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Time to Re-balance?

Well, we’ve had a nice run in the U.S. stock market, especially if you look all the way back to the bottom in the spring of 2009. The question on most investors’ minds is whether it’s time to re-balance, or not. As we noted in our post at the end of the year, the important things to pay attention to this year are; the Fed, politics, and the economy. So far, so good. The economy continues to improve, the market is absorbing big changes in the political structure without much disturbance, and the Fed seems to be holding it’s line on rate hikes. So, although there seems to be no compelling reasons to change strategies at this point, re-balancing portfolios has more to do with preparing for the future than reacting to current conditions. There are two futures to prepare for; yours and the market’s. Our clients tend to fall into three general age categories; Emerging Investors (20s-30s,) Peak Earners (40s-50s,) and Retirees (60+.) Each age group should respond just a little differently than the others to the need for investment re-balancing. Emerging Investors probably need to be least concerned with re-balancing. Once their long term allocations are set it becomes more […]

Looking Ahead to 2017

Predictions are often easy to make, but even the best researched and considered predictions are often 180 degrees wrong. So for that reason, we are reluctant to make New Year predictions. However, what is important is to figure out what are likely to be the biggest influences on the markets in the coming year. It’s an especially good idea to consider macro factors this year because markets have made dramatic turns around the recent elections. Domestic stocks indices are at new highs (up from highs set last Spring) and bonds are now testing the lows of summer 2015, after reaching record high prices this past summer. We’re thinking the big 2017 market influences will be: The Fed Politics The Business Cycle The markets could be facing real headwinds if the Fed decides to get aggressive in its efforts to head off inflation. Politics are important here because a surge in economic activity due to fiscal stimulus, should it lead to an acceleration in wage gains, will almost certainly force the Fed to raise rates more rapidly. Of course, the result will be lower bond prices and, probably, lower stock prices. Conversely, should fiscal stimulus efforts get stuck in congress, or […]

Probably Time for a Normal Market Pullback?

The markets got a lift in the third quarter from continued job gains and, surprisingly, a striking improvement in wage growth. Domestic politics and Brexit fallout didn’t seem to hurt much. The S&P 500 was up nearly 4% and the Dow up nearly 3% in the quarter. Balanced indices returned generally 2-3.5% in the quarter. U.S. bonds generally returned less than .5% but international bonds showed improvement, returning nearly 3%. Q4 is starting off with a little more concern about stock valuations and bonds being vulnerable to a probable rate hike before year end. As well, the markets seem somewhat uncertain about potential power shifts in congress as a result of the elections and the effects on big banks, pharma and biotech. Both stocks and bonds have sold off some since the end of Q3 and we could be in for continued weakness leading up to the holidays. However, assuming the current earnings season is not worse than expected, consumers remain buoyant going into the holidays, and oil prices stay near current levels, we feel we’re probably seeing a normal market pullback. It continues to be a good time to clean out underperformers in fixed income and equities, as well […]

September in the Rain?

July and August were good to stock investors after the Brexit dip. In the end, Q2 earnings came in mixed. That is; some stocks in each sector turned in good earnings and some stocks in each sector turned in not so good earnings. The market seemed to like most of it, and the S&P was up nearly 10% off the July low. Then, this week, we hear from the Fed that the second interest rate hike is imminent. There was a bit of a delayed reaction, but market participants seem to agree, all at once, that stock and bond prices need to get cheaper. The S&P is off  by 2.3% and small caps by nearly 3.3% as I type. We suspect the weakness will continue a bit as the market continues to adjust to the not-so-new reality of a rate hike. It’s a good time to look at our allocations to stocks, bonds and other interest rate sensitive investment to see if we’ve gotten too enthusiastic about any asset class or sector; if we’ve got any positions we’ve become concerned about longer term; or if we’ve got any positions that have had big moves that we may want to trim. The […]

2016: A Sea Change for the Markets

Almost 10 years of near zero interest rates has ended with yesterday’s FOMC announcement. Short term rates will rise to 1.375% next year from .375% right now. And, rates will go up 1% again in 2017 to 2.375%. The FOMC has left some wiggle room if the economy, jobs or inflation change significantly but, for sure, we are at the beginning of a rising tide of interest rates. Rising interest rates, aside from negatively affecting bond prices, create real resistance for the stock market. At some point bond yields become competitive with risk adjusted stock returns, and earnings quality is reduced as sales increases may reflect price inflation as much as unit sales increases. As well, it costs more money for businesses to finance new initiatives, possibly slowing expansion. Does this mean it’s time to exit the stock market, or does it mean it’s time to be more quality and price selective? Because the Fed has reiterated it’s intention to be very gradual and data driven in the process we believe it won’t be necessary to turn our backs on stocks, but it is time to double down on our homework. Even within our favored industries for 2016, tech, biotech […]

Why Young Investors Should Love Dividend Stocks

More mature companies in more stable industries tend to pay dividends. Some might think that a younger investor would benefit more by owning smaller, more rapidly growing companies. And, yes, younger investors should have some of their investment funds in rapidly growing companies, although they are often riskier (think early stage biotech or social media.) Aside from the well known benefits of owning dividend stocks; less volatility, total return from income and growth, and cash flow in times of market weakness, there is an important advantage for younger investors. Many companies have a history of raising their dividend annually and many others raise their dividend almost every year. (Most industries go through cyclical downturns causing the suspension of the dividend hike for that period.) The dividend yield on most of our best dividend paying stocks at their current prices generally ranges between 2-3%. If dividends rise on average only 3% per year the dividend will double in 24 years, becoming a 4-6% dividend yield on today’s prices. (A 4% per year increase doubles in 18 years.) If dividends are reinvested over the years the compounding effect is even greater. As we get closer to retirement we want to be sure […]

Go Ahead and Fret if You Like

Good news on both the US and European economy today points to Central Bank tightening. All signs point to a Fed that will be very slow and very incremental. Although we think stocks will continue to work into 2016, there will most likely continue to be a bit of a head wind for fixed income, so one might want to shorten maturities a bit. Our favorite stock sectors: Financials (higher rates mean more profitable loans) Big Cap Tech (good dividends, globally diversified, strong demand for products.) Biotech (the time is here for big breakthroughs after decades of major disease research, and industry consolidation should continue.) Lower energy prices should continue to support the consumer and profit gains in the rest of the economy. The higher dollar creates a headwind for some exporters but we think an improving economy will mitigate that. As well, the higher dollar helps European and Japanese exporters so we think foreign stocks can continue their rally. China is a little scary for several reasons, so we’re not recommending big China exposure. This summer will probably continue to be choppy while Greece gets sorted out one way or the other and our market continues to fret over […]

Retirement Savers Will Have a New Retirement Account Option in 2015

  Investors will also be eligible to contribute $500 more to a 401(k) next year. Here’s a look at how retirement accounts will change in 2015. Introducing the myRA. The Treasury will offer a new type of retirement account, the myRA, beginning in late 2014 that is guaranteed by the government to never lose value. Deposits will be made via payroll deduction, and accounts can be opened with an initial deposit of as little as $25 and then direct deposits of $5 or more each payday. But these accounts are not tied to your job and are portable if you change jobs. Savers with an annual income of less than $129,000 for individuals and $191,000 for couples will be eligible to participate. The myRA is a Roth Account, which means contributions can be withdrawn tax-free at any time, and earnings can be distributed without triggering an additional tax once the account is five years old and the account owner is at least age 59½. However, myRAs differ from Roth IRAs in that myRAs will hold a new retirement savings bond backed by the U.S. Treasury that is guaranteed not to lose value, and there are no fees. Savers can use […]

New Home for Investip Blog

Over the next few weeks we’ll be transitioning our blog subscribers over to our new Marin Wealth Advisors Blog. As before, you’ll see simple, timely tips to help you with your investing and financial planning responsibilities. What’s new is that you will also see posts from my associates, Ed Burke and Wayne Best, as well as posts from our professional friends with deep knowledge in tax planning and estate planning. Thank you for reading and staying connected. Bob Hunter

Welcome to Our New Website

We are pleased to launch our new web site and celebrate the opening of our new office. Please contact us at Marin Wealth Advisors LLC 899 Northgate Drive Suite 300 San Rafael, CA 94903 415.458.5880415.458.5880 or 800.758.3768800.758.3768 info@marinwealthadvisors.com Call Send SMS Add to Skype You’ll need Skype CreditFree via Skype