Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

2nd Quarter | 2021

Market insights and analysis

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Updates on how dynamic, risk-managed investment solutions are performing in the current market environment.

Major U.S. stock market indexes ended mostly lower last week. The S&P 500 increased by 0.02%, the Dow Jones Industrial Average was down 0.50%, the NASDAQ Composite decreased by 0.39%, and the Russell 2000 small-capitalization index lost 0.24%. The 10-year Treasury bond yield rose 7 basis points to 1.63%, as Treasury bonds fell for the week. Spot gold closed at $1,769.13, down 0.45%.

Have the Roaring ’20s returned?

In an upcoming Proactive Advisor Magazine article, the author (a successful financial adviser) writes about a behavioral finance issue affecting several of his clients. As opposed to the typical fear seen in severe market declines, these clients are fearful about the sustainability of the massive market rally since March 2020. Whether you call it fear or greed, they do not want to see their current portfolio gains diminished.

The major U.S. stock market indexes finished mostly lower last week. The Dow Jones Industrial Average lost 0.5%, the S&P 500 Index slipped 0.1%, and the NASDAQ Composite fell 0.3%. In contrast, the Russell 2000 small-capitalization index gained 0.6%. The 10-year Treasury bond yield fell 2 basis points to 1.555%, leaving bonds flat for the week. Spot gold closed the week at $1,777.20, up $0.69 per ounce, or 0.04%.

Examining key factors of ESG investing

Last week we celebrated Earth Day. At this time of year, many investors reflect on the state of our planet and what they can do to make an impact. For some, this includes how and where they invest their money.

When you go to a restaurant (remember those?), you know if you had a good meal. And you know if the service is above average and deserving of a larger tip than usual. Your five senses give you all the answers. But what about your investment manager? How do you know if he or she or they are doing a good job of managing your investments for you? The easy answer is, “Look at their performance.”

Don’t let your heart rule your investments

This week, I want to talk about a well-documented pattern of investor behavior that does not serve their best interests: letting emotions rule investment decisions. We originally posted a version of this article last year just before the COVID crash.

The markets were up last week as we closed out the first quarter of the year. The tech-dominated NASDAQ Composite gained 2.60%, the Russell 2000 was up 1.49%, the S&P 500 gained 1.41%, and the Dow Jones Industrial Average rose 0.24%. The 10-year Treasury bond yield rose 5 basis points to 1.72%, though bonds as an asset class were largely up for the week. Spot gold closed at $1,728.87 for the week, down 0.19%.

Major U.S. indexes ended mixed last week. The S&P 500 increased by 1.57%, the Dow Jones Industrial Average was up 1.36%, the NASDAQ Composite was down 0.58%, and the Russell 2000 small-capitalization index lost 2.88%. The 10-year Treasury bond yield fell 4 basis points to 1.68%, as Treasury bonds rose for the week. Last week, spot gold closed at $1,732.52, down 0.73%.

The importance of being “money smart”

Did you know that April is Financial Literacy Month? And that April 10–17, 2021, is Money Smart Week? Financial Literacy Month was designated officially by the United States Senate in 2004 via Resolution 316, during the administration of George W. Bush. (Interestingly, Barbara Bush was passionate about many literacy causes and started the Barbara Bush Foundation for Family Literacy in 1989.)

The major stock market indexes finished lower last week. The Dow Jones Industrial Average lost 0.5%, the S&P 500 Index slipped 0.7%, the NASDAQ Composite fell 0.8%, and the Russell 2000 small-capitalization index tumbled 2.8%. The 10-year Treasury bond yield rose 10 basis points to 1.727%, sending bonds lower for the week despite a late-week rally. Last week, spot gold closed at $1,745.23, up $18.12 per ounce, or 1.1%.

Major U.S. indexes ended higher last week, with most hitting record highs. The Dow Jones Industrial Average was up 4.07%, the S&P 500 increased by 2.64%, the Russell 2000 small-capitalization index rose 7.32%, and the NASDAQ Composite was up 3.09%. The 10-year Treasury bond yield rose 6 basis points to 1.63%, as Treasury bonds fell for the week. Last week, spot gold closed at $1,727.11, up 1.60%.

In investing, as in life, it’s all relative

A couple of years ago, I was at physical therapy for a back ailment. They had me begin on the treadmill. Trudging along, time seemed to drag. Reaching the end of the exercise interval seemed like a distant goal. As I looked around the room in abject boredom, I noticed a group of therapists chatting away with another client. They were animated. The level of chatter increased. They were so engaged!

The major stock market indexes tumbled last week. The Dow Jones Industrial Average lost 1.8%, the S&P 500 Index declined 2.5%, the NASDAQ Composite fell 4.9%, and the Russell 2000 small-capitalization index dipped 2.9%. The 10-year Treasury bond yield rose 6 basis points to 1.405%, as its price weakened. Spot gold closed the week at $1,734.04, down $50.21 per ounce, or 2.8%.

Visualizing the benefits of risk management

A few weeks ago, I wrote about a financial adviser’s analogy between the strategy in a Kansas City Chiefs 2021 playoff game and investor behavior. In that example, the point was how financial advisers could help their clients with the concept of “behavioral adherence,” or sticking with a well-constructed and risk-managed investment plan even when times get tough.

Why it pays to have a flexible portfolio

When I get the opportunity to share my thoughts in this column, I generally pull from my recent conversations with financial advisers and their clients.

Market Update 2/8/21

The major stock market indexes soared higher last week. The Dow Jones Industrial Average gained 3.9%, the S&P 500 Index rose 4.6%, the NASDAQ Composite climbed 6.0%, and the Russell 2000 small-capitalization index increased 7.7%. The 10-year Treasury bond yield rose 10 basis points to 1.168%, as its price weakened. Spot gold closed the week at $1,814.11, down $3.54 per ounce, or 1.82%.

Market Update 2/1/21

Major U.S. indexes pulled back last week, experiencing record trading volumes and high volatility. The Russell 2000 small-capitalization index fell 4.4%, the NASDAQ Composite was down 3.5%, the S&P 500 decreased by 3.3%, and the Dow Jones Industrial Average lost 3.3%. The 10-year Treasury bond yield fell 2 basis points to 1.07%, as Treasury bonds rose for the week. Last week, spot gold closed at $1,847.65, down 0.43%.

Sticking with your investment game plan

Jerry Wagner, Flexible Plan Investments’ (FPI’s) founder and president, offered this piece of advice to financial advisers and investors in a recent article: “Have a plan and stick to it. As I’ve written many times, whether it is trying to invest by following headlines, financial talking heads, so-called market experts, or political predictions, none of these sources are likely to lead investors to long-term profits.

The major stock market indexes finished higher last week. The Dow Jones Industrial Average gained 0.6%, the S&P 500 Index rose 1.9%, the NASDAQ Composite climbed 4.2%, and the Russell 2000 small-capitalization index increased 2.2%. The 10-year Treasury bond yield and its price ended the week essentially flat. Last week, spot gold closed at $1,855.61, up $27.16 per ounce, or 1.5%.

No one thing leads to success

Watching the NFL playoff games this past weekend, I noticed the winning teams’ quarterbacks got much of the credit and much of the press. But there are 53 players on each team’s roster and many more behind them contributing to each team’s success.

Remember what the Dormouse said

One of my favorite gifts for Christmas was Haley Reinhart’s album “What’s That Sound?” Reinhart was a finalist on “American Idol” in 2011. I was repeatedly surprised while watching the show by the range and emotive power of her singing voice, and I have followed her career ever since. In recent years, she has been one of the stars of Scott Bradlee’s popular Postmodern Jukebox shows.

U.S. equity markets posted gains in all three indexes last week. The NASDAQ Composite gained 2.43%, the S&P 500 gained 1.83%, and the Dow Jones Industrial Average gained 1.61%.

The major stock market indexes finished mixed last week. The Dow Jones Industrial Average gained 1.4%, the S&P 500 Index rose 1.4%, and the NASDAQ Composite increased 0.7%. In contrast, the Russell 2000 small-capitalization index lost 1.5%. The 10-year Treasury bond yield and its price ended the week essentially flat. Last week, spot gold closed at $1,898.02, up $14.59 per ounce, or 0.8%.

Are you a fox or a hedgehog in your investing?

A short fragment of poetry over 2,600 years old set the academic world ablaze when it was cited in 1951. Attributed to one of the greatest Greek poets, Archilochus of the Greek island of Paros, was this simple phrase: “Πόλλ᾽ οἶδ᾽ ἀλώπηξ, ἀλλ’ ἐχῖνος ἕν μέγα.” The fox knows many things, but the hedgehog knows one big thing.

4 unconventional ways to manage risk in your portfolios

Over the years I have written about “Plan B Investing” and “Just-In-Case Investing.” Both of these are similar but different.

Gold prices remained above the 50-day moving average, closing the week at $1,883.90 per ounce.

Stocks traveled north last week, with all major U.S. indexes trading at all-time highs. The NASDAQ Composite was up 3.05%, the Russell 2000 small-capitalization index also rose 3.05%, the S&P 500 increased by 1.25%, and the Dow Jones Industrial Average gained 0.44%. The 10-year Treasury bond yield rose 5 basis points to 0.95%, as Treasury bonds fell for the week. Last week, spot gold closed at $1,881.31, up 2.26%.

Expectations that can lead to bad investing

This week I was listening to an expert on investor psychology who stated, “Investors feel comfortable investing when markets are behaving as they expect.” That made me think about the piece I recently wrote about the emotions of fear, uncertainty, and doubt (FUD) and their often negative influence on investors’ decisions.

The major stock market indexes finished mostly lower last week. The Dow Jones Industrial Average lost 0.6%, the S&P 500 Index fell 1.0%, and the NASDAQ Composite declined 0.7%. In contrast, the Russell 2000 small-capitalization index advanced 1.0%. The 10-year Treasury bond yield fell 7 basis points, and bond prices were up slightly. Last week, spot gold closed at $1,862.73, up $23.87 per ounce, or 1.3%.

Gold continued to trend above the 200-day moving average, closing the week at $1,840.00 per ounce.

As pointed out in last week’s Market Update, Thanksgiving week is normally very bullish for the markets. The shortened holiday week followed history in a big way. Each index was up over 2%, and for the first time, the Dow Jones Industrial Average crossed above 30,000!

The invitation to our holiday party a few years read “Dress: Cocktail.” One of our guests, John Zilli, wondered, “What exactly does that mean?” He Googled it.

Last week, the gold spot price was down 4.45% and the U.S. Dollar Index was down 0.65%.

Last week, positive news about the COVID-19 vaccines provided a temporary boost for the equities market. Gold prices responded by moving down to the 200-day moving average.

The major stock market indexes finished mixed last week. The Dow Jones Industrial Average lost 0.7%, the S&P 500 Index fell 0.8%, the NASDAQ Composite rose 0.2%, and the Russell 2000 small-capitalization index rose 2.4%. The 10-year Treasury bond yield fell 7 basis points, and bond prices were up slightly. Last week, spot gold closed at $1,870.99, down $18.21 per ounce, or 0.96%.

Things to be thankful for

For a variety of reasons, 2020 has engendered a wide range of strong emotions for many people: fear, uncertainty, anger, depression, resignation, loneliness, and (unfortunately) sadness and grief. But for many, there have been more positive and constructive responses: determination, commitment, hope, and a sense of community.

Gold moved sideways last week, closing at $1,872.40 per ounce.

Market Update 11/9/20

As Election Day turned into election week, the major indexes rallied, experiencing weekly gains not seen since April. The NASDAQ Composite surged 9.0%, the S&P 500 gained 7.3%, the Dow Jones Industrial Average was up 6.9%, and the Russell 2000 small-capitalization index increased 6.9%. The 10-year Treasury bond yield fell 5 basis points to 0.82%, as Treasury bonds rose for the week. Last week, spot gold closed at $1,951.35, up 3.86%.

U.S. equity markets posted gains in all three indexes last week. The NASDAQ Composite gained 9.01%, the S&P 500 gained 7.32%, and the Dow Jones Industrial Average gained 6.87%. All 11 sectors were up last week; Information Technology, which posted the largest gain, was up by 9.70%.

In 1999, I began working with writer Susan Ward at the weekly financial news magazine Barron’s to produce a series of columns on Flexible Plan Investments’ (FPI’s) Political Seasonality Index (PSI).

When surprises occur in everyday investing

When we think of our lives or just talk about what we have been doing lately with a friend, we tend to focus on big events. If we have just started a new job or a baby was born, the event dominates our conversations. Similarly, in the news, election and pandemic news can consume the headlines and color what we think is occurring around us.

U.S. equity markets posted losses in all three indexes last week.

Last week, the gold spot price was up 0.15% and the U.S. Dollar Index was down 0.98%.

Equities were up significantly in the third quarter despite a sell-off in September.

Taking personal bias out of the investing equation

I have spoken with many financial advisers lately, and, of course, one of the topics at the top of their minds was the recent presidential debate. Some of the advisers I spoke to are committed Democrats and some are committed Republicans. One would never have known that we all watched and heard the same event based on what we each thought we saw, heard, and understood—all of which was reflected through the lens of our personal bias.

Early this morning it dawned on me that I have not looked at the global stock market in some time. As investors, we understandably tend to focus on domestic markets—even though there is a world of opportunity available to us. Those opportunities, including those outside of stocks, are why Flexible Plan builds strategically diversified portfolios.

Market Update 9/28/20

The major stock market indexes finished mixed last week. The Dow Jones Industrial Average lost 1.75%, the S&P 500 Index fell 0.6%, the NASDAQ Composite rose 1.11%, and the Russell 2000 small-capitalization index lost 4.0%. The 10-year Treasury bond yield fell 3 basis points, and bond prices were flat. Last week, spot gold closed at $1,861.58, down $89.28 per ounce, or 4.6%.

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Over 2,500 years ago, in what may have been one of the earliest examples of behavioral finance theory, ancient Greek philosopher Aristotle is reported to have said the following regarding the achievement of success.

Market Update 9/21/20

The major stock market indexes were mixed last week, with some further consolidating gains seen this year. The NASDAQ 100 Index (the laggard for the week) was down 1.4%, the S&P 500 Index fell 0.6%, the Dow Jones Industrial Average lost 0.03%, and the Russell 2000 gained 2.6%. The 10-year Treasury bond yield rose about 3 basis points, as Treasury bonds fell slightly for the week. Last week, spot gold rose slightly, gaining 0.4%.

“Fiddler on the Roof” is one of the most enduring musicals written. It first previewed here in Detroit in 1964, and I’m sure regional or touring companies will continue performing it in the future for many years to come. And, of course, the movie version is always available!