In Search of the Goldilocks Economy

In Search of the Goldilocks Economy

In closing 2018, the S&P 500 posted its worst December since 1931, during the Great Depression, and its worst quarter since 2008, during the Great Recession. The good news is we didn’t have to wait long for the bounce back. To start 2019, the S&P 500 posted its best January since 1987. As of Friday’s market close, the S&P 500 is 5.0% below its high on September 21, 2018, but is 19.0% above its low on December 26, 2018.

Managing Sequence of Returns Risk

Managing Sequence of Returns Risk

A retirement calculator is a great tool for most investors. It lets you input a number of variables such as current age, planned retirement age, annual salary, annual savings, current retirement savings balance, and expected annual return and the calculator computes your estimated accumulated retirement account balance at retirement. Some calculators will even translate that lump-sum balance into an annual withdrawal amount. This is a straight-forward way to see if you are on track to meet your retirement goals and compare what you have with what you will need. If you don’t like your results, you can play with the inputs to determine what changes you should make.

Stocks for the Long Run

Stocks for the Long Run

Over the past few weeks most of our posts have focused on putting the recent stock market volatility in perspective and subduing concerns about the strength of the U.S. economy.

One of the important points we have stressed is the importance of remaining disciplined to your investment strategy because capital markets have rewarded long-term investors. One of the graphics we often show to illustrate this point is the chart included below. This chart shows the growth of $1 from January 1, 1926 through December 31, 2018 had you invested in US small cap stocks, US large cap stocks, long term corporate bonds, long term government bonds, and cash.

Super Bowl Winners and Stock Returns

Super Bowl Winners and Stock Returns

The National Football League (NFL) season reached its conclusion yesterday when the New England Patriots defeated the Los Angeles Rams 13-3 at Mercedes-Benz Stadium in Atlanta, Georgia to win the Super Bowl. While New England Patriots Fans are busy celebrating their sixth Super Bowl win in the past eighteen years and Los Angeles Rams fans are licking their wounds, some investors are looking to the final score to get a sense of how the stock market is likely to perform for the rest of the year.

Who’s Footing the Bill for Your Rewards?

Who’s Footing the Bill for Your Rewards?

How often in the past month have you received a credit card offer with a large sign-up bonus and lofty on-going rewards? Sign-up bonuses can be a flat dollar amount, say $500, or a promise to match any cash back rewards you may earn within the first 3 months. On-going rewards can be cash, points, or travel perks. No matter your need there is sure to be a credit card issuer out there trying to entice you to sign up for their card. Some people accept the sign-up bonus and on-going rewards and don’t think twice about it. Others, though, see these offers and wonder, “What’s the catch?”

Separating Fear from Reality

Separating Fear from Reality

Over the past few months, market participants have focused on the yield curve and its history of predicting an economic recession. As the chart below shows, the yield curve has inverted prior to every recession dating back to 1962. With predictive power like this, it’s no wonder investors have been vigilantly monitoring its movement in an attempt to gauge when a recession may occur.

HIGHLAND News

HIGHLAND News

At HIGHLAND, we continue to support the efforts by our staff to develop personally and professionally. We have a commitment to providing excellent service and guidance to clients. Each member of our team has an intellectual curiosity and belief that what they do really matters to our clients’ lives. With this in mind, we have some exciting news to share about the HIGHLAND team.

Cost of Living Adjustments for 2019

Cost of Living Adjustments for 2019

It’s a new year and I can’t think of a better time to highlight cost of living adjustments affecting dollar limitations for retirement-related items and social security benefits for 2019.

 The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the Federal government’s Thrift Savings Plan increased from $18,500 to $19,000. The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the Federal government’s Thrift Savings Plan remains unchanged at $6,000.

Market and Economic Commentary

Market and Economic Commentary

What a difference a year makes. This time last year we were highlighting a picture-perfect year for global stocks. In 2017, both the S&P 500 and the MSCI All Country World Index ex USA were positive for all twelve calendar months. This was the first time either index accomplished this feat and it happened with near-record low volatility while enduring geopolitical tensions, political dysfunction, massive natural disasters, and tighter monetary policy. 2017 was defined by synchronized global expansion whereby most global economies were getting stronger, with the United States leading the charge.

The Wild Ride Continues

The Wild Ride Continues

From its close on September 20th to its close on December 24th, the S&P 500 Index declined 19.8%, including a greater than 7% one-week (December 14-21) fall that had not been seen since the Global Financial Crisis of 2008-09. The generally accepted technical definition of a bear market is a decline of 20% or more. While the S&P 500 barely avoided the official bear market designation, it sure felt like one.

Experimenting with the Truth

Experimenting with the Truth

In the 1950s psychologist Solomon Asch conducted a series of experiments to investigate the extent to which social pressure from a majority group could affect a person to conform. Asch’s experiments were simple vision tests. A group of eight male college students were placed in a room, shown a card with a line segment on it, and then shown another card with three line segments labelled A, B, and C. One of the line segments on the second card was the same length as the line segment on the first card, while the other two line segments were clearly of a different length. Participants were asked to write down their answers and then give their answers aloud. Seems like a pretty straight forward experiment, but there was a twist.

The Herd: Part 1

The Herd: Part 1

Over the past 80 days, the US stock market has declined about 11%, and over the last 365 days, it is down about 1%.  Foreign stock markets have declined about 9% over the last 80 days and are down about 10% for the last 365 days as well.  The US bond market, typically a good hedge to the risk of stocks, hasn’t delivered much protection during the same time periods, being up about 1% in the last 80 days and down about 1% for the last 365 days.

Tax Planning under the TCJA: The Donor-Advised Fund

Tax Planning under the TCJA: The Donor-Advised Fund

Prior to the passing of the Tax Cut and Jobs Act (TCJA) in December of 2017 you likely enjoyed the tax deduction that came with your charitable contributions – no matter the size of the donation.  If you lived in a state where you paid state income taxes and had high property taxes you were probably itemizing your deductions (See NJ, NY, CT, and MA – just to name a few).

Thoughts From The 2018 SRI Conference

Thoughts From The 2018 SRI Conference

Earlier this month I had the opportunity to attend the 29th annual SRI Conference in Colorado Springs, Colorado. The SRI Conference is the premier annual gathering of sustainable, responsible, and impact investment professionals working to direct the flow of investment capital toward a truly sustainable future.

Positivity in a Sea of Negativity

Positivity in a Sea of Negativity

Over the past few weeks the focus of our weekly posts has been on the volatility in the global equity market. We have sought to provide some insight into what’s driving global stocks lower and provide perspective on how frequently drawdowns like the one we are currently mired in occur. We hope these insights and perspectives have been valuable for you and helped to give you peace of mind.

Don’t Look!

Don’t Look!

It goes without saying, this has been a challenging year for investors. Every asset class has experienced significant loss at one point or another – International Equities, US Bonds, and recently, US Equities. As much as we say uncertainty and risk of loss is the cost of realizing long-term capital returns, times like this can make even the most rational long-term investor fear the future.