Category: Tailwinds

24 posts categorized as "Tailwinds"

Dow Plunges 1500 Points!

August 30, 2019 SEIA

By Deron McCoy, CFA®, CFP®, CAIA, AIF®,  Chief Investment Officer
That’s the ‘all caps’ headline the media will use for shock value, hoping to lure you into reading their article or clicking their ad – a shameless attempt to profit off your emotions and fears. But don’t be fooled. The truth is, with the Dow having soared to 27,000, the drop of 1500 points since August 1, 2019 amounts to nothing more than a -5.5% selloff. To put that into context, the daily price moves don’t even rank among the market’s top 100 percentage point declines[1]. Now, if we were back in November of 2008, it would have represented something closer to a -18% drop; a far more significant event. But given the market’s current lofty heights, a certain amount of perspective is required.

Avoiding the Tax Tail Trap

July 25, 2019 SEIA

By Sam Miller, CFA®, CAIA®, CFP® , Senior Investment Strategist
As a wealth management firm with many clients residing in the state of California as well as other high tax states around the country, we are acutely aware of the bite that taxes can take out of portfolio returns. Because of this, we use every tool in our tax toolkit to help mitigate your tax burden and avoid paying more than your fair share to Uncle Sam. Whether it’s tax-advantaged accounts like IRAs and 529s, tax-free muni bonds, proactive tax loss harvesting strategies, private vehicles such as qualified opportunity zones and exchange funds, or sophisticated estate planning techniques, there are many strategies available to pursue the goal of tax minimization.

Q3: Raging vs Aging Bull

October 4, 2018 SEIA

2018 Q3 Investment Landscape
By: Deron McCoy, CFA®, CFP®, CAIA, AIF®, Chief Investment Officer
Sam Miller,   CFA®, CAIA, Senior Investment Strategist
In recent weeks, financial news outlets have published dozens of articles with attention-grabbing headlines citing the “longest bull market in history.” Is this factual or the financial version of “fake news”? Let’s take a closer look.

2018: The Sum of All Fears

May 30, 2018 SEIA

Why Volatility is Up and How to Position Portfolios

We want to take this opportunity to characterize the first half of 2018 while outlining how we have repositioned portfolios ahead of new market headwinds. The large profits and minimal volatility that were the hallmarks of 2017 gave way to the first half of 2018 that flipped the script. So why has 2018 been such a stark contrast to 2017?

The New Tax Law: Winners and Losers

January 22, 2018 Deron T. McCoy, CFA®, CFP®, CAIA, AIF®

On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act – a bill that was quickly pushed through Congress without the benefit of public hearings or a thorough impact analysis. Over the last several weeks, accountants, attorneys and financial experts have begun parsing through the entire 500+ pages to identify all the new opportunities and obstacles contained in the legislation. While this information continues to be digested by the markets, we can identify a number of winners and losers as a result of various provisions of the new tax law. Download the full article here.

Meet the New Boss, Same as the Old Boss (Part II)

December 6, 2017 Deron T. McCoy, CFA®, CFP®, CAIA, AIF®

Four years ago in our December 2013 SEIA Report titled, “The Federal Reserve: Meet the New Boss, Same as the Old Boss”, we offered reasons why analyzing the human makeup of the Board is so important (hint: they more or less set monetary policy for the world, affecting global capital markets everywhere). We opined that the new incoming Federal Reserve Chair Janet Yellen was very much in line with her predecessor and that her appointment was a “signal to all investors that easy monetary policy will be the policy of choice for the foreseeable future” and “short-term interest rates might be low for another three years extending through 2016.” We concluded by stating “Yellen’s policies should support ‘risk assets’ (Equities, High Yield Bonds, etc.) in the near term with her hopeful goal of higher inflation and economic overheating (not a typo) four years out which will in turn convolute her reappointment process (in 2017).” Download the full article here.

Back to School: Public vs Private – Financial Edition

August 25, 2017 Deron T. McCoy, CFA®, CFP®, CAIA, AIF®

It’s hard to believe it’s back to school season already. It’s also hard to believe that it’s been 10 years since the start of the financial crisis that brought about the Great Recession. A decade later, we find ourselves in the nation’s second longest economic recovery and expansion (FYI: the average duration of a bull market is 3.5 years). Yet while stocks continue to push to new record highs, corporate earnings have failed to keep pace with prices, resulting in stock valuations that now sit near all-time highs. If you remove the tech bubble as a one-time anomaly, stocks have historically never been more expensive (based on a number of different metrics) than they are today. Download the full article here.

Spanning the Globe: Looking abroad for market opportunities

May 16, 2017 Deron T. McCoy, CFA®, CFP®, CAIA, AIF®

What were you doing 6 years ago? It was the summer of 2011 and amidst a 9.1% unemployment rate, a 1.8% GDP report, a U.S. debt downgrade, European debt crisis (remember PIIGS?), and renewed weakness in housing prices we were busy writing our “Time to Get Patriotic” piece urging investors to buy U.S. stocks (SEIA Report Volume 4, Issue 2 dated June 2011). Since then, markets have more than doubled, with the S&P 500® moving from below 1200 to over 2400 as of early May 2017. That’s the good news.
While a boon for net worth statements, the rise in stock prices has come with a host of far less desirable effects. Download the full article here.

New Year’s Resolutions for Investors

December 31, 2016 SEIA

Whether building your dream house or crafting an investment portfolio that will last a lifetime, the likelihood of realizing your vision without a well thought out plan is at best remote. There are simply far too many decisions, choices and potential distractions. I can hear the mantra of Benjamin Franklin now: “if you fail to plan, you are planning to fail.”
Download the full article here.

2016 US. Presidential Election: As the dust settles

November 30, 2016 SEIA

Election results have come in and Donald Trump is set to be the 45th President of the United States. At the onset of this election, there were 16 candidates that included Ted Cruz, John Kasich, Jeb Bush and Marco Rubio. Yet after 597 days filled with countless headlines, political gaffes and midnight tweets, the American people have followed a recent global trend and voted to elect a political outsider.
Download the full article here.

Lowering the tent: the political circus leaves town

October 4, 2016 SEIA

It’s finally here! Hard to believe but after a bitterly contested and historic presidential campaign lasting 18 months, the election is now less than a few days away. And while political discussions over the final days are sure to stir emotions and angst amongst the neighbors (and perhaps within your own family!), prudent investors will not allow short-term passions to affect their portfolios. Now is the time to remember that most investment gains are rooted in facts while most losses are based on emotions.
Download the full article here.

U.S. Real Estate: All Grown Up

August 15, 2016 SEIA

The U.S. stock market is made up of many different types of companies across a multitude of industries. To assist investors, Standard & Poor’s and MSCI have grouped individual stocks into sectors, with each sector representing one slice of the stock market pie. Historically, the classification system was divided into 10 sectors (consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, telecommunication services and utilities) but starting next month, real estate will officially become its own distinct sector. The U.S. stock market pie will still be the same size—it will now just be divided into 11 instead of 10 slices.
Download the full article here.

‘Bremain Calm’ or ‘The British are Leaving!’

July 1, 2016 SEIA

UK citizens in a non-binding national referendum voted to leave the European Union (EU) trading bloc. Reasons likely vary from voter to voter, but two main constituencies seemed to propel the leave vote: rural/industrial working-class voters who feel economically left behind and are spurred on by a nationalistic desire to control immigration and take back power from perceived “appointed EU bureaucrats,” along with older pensioners fueled by a yearning for the old days of a more powerful and sovereign UK.
Download the full article here.

Britain’s Independence Day?

June 24, 2016 SEIA

While most analysts and polls predicted a close vote for the U.K. referendum, few predicted the vote to be in favor of the United Kingdom leaving the European Union. Final results of the June 23rd United Kingdom referendum came out this morning stating that Britain has voted to leave. Prime Minister David Cameron also announced that he would step down as Britain’s Prime Minister.
Download the full article here.

Should I Stay or Should I Go?

May 29, 2016 SEIA

There has been no shortage of headlines over the past months championing both sides of the argument regarding the upcoming (June 23rd) referendum as to whether or not the United Kingdom will remain a member of the European Union. Attempting to wade through all the information and digesting it can quickly become a bit overwhelming, so we thought we would lay out a few key points leading up to the so-called BREXIT (British Exit) vote.
Download the full article here.

Sunnier Days

April 25, 2016 SEIA

Just a few short months ago, we wrote at length about the stranglehold that fear seemed to have on both investors’ psyches and on the markets at large. Despite a steady stream of encouraging economic reports showing continued growth in employment, strong consumer spending and service economy expansion, a cloud of worry that a slowdown in China might be triggering another global recession or a potential monetary policy mistake persisted.
Download the full article here.

The End of Fiscal Austerity

March 15, 2016 SEIA

Between the never-ending U.S. election coverage and the recent turmoil in global capital markets, there’s a good chance you may have missed the December headlines coming out of Congress. For the first time in a halfdecade, the legislative body finally took positive action to benefit economic growth.
Download the full article here.

2016: Fear Trumps Fundamentals

February 20, 2016 SEIA

After a frustrating 2015, where most major asset classes either returned less than 1% or lost money outright, investors were welcomed into the new year with the worst first-week of stock market losses— EVER! After the 6th worst opening day since 1928, the S&P 500 continued to lose ground the rest of the week and by Friday the Index was down 6%, with the tech-heavy NASDAQ down 7.3%. And losses weren’t confined strictly to Large Caps—by midday Monday, small cap stocks (Russell 2000) were officially in bear market territory, down more than 20% from their June peak.
Download the full article here.

Like Any Summer Squall, This Too Shall Pass

August 25, 2015 SEIA

On May 21st, U.S. stocks (S&P 500®) reached an all-time high of 2130. But summer squalls overseas (Greece, China, etc.) have subsequently rattled global investors and caused many to hit the sell button, pushing stocks lower into “correction” territory – a drop of 10% from their springtime highs. The sudden bout of volatility may seem out of the ordinary but only because stocks have traded in their narrowest band ever through the first eight months of the year. But the lack of volatility is by no means merely a 2015 story. Over the last three calendar years, at no time have stocks retrenched more than 7% from their highs, which is in stark contrast to historical averages. Dating back to 1980, the average intra-year drop is 14.2%!
Download the full article here.

Japan: Past 25-year Performance is Not Indicative of Future Returns

June 15, 2015 SEIA

Global investors and even Japanese citizens are woefully although understandably under allocated to Japanese stocks. Why? For most of our “investment” lifetimes, the island nation has been a place to avoid, with equities (Nikkei 225) still unable to fully recover from the Japanese bubble that popped 25-years ago. From the 1989 top to the 2009 bottom, Japanese stocks lost 83% of their value. Even despite recent gains, a $1 million Japanese equity investment made in 1989 would be worth $500,000 today compared to $6 million if invested in U.S. stocks (S&P 500). And that pain wasn’t merely limited to a bad investment made during a narrow window in late 1989. The same investment into Japanese stocks made 6 years later (the typical length of a normal business cycle) would still be down 1% compared to a 350% gain here stateside. Is there any wonder why investors love U.S. stocks and seemingly despise the third largest economy on earth?
Download the full article here.

The Global Equity Horserace: An Update on Europe

May 10, 2015 SEIA

The month of March marks a couple of key milestones in recent investor lore. On March 9th 2000, the NASDAQ broke through 5000 and peaked one day later at 5048 (the only two days the index closed above that mark). Fifteen years later, the index is once again poised to break through the momentous level as it rests at 4976 at the time of this writing. March 9th also marks the sixth anniversary of the current (U.S.) bull market which has taken the S&P 500 index from a then low of 676 to a late February high near 2115—a gain of over 1440 points! The nearly 230% gain has led most major global indices and vaulted the S&P 500 back into the spotlight as the world’s darling, fulfilling our 2011 SEIA Report hypothesis that “the time will soon be upon us when stocks again regain their status as king of the investment choices.” While the media will focus on the NASDAQ and compare and contrast 2015 with 2000, we believe that it is more prudent to analyse the S&P 500 and compare today with the economic landscape of just a few years back. Our conclusion? The biggest gains from U.S. stocks may be behind us as the world’s thoroughbred rounds the last turn in this business cycle.
Download the full article here.

Crude Oil

February 20, 2015 SEIA

Several years ago, many of the discussions in SEIA’s Investment Committee (IC) centered on whether the commodity “Super Cycle” of the last decade had finally come to a close. Long-term investors will recall that the period of the 2000s was marked by outperformance from commodities due in part to strong Emerging Market economies. China’s rapid ascension gave a boost to any commodity needed to urbanize a vast and populous country (copper and iron ore to build, coal to run the power plants that provide electricity, and crude oil to fuel a new car-buying nation). The influx of capital into these economies strengthened their currencies at the expense of a weaker U.S. Dollar. These stronger currencies could then be used to buy more commodities to build more things, and the “super cycle” was on.
Download the full article here.

The 2014 Autumn Fall: Have the Leaves of Global Growth Changed Color?

October 11, 2014 SEIA

Three weeks ago, the S&P 500 (a measure of U.S. Large Cap stocks) hit a new closing high of 2011.36 (intraday high of 2019 a day later) and was up 10% for the year after returning 32% the year prior. Such fantastic returns over a relatively short period of time prompted the SEIA Investment Committee to mention this past July that investors should “revisit ones asset allocation as the moves over the last 18 months may have left some investors overexposed.” But now that the U.S. stock market has backed away from its historical high, investors are now asking whether anything has changed or rather has the change in fall colors coincided with a change in our outlook for economic growth.
Download the full article here.

Globalization vs. the U.S. Business Cycle: The Effects on U.S. Interest Rates

April 22, 2014 SEIA

Many investors believed that U.S. interest rates, which started the year at 3.02%, would move north this year and approach 3.50%. But in fact, the opposite has occurred and rates now sit at 2.50% as of August 4th. What happened? This year, Europe joined Japan with another aggressive attempt at further easing of monetary policy, which pushed interest rates lower across the Atlantic. German government bonds (Bunds) are now at an historic low yield of just over 1.15%. Even in troubled Spain, corresponding bond yields have moved below 2.30% to reach their lowest yield dating back 225 years to 1789! Although low, European yields are not the lowest in the developed world. Across the Pacific, Japanese government bonds (JGBs) have an astonishingly low yield of 0.50%. In an era of globalization and rapid money movement, it is hard to argue that current U.S. yields of 2.50% are unattractive compared to corresponding bonds overseas. The 135 basis point (bps) spread between Treasuries and Bunds is rapidly approaching record levels. In fact, the last two times the spread was this wide it soon reversed course leading to one of two results, higher Bund yields or lower Treasury yields. But which outcome is most likely? Let’s analyze each case.
Download the full article here.