Independent Investment Management and Financial Planning
The stock market has enjoyed a nice rally since mid-October so I figured it was a good time to see how things stand now.
In this commentary I’ll review:
Bonds and stocks (along with real estate, commodities, etc…) are inherently volatile. Therefore, the value of portfolios that hold these securities will also be volatile.
Having said that, investors must be willing to suffer through short-term volatility if they are to achieve long-term portfolio growth. Continue reading “Return Ranges for Stocks, Bonds and Blended Portfolios”
Last week I mentioned yields on Treasuries hitting (or even exceeding) 4% now. So, let’s bring this full circle.
Two weeks ago I wrote a note titled, “No, Stocks Are Not Cheap Yet.” And in that note I provided a range of returns for the U.S. stock market over the next twelve years under a variety of good, average, and bad conditions (see below).
The range of returns from this analysis was -5.4% to +3.5% annualized. That means even an optimistic case for U.S. stocks (at least for the conditions in the matrix above) is about a 3.5% annualized return over the next 12-years with an average expected return of about 0%. Continue reading “Quick Follow-Up to “Bonds Haven’t Been Here…””
With the stock market down about 20%, I’ve been getting asked if stocks are now cheap. I’ve also heard some folks state, rather matter-of-factly, that stocks are now reasonably priced.
However, stocks are neither cheap nor even fairly-priced…yet.
To illustrate why I believe stocks are not yet cheap, it helps to contrast current conditions to those of a period when stocks were actually objectively fairly-priced in the past. Continue reading “No, Stocks Are Not Cheap Yet”
I hope you had a wonderful Fourth of July weekend.
Today I’m briefly recapping market returns. Based on conversations with some folks, it certainly feels like a brutal year so far given the dynamic of both bonds and stocks being down together.
Although, safe, high-quality bonds seemed to have turned a corner very recently with the 10-year treasury back below 3%, which has been positive for treasury prices, while stocks have continued their slide.
This year also appears to be the year that the bubble in low-quality, speculative assets have popped (e.g. cryptocurrencies, tech stocks, NFTs). Beanie babies anyone?
The chart below displays returns for the various primary asset classes (bonds, stocks, commodities, U.S. dollar, real estate) for the quarter, year-to-date, last 12 months and last 3 years (annualized). Continue reading “Quarterly Market Performance Update”