Independent Investment Management and Financial Planning
First, I hope you have a wonderful weekend!
Just dropping a quick line this afternoon as I saw an article in the Wall Street Journal today titled, “Number of Americans Caught Underpaying Some Taxes Surges 40%” that made me think of a point I’ve often made in private.
Continue reading “Tax Withholding Makes Taxpayers More Agreeable To Higher Taxes”
“Entering Friday’s session, 200 S&P 500 components, or 40 percent, were in correction territory. A stock or an asset class enters a correction when it falls at least 10 percent from its 52-week high.”
https://www.cnbc.com/2017/08/11/market-cracking-with-200-sp-500-already-in-correction.html
I have a multiple choice question for you:
You have some cash sitting in your bank account. You’re buying a house in 12 months and want to put 20% down so you’ll need the cash in a year. What should you do with the cash in the interim?
cue the Jeopardy music….
Continue reading “The Asset Must Match The Liability!”
For those of you that follow Bitcoin, you know it’s had a volatile couple months. In early-June the price of a Bitcoin hit about $3,000 at which point many articles were written about how high it could go, etc… It then fell over $1,000 down to about $1,900. That’s a 35% drop in about 1 month (see chart below) before recovering once again. That is not the interesting part….
It’s that time again. The time when I review the market’s performance and important metrics for the quarter.
In short, it was a strong quarter for most assets. However, market valuations continue to get stretched to extremes implying the ultimate snapback will need to be that much greater. In fact, valuations have only been this high two other times since 1900. The first time was right before the Great
Depression and the second time was at the Dot-Com Bubble
peak.
Therefore, it is reasonable to expect subdued returns over
the next ten years and plan accordingly.
Q2 Market Performance
I’ll just briefly summarize various index returns for the quarter so we can get to more meaningful insights. International stocks continue to be the top performer.
U.S. Stock Market Valuations
Today’s price of a future cash flow determines your return. For instance, if you exchange $50 now to receive $100 in ten years that implies a 100% return. If, however, you exchange $90 today for that same $100 in ten years your return drops to 11%. So price paid today is extremely important in determining future returns.
Continue reading “Quarterly Market Update – This Has Happened Only Two Other Times Since 1900…”