First real volatility in over a year and the markets seem to be in a tailspin. The sense of dread that gripped equity markets earlier in the week suddenly re-emerged mid-Thursday as the Dow slid over 1,000 points on concern that rising interest rates will drag down economic growth. Thursday’s 3.8% loss took the S&P 500’s decline since its Jan. 26 record past 10%, meeting the accepted definition of a correction. The Dow finished the day down by 1,032.89 points, or 4.15% at 23,849.23. Ten-year Treasury yields fluctuated near their four-year highs. Traders remain on edge after the resurgent threat of inflation and higher bond yields had helped trigger the burst of volatility and a pullback across the overheated global equity market.
Investors are under a constant barrage of information that could be a real threat to their portfolio but most likely the information is published with a different agenda. Simply put, click bait. This click bait, or “noise” can cause negative emotions like fear and uncertainty that can be dangerous to an investor in a competitive trading environment. In light of this situation we advise people to act as investors with a long-term plan, not traders looking to make a short-term profit. A trader will use the noise in the markets to make short-term buying and selling decisions hoping to gain from small pricing discrepancies. People who succeed in this endeavor are few and far between. However, we have seen the vast majority of investors who stick with a specific long-term strategy and goal be successful. So what is the difference?
Worried about market volatility? Rightfully so. The stock market in 2017 experienced historically low price movements. While this was encouraging from an economic standpoint, it also has the potential to breed complacency and lead investors into the trap of excess risk-taking. We saw the VIX, which measures expected volatility, hit a five-month high this week with simultaneous stock market declines. This has caused some speculation that unstable markets are back and we can expect choppy waters ahead. Is this something we should be concerned about?
- Passive, active or hybrid investing?
- Manage risk vs. simple re-balancing
- Low cost AND value
Today, passive investing has become so commonplace that many startup investment firms are basing their entire business model solely on this approach. However, at Altruistic Investing we believe that investors need more than just low-cost investments to achieve their financial goals. They also need a way to manage risk and to distinguish between perceived and actual threats to their investment portfolio.
We have a vision at Bauer Wealth Management to give our investors what they deserve. Something better than traditional Wall Street has to offer, and don’t worry; we’re not setting the bar that low. Your investing experience should be easy and give you the opportunity to earn more, lose less, and make a difference. Up to this point our investors have taken advantage of our professional portfolios designed to optimize risk management. They have also enjoyed the incredibly low fees. But what about the growing number of people who want this modern style of management but also care about the impact their investments have on the world? Simply put, it has not existed until now. Today we’re excited to introduce our Socially Responsible Investing (SRI) portfolio, built with the same Dynamic Risk Hedging capabilities that our standard portfolios offer and automated through our Algorithmic Virtual Advisor™.
It is hard for investors to separate actual from perceived threats to the market and their portfolios. Whether there is an issue with President Trump, North Korea, trade negotiations or some other risk, investors often find themselves hit with market gyrations over the short-term. It is important for people to understand that short term market impacts are not only common, but expected.
You’re out of college and working for a few years now and finally got a few bucks to invest. But you’re not sure where to go for advice. You know that your father has a financial advisor – the kind that sits behind a big desk in a fancy office that instantly makes you feel like this option is both unaffordable and reminds you of the school principal’s office.
April saw markets soar to new highs with the S&P 500 and the Nasdaq making the concerns over a recession following the inversion of the yield curve seem like a distant memory. More impressive than the rebound in equity prices, the forecast for Q1 GDP growth has risen from virtually 0 to just under 3% in just one month. (GDPNow) The markets have embraced the 'Powell Put,' but the recovery from the late 2018 selloff appears to be the dovish pivot by the Fed Chair.