Blog Posts in "Financial Planning"

Income Report Card | May 2018

Author: Nathan J. Rowader
Date: May 14, 2018
Category: Asset Allocation, Financial Planning
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The global stock market rebounded in April, gaining 1.03% for the month and bringing the year-to-date return to 0.16%. European stocks led the way with a gain of 2.77% in U.S. dollars and 4.75% in euros. Japan increased by 1.37% in USD and 3.58% in yen terms. Emerging markets didn’t fare as well as developed markets and declined by -0.31% with very little impact from currency. The U.S. stock market managed a small gain of 0.38% with small-cap stocks gaining 0.86% for the month. Domestic energy stocks were a bright spot, finishing the month with a gain of 9.36% as oil hit new multiyear highs.

Income Report Card | April 2018

Author: Nathan J. Rowader
Date: April 16, 2018
Category: Asset Allocation, Financial Planning
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The market volatility that characterized most of February carried into March. Global stocks declined -2.21% led by a selloff in Japan, which declined by -2.79%. The decline was exacerbated only slightly by a decrease in the yen versus the U.S. dollar. Europe was the best performing segment of global stocks, declining -1.20%. However, the increase of the euro relative the U.S. dollar accounted for a substantial portion of the relative outperformance; in local currency, European stocks declined -2.02% for the month. Emerging markets gave up some of their year-to-date relative outperformance and declined -1.99% as the weight of a possible trade war dragged down Chinese stocks. U.S. stocks continued to be a market underperformer, declining -2.54% as the potential for a protracted trade war with China also weighed on future growth. On a bright note, small-cap U.S. stocks performed well with a gain of 1.29%. Defensive sectors rebounded as interest rates stabilized during the month with U.S. real estate increasing by 3.78% and utilities increasing by 3.76%.

Income Report Card | March 2018

Author: Nathan J. Rowader
Date: March 15, 2018
Category: Asset Allocation, Financial Planning
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The global stock market declined -4.20% in the month of February, putting an end to the historic run. Overall, global stocks had a maximum drawdown of -9.02% from the January 26th high, but recovered some of that loss through the rest of February. There were few places to hide from the sell-off as European stocks fell 5.88% and Japanese stocks fell -1.51%. However, the impact of currencies was more mixed in February than it has been in past months. The yen declined against the U.S. dollar in February, so local investors realized a loss of -3.71%. European investors, on the other hand, realized a better relative return of -3.69% due to the appreciation of the euro relative the U.S. dollar. U.S. stocks outperformed their foreign counterparts with a loss of -3.69% while small-cap U.S. stocks declined -3.87%. The sell-off took a toll on energy stocks, which were just starting to climb out of their rut in January, declining -10.84% in February, as measured by the S&P 500 Energy Sector.

Income Report Card | February 2018

Author: Nathan J. Rowader
Date: February 20, 2018
Category: Asset Allocation, Financial Planning
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Global stocks finished at a gain of 5.64% in the month of January, just slightly off their all-time high. Emerging market (EM) stocks led the way once again with a gain of 8.33%.Europe and Japan also marked strong gains for the month with an increase of 5.40% and 4.58%, respectively.However, much of these gains (greater than half) can be attributed to appreciation of the local currency. While appreciation of EM currency relative to other major currencies did push prices, these markets would have still outperformed all developed markets. This distinction is crucial since the performance of EM stocks appears to be organic while other foreign markets are largely a function of appreciating currencies, a dynamic that may or may not persist over time. U.S. stocks fared well in January with again of 5.73% while small-cap U.S. stocks increased by 2.61%. There has been a notable improvement in the performance of energy stocks following a weak 2017.Strength in this part of the market could help keep the overall stock market rising.

Income Report Card | January 2018

Author: Nathan J. Rowader
Date: January 22, 2018
Category: Asset Allocation, Financial Planning
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With 2017 behind us, let’s look back at this remarkable year. Global stocks finished with a gain of 23.92% with foreign markets leading the way thanks in part to a weak U.S. dollar. The emerging markets (EM) represent the biggest winners globally, gaining 37.90% in U.S. dollar terms and 30.55% in local currency. Japan and Europe also posted strong gains with Japanese stocks gaining 23.76% and European stocks gaining 26.62%. In this case, the weaker dollar played an even more meaningful role as European stocks only gained 13.06% in local currency and Japanese stocks gained 19.75% in yen. U.S. stocks were not left behind, finishing the year with a gain of 21.27%. Small-cap U.S. stocks finished the year with a gain of 14.14%. The gains were certainly impressive, but when we look behind the curtain we learn some very interesting facts, most notably that U.S. stocks have gone 282 days without a 3% correction—the longest period in history. Additionally, 42 of the 44 stock markets followed by MSCI posted gains as well as nine of the 11 sectors. The most unusual sector was energy, which posted a decline for the year despite the rise in oil prices, marking the first time in 15 years energy declined while oil rose. Energy also posted the biggest sector swing in year-over-year earnings ever besides financials during the 2008-2009 financial crisis, which we believe is likely a positive sign for energy stocks going into 2018.

Income Report Card | December 2017

Author: Nathan J. Rowader
Date: December 19, 2017
Category: Asset Allocation, Financial Planning
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November is historically a strong month for stocks, which typically leads to the historically stronger month of December. Global stocks ended November with a gain of 1.94%, led primarily by U.S. and Japan, which increased by 3.07% and 2.99%, respectively. Europe and the emerging markets (EM) didn’t fare as well, increasing by 0.22% and 0.20%, respectively. Small-cap U.S. stocks posted a strong month, increasing by 2.88%. November ended on a high note with nearly every major stock market hitting all-time highs on or within a week of 11/30. Market breadth was also strong, indicating a healthy bull market, as the advance-decline lines of most major stock markets coincidentally hit all-time highs in line with stock prices.

Income Report Card | November 2017

Author: Nathan J. Rowader
Date: November 15, 2017
Category: Asset Allocation, Financial Planning
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Historically, September and October tend to be the weakest months for stocks, but this year has been different as global stocks increased by 2.08% in October. The gains were broad based, with Japan increasing by 4.61% following Prime Minister Shinzō Abe’s reelection and emerging markets (EM) increasing by 3.51%. Other major markets gained as well, with U.S. stocks increasing by 2.33% and European equities gaining 0.47%. Small-cap stocks underperformed large-cap stocks, increasing by 0.85% and underperforming the S&P 500. Gains in foreign markets overcame weakness in the euro and yen relative to the dollar, which gained slightly less than 1% compared to other major developed currencies.

Income Report Card | October 2017

Author: Nathan J. Rowader
Date: October 11, 2017
Category: Asset Allocation, Financial Planning
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Despite the potential for seasonal weakness in September, the MSCI All Country World Index ended the month of September with a gain of 1.93%, achieving an all-time high on September 20th. In contrast to the rest of the year, emerging markets were not the primary contributor to returns as the MSCI Emerging Markets Index declined by ‑0.40% while the MSCI Europe and MSCI Japan indices increased by 3.30% and 1.96%, respectively. Unlike prior months, these gains were not primarily attributed to increases in currency. The U.S. Dollar Index increased by 1.90% from its 2017 low, which was hit on September 8th. U.S. stocks broke out of their anemic trading range with the S&P 500 Index increasing by 2.06% and the Russell 2000 Index increasing by 6.24%. The renewed strength in small-cap stocks is a good sign for market health. Historically, in a healthy and broad bull market, riskier small-cap stocks have outperformed large-cap stocks. However, this year the Russell 2000 has increased by 10.45% while the S&P 500 has increased by 13.72%. This relative underperformance was obviously worse at the end of August. At any rate, the overall stock market appears to be poised for continued growth.


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