Weekly Market Insights: 10-27-21 - Strong Week on Wall Street
As we begin working on year end planning and update meetings with clients, I have been shocked to see how many of our clients have seen a doubling of their accounts over the past 2-3 years. Reflecting on 20 years of helping clients with their financial situations and scenarios have taught me as much about what not to do as it has about what works.
While there are numerous reasons and situations why investors choose to work with advisors, my experience has taught me that it really comes down to 3 points to examine.
They are coming in to seek help, out of fear they do not or will not have enough to retire OR they are coming in because they fear they are going to lose what they have.
My thoughts on fear:
Fear is an emotion that will create a behavior that can save your life in certain situations. When it comes to money, they do not mix. Most of our industry prey’s on the fears of investors to manipulate them into buying an annuity or life insurance or this investment or that investment. You should not make a decision when you are fearful, just like you should not go grocery shopping when you are hungry or discipline your children when you are angry.
When you earn a high salary, it usually comes at the cost of having little to no time to waste on the google trying to figure out which fund or stock to buy and when to sell. This takes time unless you do it half-assed by just picking the S&P 500 index or a leaving it in a target date fund and calling it a day. I suppose you could bring a Wal-Mart pie to thanksgiving and if you’re hungry enough, everyone will eat it but that doesn’t make it a good pie.
My Thought on time:
It waits for no-one. Everyone has the same 24 hours in a day. The idiots think they know more than they do because they have read an article in Kiplinger’s or follow a blog or two. The intelligent persons realize they do not know enough and more importantly, do not want to take the required time it takes to learn a new skill. They would rather continue to work on the skill it takes to make more money over time. My coach once said, “never confuse being lucky with being good. Anyone can hit a last second game winner from half-court but very few can win a championship.”
Investors think that if they take their tuff to a “professional” then that automatically results in better returns and after all, returns are what matters most in the world of investing. That’s like saying the most important aspect of a car is the miles per gallon. If the MPG on a car was the most important thing, then why do manufactures spend all that money on safety, design, colors and technology.
My Thought on Returns:
I never want our clients to EVER have to pin their hopes for retirement on the market going up the year they plan to retire. Returns are one piece, an insignificant piece, when you are prepared properly for retirement and beyond. It’s like planning a camping trip but hoping for good weather instead of planning your trip to include poor weather.
Don’t take my word for it….
According to Schwab’s indicator report for Q1 of 2021, those with brokerage accounts that have professional advice have a value of twice the amount when compared to those who do not have professional advice. They are better diversified. Have less transactions per year and lower concentration in any one security with a lower percentage in cash. All of these points contribute to championships in finance and financial planning for a successful retirement!
CLICK HERE to see the 10 page report-
Till we speak again, enjoy the changing of the leaves and the chili on the stove!
General Market Commentary
Stocks rallied last week on a stream of positive corporate earnings surprises.
The Dow Jones Industrial Average rose 1.08%, while the Standard & Poor’s 500 advanced 1.64%. The Nasdaq Composite index gained 1.29% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, was up 0.23%.1,2,3
Earnings Ignite Rally
Fears over inflation, supply shortages, and slowing economic growth in China were pushed aside last week as investors reacted to a daily succession of positive corporate earnings surprises. After the Dow Industrials reached an all-time high intraday on Wednesday, fresh earnings reports, an increase in existing home sales, and a new pandemic low in initial jobless claims–and continuing claims–propelled the S&P 500 index to a new record high the following session.4,5
Disappointing earnings before the market opened on Friday hurt a few social media stocks, resulting in a choppy trading session and a selloff in the Nasdaq to close out the week.
Solid Start To Season
Investors came into the earnings season anxious about whether businesses could extend the earnings growth momentum of recent quarters amid an increase in Delta infections, inflation, labor shortages, and supply-chain bottlenecks. The early results were encouraging. Of the 23% of companies comprising the S&P 500 index that have reported, 84% beat Wall Street consensus earnings estimates by an average of more than 13%.6
The earnings season may get more uneven in coming weeks since many of the companies potentially affected by labor shortages and inflation have yet to report. Nevertheless, these better-than-expected earnings buoyed investor spirits and allowed stocks to build on their October gains.
Source: Econoday, October 22, 2021The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
Tuesday: Microsoft Corporation (MSFT), General Electric Company (GE), Advanced Micro Devices, Inc. (AMD), Twitter, Inc. (TWTR), Visa, Inc. (V), Alphabet, Inc. (GOOGL), Lockheed Martin Corporation (LMT), Eli Lilly and Company (LLY), Texas Instruments (TXN), United Parcel Service (UPS), Capital One Financial Corporation (COF).
Wednesday: The Boeing Company (BA), Ford Motor Company (F), Bristol Myers Squibb Company (BMY), General Motors (GM), Twilio, Inc. (TWLO), CocaCola Company (KO), McDonald’s Corporation (MCD), GlaxoSmithKline (GSK), ServiceNow, Inc. (NOW), Spotify Technology (SPOT), General Dynamics Corporation (GD).
Thursday: Apple, Inc. (AAPL), Mastercard (MA), Caterpillar, Inc. (CAT), Starbucks Corporation (SBUX), Merck & Company, Inc. (MRK), Shopify, Inc. (SHOP), Northrop Grumman Corporation (NOC), Comcast Corporation (CMCSA), Illinois Tool Works, Inc. (ITW).
Friday: AbbVie, Inc. (ABBV), Exxon Mobil Corporation (XOM), Chevron Corporation (CVX), LyondellBasell Industries N.V. (LYB).
Source: Zacks, October 22, 2021Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
“Give what you have to somebody; it may be better than you think.”
– Henry Wadsworth Longfellow
Tax Tips on Identity Theft
Here are a few things to know when attempting to protect yourself against identity thieves:The IRS never will contact you via email or phone to request personal information. If you receive a scam email or call that claims to be from the IRS, report it to firstname.lastname@example.org.People can steal your identity by stealing your wallet or purse, receiving information they need over the phone or email, finding your personal information in the trash, or accessing information you provide to an unsecured website (only enter credit card information on websites that start with “https://”).Your identity may have been stolen if you receive a letter from the IRS indicating that more than one tax return was filed in your name.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov7
The Health Benefits of a Meat-Free Day
There’s no denying the overwhelming health benefits of a plant-based diet. You still can enjoy such a diet’s many health benefits by going “meat free” for just one day a week. Here are some of the main benefits:
You’ll be cutting out potentially dangerous processed meat – According to the World Health Organization, processed meats rank alongside cigarettes as a major cause of cancer.
You’ll be decreasing your risk of heart disease – Coronary heart disease is linked to a meat-based diet, and most cardiovascular diseases can be prevented by switching to a plant-based diet.
You’ll be getting more vitamins, minerals, and fiber – When you don’t turn to meat on your meat-free day, you’ll likely turn to other foods such as veggies, fruits, whole grains, and other plant-based products. This variety helps you round out your diet!
Tip adapted from Hello Magazine8
If you add 1.5 to this number, you will get the same result as you would if you multiplied it by 1.5. What number is it? (Hints: It is a whole number, it is not zero, and it is between 1 and 10.)
Last week’s riddle: What nine-letter word begins and ends with the letter “S” and has only one vowel? Answer: Strengths.
Surveyor near Seljalandsfoss waterfall, Iceland.
Footnotes and Sources
1. The Wall Street Journal, October 22, 2021
2. The Wall Street Journal, October 22, 2021
3. The Wall Street Journal, October 22, 2021
4. CNBC, October 20, 2021
5. The Wall Street Journal, October 21, 2021
6. FactSet, October 22, 2021
7. IRS.gov, June 8, 2021
8. hellomagazine.com, June 24, 2021
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
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