Stocks Rebound

Markets rebounded last week, posting sizable gains and moving back into positive territory for the year.  All three domestic indexes experienced their largest weekly growth in years, despite losing some ground on Friday after news of additional indictments in the Russia investigation.

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Understanding Recent Market Volatility

Our Analysis of the Recent Market Turbulence

The markets started 2018 with the wind in their sails, and investors watched as indexes continued their nearly straight-up trajectory from 2017.

Then, after the S&P 500’s best January performance since 1997, stocks took a dive at the beginning of February.[1] On Monday, February 5, the Dow and S&P 500 each lost more than 4%, and the NASDAQ’s drop was nearly as significant.[2] The next day, all 3 indexes posted positive returns.[3]

We understand how unnerving these fluctuations can feel—especially as headlines shout fear-inducing statistics. Our goal is to help you better understand where the markets stand today and how to apply this knowledge to your own financial life.

Putting Performance Into Perspective

When markets post dramatic losses or whipsaw back and forth, many people wonder what causes the turbulence—and may assume negative financial data is to blame. However, the recent selloff and volatility don’t have the culprits you might expect.

No negative economic update or geopolitical drama emerged to spur the selloff February 5–6. Instead, emotion-driven investing may have combined with computer-generated trading to fuel the decline. In particular, after the latest labor report showed wage growth picking up more than expected, some investors began to worry about increasing inflation.[4] Higher wages can mean companies have to raise their prices to support their labor costs, a cycle that can cause inflation to grow.[5]

While concerns about inflation and interest rates may be to blame for the market fluctuations, it may not be the only detail to focus on. Another key point is important to remember as an investor: Volatility is normal.

Volatility Facts

Knowing Where to Go From Here

Over short periods of time, the market trades on fear, anxiety, greed, and emotion. Over the long term, however, economic fundamentals drive the markets.

Thankfully, a variety of data indicate that the economy continues to grow:

  • Labor Market: The economy added 200,000 new jobs in January and beat expectations. Average hourly wages also increased, bringing 2.9% growth in the past 12 months—the largest rise since 2008–2009.[13]
  • Corporate Earnings: The majority of S&P 500 companies who have reported their 4th quarter results have beaten their earnings estimates.[14]
  • Service Sector: The latest reading of the ISM Non-Manufacturing Index (which tracks performance and expectations for service-sector businesses) hit its best level since 2005.[15]
  • Consumers: The most recent data indicates that personal income and spending are on the rise.[16]

As investors try to determine whether inflation is on the rise and higher interest rates are imminent, volatility could continue. After last year’s smooth sailing in the markets, these fluctuations may feel harder to withstand. The reality is that equities don’t move in a straight line.

Even if volatility is here to stay, we know that price changes can provide new market opportunities. We agree with the economists at First Trust who assert that, “More economic growth will ultimately be a tailwind for equities, not a headwind.”[17]

We encourage you to focus on your long-term goals, rather than short-term fluctuations. As you do, avoid allowing emotions to derail your plans. We also want you to feel comfortable in your financial journey. If your thoughts on risk have changed, call us so we can help you find the best path forward.

As always, we are here to provide you with clarity, perspective, and support during every market environment. Thank you for the confidence you place in our abilities. We consider it a privilege to be good stewards of the assets you entrust to our care.

 

Kind Regards,

Brad Connors, President
iWealth

Disclosures:

Insert your broker/dealer disclosures here. i.e. Securities offered through “Your B/D Name Here,” Member FINRA/SIPC.

Opinions, estimates, forecasts and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice.

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Indexes cannot be invested in directly, are unmanaged and do not incur management fees, costs and expenses.

Opinions expressed are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

Consult your financial professional before making any investment decision.

All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

These are the views of Platinum Advisor Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer gives tax or legal advice.

We have not independently verified the information available through the following links. The links are provided to you as a matter of interest. We make no claim as to their accuracy or reliability.

[1] https://www.bloomberg.com/news/articles/2018-02-02/stocks-in-rate-wringer-with-rout-raising-existential-questions

 

[2] http://money.cnn.com/2018/02/05/investing/stock-market-today-dow-jones/index.html

 

[3] https://www.cnbc.com/2018/02/06/us-stock-futures-dow-data-earnings-market-sell-off-and-politics-on-the-agenda.html

[4] https://www.cnbc.com/2018/02/05/why-the-stock-market-plunged-today.html?recirc=taboolainternal

[5] https://www.theguardian.com/business/2018/feb/02/us-bond-market-rout-fears-trigger-wall-street-sell-off

[6] First Trust, Staying the Course, 12/31/17

[7] https://www.reuters.com/article/us-global-markets-volatility/explainer-investors-burned-as-bets-on-low-market-volatility-implode-idUSKBN1FQ2GL

[8] http://www.cnn.com/2018/02/06/us/five-things-february-6-trnd/index.html

 

[9] https://www.cnbc.com/2018/02/05/fidelity-says-it-saw-no-panic-among-its-customers-and-more-buying-than-selling-during-the-plunge.html

https://www.cnbc.com/2018/02/06/us-stock-futures-dow-data-earnings-market-sell-off-and-politics-on-the-agenda.html

[10] First Trust, S&P 500 Performance After Its Worst Days, 6/17

[11] First Trust, S&P 500 Performance After Its Worst Days, 6/17

http://money.cnn.com/2011/08/10/markets/markets_newyork/index.htm?iid=EL

[12] First Trust, S&P 500 Performance After Its Worst Days, 6/17

[13] https://www.ftportfolios.com/Commentary/EconomicResearch/2018/2/2/nonfarm-payrolls-rose-200,000-in-january

[14] https://insight.factset.com/sp-500-earnings-season-update-february-2

[15] https://www.ftportfolios.com/Commentary/EconomicResearch/2018/2/5/the-ism-non-manufacturing-index-rose-to-59.9-in-january

[16] https://www.ftportfolios.com/Commentary/EconomicResearch/2018/1/29/personal-income-rose-0.4percent-in-december

[17] https://www.ftportfolios.com/Commentary/EconomicResearch/2018/2/5/new-policies,-new-path

Special Update: Understanding Volatility

After months of relative calm, market fluctuations are causing many investors to wonder what is happening to the economy.  Last week, the S&P 500 lost 5.16%, the Dow dropped 5.21%, and the NASDAQ declined 5.06%.  The MSCI EAFE also gave back 6.19%.  These losses pushed all four indexes into negative territory for the year.  In addition, the weekly performance included significant volatility, as stocks had large fluctuations both within days and from one day to the next.  The Dow, for example, lost over 1,000 points twice during the week-and also twice gained over 300 points.

During times like these, viewing events in their proper context is imperative.  This week, we are going beyond our typical market update in an effort to provide you with clarity and perspective.

Click here to read the full article.

Markets Slide as Bond Yields Rise

After 4 straight weeks of gains, the markets have slipped.  As of Friday, the S&P 500 lost 3.85%, the Dow dropped 4.12%, and the NASDAQ decreased by 3.53%.  International stocks in the MSCI EAFE also took a 2.78% hit.  Domestically, the losses spanned sectors and asset classes.  For the S&P 500, all 11 of the index’s  industries lost ground last week.  This decline came after the S&P 500 had its best January performance in over 20 years.

Click here to read the full article.

Stocks Jump Again

Stocks had an impressive week yet again, as each of the domestic indexes reached record highs and gained at least 2%.  The S&P 500 added 2.23%, the Dow increased 2.09%, and the NASDAQ grew 2.31%.  International stocks in the MSCI EAFE joined the growth, adding 1.49%.

Click here to read the full article.

Stocks Up as Shutdown Looms

We’re only a few weeks in 2018, and stocks are showing quite a strong performance so far.  last week, major domestic indexes posted gains yet again, with all 3 up at least 5% this year.  By Friday, the S&P 500 had added another 0.86%, and both the Dow and NASDAQ were up 1.04%.  All 3 indexes hit new record highs at least once during the week.

Click here to read the full article.

Equities and Inflation Climb

Domestic markets continued their strong start to 2018, posting gains across the board for their 2nd week.  The S&P 500 added 1.57% and closed at a new record high on Friday.  The index just posted its best 10-day beginning to a year since 2003, with a 4.2% gain so far this year.  The Dow also hit a new record on Friday and gained 2.01% for the week.  The NASDAQ increased by 1.74%, while international stocks in the MSCI EAFE joined last week’s gains, adding 1.20%.

Click here to read the full article.

iWealth Perspectives – Winter 2018

Image for Website In This Issue:

  • Safeguard Your Credit: Protect Yourself from Fraud and Safeguard Your Financial Life
  • Start 2018 With These Financial Resolutions
  • 4 Tips for Sticking to Your Goals
  • Warm & Cold Winter Vacation Destinations

Stocks Start 2018 With Jump

The first week of 2018 is behind us, and across the globe, stocks experienced a strong start to the year.  International stocks in the MSCI EAFE gained 2.44% last week.  In the U.S., our major indexes also leapt forward, hitting a number of records and milestones.

Click here to read the full article.

Define and Reach Your 2018 Financial Resolutions

The New Year is upon us, bringing a fresh opportunity to consider your goals. For 2018, we are taking a different approach to resolutions. Instead of giving you a laundry list of tasks to accomplish, we want to encourage you to make this the year you really own your financial life.

Imagine fast forwarding your life to December 31, 2018, and looking back on the year. What do you think you will have accomplished? How did your financial life change? What roadblocks did you remove? Answering these questions can help you identify your true goals for 2018.

If your vision for next year differs from where you are today, then you need a clear strategy for making changes—and a plan to follow along the way. It all begins with knowing how to define and reach your goals.

According to a study on the science of achieving goals, 3 key steps make you more likely to achieve what you set out to accomplish:

  • Written goals
  • Accountability
  • Commitment[1]

Using these findings, we have created 3 steps to help you set—and keep—your financial resolutions for 2018.

  1. Written Goals: Define and record what you want.

Financial worries keep 65% of Americans up at night. From paying for health care to saving for retirement, people’s concerns span an array of life events.[2] Fortunately, writing down goals can improve your chance of reaching them and moving past these stressors.[3]

When defining your financial resolutions, ask yourself which priorities matter most to you and would help create the greatest comfort in your life. Your financial needs are unique to you, and they should guide the goals you set for the coming year.

  1. Commitment: Outline specific action items for each day.

Once you have defined your goals for 2018, you can outline the actions you will take to help make your dreams a reality. Create and maintain your commitment to the goal by building a clear strategy for bringing it life. For example, rather than saying, “I want to pay down debt,” define the exact amount of money you will pay toward your liabilities each month. Determine which steps you need to take to achieve your goal, and then build a schedule for accomplishing the necessary tasks each day.[4]

  1. Accountability: Share your goals and progress with someone else.

When studying goal-setting, individuals who shared their objectives and actions with another person had better results than those who did not.[5] To help increase your chances of achieving your 2018 financial resolutions, share your plan with someone else, such as a spouse, family member, or friend. Make sure you give them a detailed account of exactly what you want to achieve—and the steps you will take to do so.

Once you’ve selected someone to share your goals with, keep them in the loop on your progress. In fact, sending weekly updates to your chosen accountability partner can make you significantly more likely to achieve your goals.[6]

As you look to 2018 and what you hope to accomplish, we encourage you to follow these steps to start out on the right path. We are always here to guide your financial goals and help you create the future you desire.

Here’s to a happy, healthy, and fulfilling New Year!

Footnotes, disclosures, and sources:

These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

We have not independently verified the information available through the following links. The links are provided to you as a matter of interest. We make no claim as to their accuracy or reliability.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
[1] https://forbesbooks.com/the-science-behind-setting-goals-and-achieving-them/

 

[2] https://www.cbsnews.com/news/biggest-money-worries-keeping-americans-up-at-night/

 

[3] https://www.dominican.edu/academics/lae/undergraduate-programs/psych/faculty/assets-gail-matthews/researchsummary2.pdf

 

[4] https://www.thebalance.com/how-to-create-an-action-plan-to-achieve-your-goals-1794129

 

[5] https://www.dominican.edu/academics/lae/undergraduate-programs/psych/faculty/assets-gail-matthews/researchsummary2.pdf

 

[6] https://www.dominican.edu/academics/lae/undergraduate-programs/psych/faculty/assets-gail-matthews/researchsummary2.pdf

 

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