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Humming Right Along

As we enter the homestretch of 2017, markets seem to be humming right along. Across the globe we are seeing improving economic fundamentals and stock markets heading higher. Unlike past few years, the United States is not leading the markets in 2017. Emerging Markets and Developed International Markets have led the way in 2017. While these economies are growing comparable to the U.S., their markets are beginning to catch up to their counterparts in the U.S. Large Cap US Equites were up 4.48% for the quarter, lagging International Equites which were up 5.40% and Small Cap US Equities which were up 5.67%. The bond markets made reasonable contributions with the Barclays Capital US Aggregate Index returning .85% for the quarter and High Yield returning 1.70%. Again, International Bonds outperformed with a quarterly return of 3.05%. Looking toward the last quarter of 2017 and the beginning of 2018 we are cautious and hopeful. The long slow economic expansion in the US shows no sign of weakness. As long as profits continue to grow we don’t see a reason that US Equities can’t go higher. The Federal Reserve has raised rates 3 times in 2017, with a 4th expected in December. We haven’t seen anything un-expected happen in the markets with […]

Equity Markets Supported by Steady Interest Rates and Growing Economies

The first half of 2017 has been good for stocks and, as of today, Q3 is starting off well as the Fed is holding its course, and earnings reports for the second quarter are expected to be solid across most industries. There are, and have been, some headwinds but the markets, based on a solid economy and steady interest rates, are climbing the wall of worry. The major U.S. stock indices were up about 3% for the quarter and 9% for the first half. Within the broader indices growth (read tech) beat value, and large cap beat small cap, both significantly. As overseas economies found their footing over the first half of 2017, foreign stocks did well in both quarters of the first half of the year. The broad international index was up 6% for the quarter and nearly 14% for the half year. The broad domestic bond index wasn’t up much in Q2 but up 2% for the first six months. So, what next after a strong start to the year? All signs continue to point to slow but solid economic growth domestically and overseas, and steady interest rates with little inflation. This is a great environment for stocks […]

Solid First Quarter-Now What?

Most major stock indices turned in a 5%+ first quarter. Bond prices bounced some off their end of year lows, showing a 1%-ish total return for the quarter in the major bond indices. Global economies continued to strengthen in Q1 including Europe, Japan and China. Here at home CEO expressed their enthusiasm for regulatory and tax relief from the new administration and congress by announcing new investments in their businesses. In Europe business trends were positive and anti Euro political sentiment seemed to diminish. Bank of Japan raised its growth outlook for 2017 as did China. So, now what? Economies continue to improve, wages are rising in the U.S. and other major economies, and political environments are improving for business. From a market perspective stock prices seem to want to take a rest, but are holding above important support levels. With stock valuations at the upper end of their historical range, the Fed once again raising short term interest rates, and a heightened risk of an overseas confrontation, a bit of caution seems prudent. However, evidence of an accelerating economy could start stocks moving up again as bonds still aren’t  likely competition for equities. Here at Marin Wealth Advisors we are […]

How a #Trump Administration Policies Might Move the #Markets

Based on Trump’s campaign statements and his record as a businessman, here are some things we can watch for from his administration: Borrow to Fund #Infrastructure Spending-helps industrial companies, raises #Inflation expectations and hurts bond prices. #Banks profit margins will improve while lending accelerates. #Deregulation-helps most industrial companies. Much of #Defense spending should be safe from cuts. #Pharmaceutical and #Biotech can breath a sigh of relief. #Mergers and #Acquisitions should benefit from a reigned in Justice Department. Some #Exporters could be vulnerable to changes in #TradeDeals.

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 […]

A Fiduciary Advisor – What it Means Now & in the Future

Based on the recent regulatory changes mandating more fiduciary standards for stock brokers, the issue has been in the news a lot lately. The standard has a fairly basic regulatory definition when pertaining to investment advice.  Regulations require fiduciaries’ advice given to be in the BEST interest of the client, not just suitable for the client. Fee-only Registered Investment Advisors and Certified Financial Planners have been held to the fiduciary standard for years and we feel they have (and still do) hold a strong competitive advantage over brokers because of this higher standard of care.  But we feel acting in the clients’ best interest is just the start of the role for the independent fiduciary investment advisor to retain that competitive advantage over not only brokers, but DIY and Robo solutions as well. As fee compression persists thanks to the investment management efficiencies gained from the latest fin-tech tools and because of more transparency and news coverage on advisor compensation, the fiduciaries’ role will likely have to expand further to justify that 1% management fee that is currently commonplace in the industry. A full-service fiduciary advisor of the future charging 1% should: Be an informed confidant in times of financial […]

Summertime and the Livin’ is Nervous

Brexit, Oil Prices, Uncertain Fed, Slow Economy; is this a wall of worry we will climb over, market summer doldrums, or a coming storm? Anybody who says they know is someone we should not be listening to. But, let’s breathe a little, add up the positives, and see if we can get less nervous Interest rates are low and seem to support current stock valuations under 20 times earnings on the S&P. Several industry sectors are still down 5-10% from their highs over the summer of 2015. Of course, energy and biotech are down significantly from their highs, so there seems to be some good stock values around. As well, the Fed, in the voice of Janet Yellen, has consistently said that their interest rate decisions are data dependent, and more than one rate hike in 2016 doesn’t seem to be in the cards. Remember, they originally planned multiple rate hikes this year, but the data hasn’t supported that. Seems responsive and responsible to us. Low rates support the housing market which remains an important driver of our economy. Corporate balance sheets are still stuffed with cash and our largest companies in most industry sectors are buying back stock, raising […]

Time for Caution in Tech and Biotech?

In early December last year we posted that tech and biotech probably warranted some additional emphasis in 2016. Well, tech. as represented by the Technology Select Sector SPDR ETF (XLK,) is off 5% and biotech, as represented by the iShares Nasdaq Biotechnology (IBB,) is off 22% from our post. Bad call or bad timing? The timing was certainly not good in retrospect, however the fundamentals of each group were, and still seem to be, mostly solid long term. Although earnings season has been mixed for tech, most of the stocks do not appear to be carrying high price to earnings multiples. And, most of the big tech companies are paying reasonable dividends that are generally rising, an important long term investment theme. The industry move to cloud and mobile is still in process and seems to be, along with a struggling global economy, adding to recent volatility. As well, the largest biotech companies looked to be trading at reasonable valuations in early December. These are the companies that most analysts believe are the future of medicine. Many are hugely profitable enterprises, which may be part of the reason for their current price weakness. They, of course, are under attack in this […]

Cash Is Not Trash – Part I

Times of market and economic uncertainty more often than not present us with opportunities, but in this time of excruciatingly low interest rates parking cash feels like a non investment. It probably is, but it accomplishes two very important things in uncertain markets. Cash in a money market fund or short term bond fund can significantly reduce volatility in an investment account. It also is essential to taking advantage of opportunities that arise in weak markets. Let’s look at an example of what some might see as a potential opportunity in this beaten up market. The NASDAQ Biotech Index peaked at almost exactly $400 last July. Today it is trading at $261 for a 34.75% decline in 7 months. The index is over 50% weighted to the largest, most well known and profitable biotech companies. Many analysts feel these companies and others in this index are the future of medicine and probably hold the keys to treating our most feared diseases. The Dow Jones Industrials and the S&P 500 are each down over 10% from their peaks last summer. Nearly 35% off of one of the potentially fastest growing industries may be one good reason to have some cash set […]

Is Index Investing Good For Our Society And Economy In The Long-Run?

I work for a firm that recommends index investing for a portion and often a majority of client portfolios. It’s hard to form an argument against it. Broad diversification and low fees with the majority of active managers underperforming their index fund counterparts in recent years. I’ve always accepted the general consensus that using index funds make sense. I still do… for now. My question: Is a society made up entirely of index investors a good thing? The United States has had the strongest economy in the world for decades. Most economists would cite easy access to capital for our businesses as a major contributor to our nation’s economic success. On the flip side, lack of capital is the #1 cause for business failure. So I think it’s safe to conclude that the easier it is for businesses to raise funds via stock and bond offerings, the greater the chance of their success. U.S. public companies are required to release reliable financial information about their operations on a quarterly basis with external audits done annually. This information is what allows investors to make informed decisions as to where to put their money. The high standards for reliability build confidence in our […]