I was at an investment conference recently and had the privilege of conversing with several investors that happen to be much more seasoned than I. These investors grew their careers at a time when the market looked very different then it is today. One of those investors was telling the story of how their career progressed. I found one component of that story very thought provoking. This investor was an analyst in the late 80’s evaluating bonds. They came across a bond that was issued by a company called Blockbuster. Many of us have fond memories of family movie nights that started at Blockbuster. The late 80’s were the stepping stone that led to Blockbuster all but dominating the video rental market for the better part of two decades. However, at the time, this particular investor did not feel the bond issued by Blockbuster was a good buy for this reason – “I just believed that in a few years you will be able to turn on the TV and watch almost any movie you want and therefore video rental stores will be obsolete”. The investor joked that “I may have been early but I was not wrong”.
Almost every prediction about the stock market could be construed as correct if you give little to no credence to time frame. It is our belief that early is in fact wrong and predictions about the market are wrong more often than they are right. We believe investors are better off focusing on the fundamentals of long term investing in a diversified manner rather than the day to day or quarter to quarter fluctuations. With that being said, it is prudent to monitor markets and make educated adjustments accordingly. We at Financial Strategies Group carefully monitor markets for potential opportunities and issues but as you probably know by now, we do not make big bold predictions.
2017 thus far has been a great year for markets overall. We have seen International Markets particularly Emerging Markets outperform (both of which we tend to overweigh). Interestingly, despite the fact that the Federal Reserve has raised interest rates four times since 2015 (with two of those raises occurring this year), bonds have still performed admirably. This is contrast to what one might expect to see. Typically, in a rising interest rate environment, bonds go down in value. Below is a quick summary of the year to date (YTD) performance of the common benchmarks we watch for diversified portfolios. All in all, 2017 has been a good year for diversification up to this point.
|Data as of 09/30/2017||Performance|
|S&P 500 (Large Cap US)||14.24%|
|Russell Mid-Cap (Mid-Cap US)||11.74%|
|Russell 2000 (Small Cap US)||10.94%|
|MSCI EAFE NR (International Developed)||19.96%|
|MSCI EM NR (Emerging Markets)||27.78%|
|Barclays US Agg Bond TR (Bonds)||3.14%|
Special Announcement. Equifax Data Breach.
As you may of heard, on September 7 Equifax announced that they had experienced a data breach that resulted in the financial and personal data of an estimated 143 million Americans being stolen. Odds are if there are two or more people in your household at least one person in your household had their data compromised. So what should you do.
- Check your credit. There are several resources available to check your credit for free, including Credit Karma, which sends you reports and has some monitoring capabilities. Checking your credit is a good practice all of the time, but is especially important in instances where there is a good chance your credit was compromised.
- Consider freezing your credit. In order for this to be effective you need to freeze your credit with all three of the major credit bureaus Equifax, Transunion, and Experian. Due to hold times this can sometimes be frustrating, however it locks your credit so no one will be able to open a new line of credit in your name. It is important to note that if you do need to open a line of credit for some reason, you will need to unfreeze your credit in order to do so.
As always, if you have any questions or concerns please feel free to call us.
From the entire Financial Strategies Group team- Thank you for your continued support and business!
This commentary on this website reflects the personal opinions, viewpoints and analyses of the Financial Strategies Group, Inc employees providing such comments, and should not be regarded as a description of advisory services provided by Financial Strategies Group, Inc or performance returns of any Financial Strategies Group, Inc Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Financial Strategies Group, Inc manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.