This time of year many of us are hard at work on our New Year's Resolutions. Maybe the resolutions include changing bad habits, beginning good ones, or simply "getting in shape". While the latter is often about personal health and improving our waistline, don't forget about improving your financial health as well.
Here are some potential resolutions to consider if you still have room on your list:
I'm hard at work finishing up the year but, with the holidays upon us, I'm stealing a little extra time with the family by taking a break from posting this week and next.
From my family to yours, warmest wishes for Happy Holidays, and best wishes for the New Year. May the season and the year ahead bring you joy, good health, and prosperity.
With the sudden market reset over the past several weeks, let's review where things stand year-to-date. Looking broadly at markets, one can clearly see the shift in "risk appetite" away from areas deemed to be too risky in a future Trump Administration (foreign stocks and core bonds), and into U.S. stocks.
Since the election, stocks have continued up while bonds have fell off a bit, but the performance of both has been mixed. To illustrate my point, here is a summary of where the major indexes stand currently, year-to-date (through last Friday) and where they stood at the end of October (green means higher than October, red means lower).
I hope you enjoyed the holidays with family and friends, and are ready to start the new year. As we look back, the year past was one filled with surprises, challenges, and no small amount of angst. Worries about China's growth rate, U.S. recession risk, and tumbling oil prices occupied much of the first half of 2016, while concerns over Brexit and a growing sense of nationalism around the world, and the ever-looming next interest rate increase, ushered in the second half.
The stock market's surge following the surprise election result last month has many investors still feeling shell-shocked. Some are even feeling conflicted: Is it okay that my investments are going up because the stock market is cheering the person I didn't vote for? Maybe a more prudent question is how long will the market's "Trump-bump" last? While the answers are subjective, there's more to the recent run-up than just President-Elect Trump.
The good news: Since November 7th, the S&P 500 is up almost 6% and small cap stocks are up twice that. The not-so-good news: The stock surge since Election Day has hidden the bond market's recent slump.
The slump began over the summer but accelerated following the election. Since then, the yield on the 10-year Treasury bond, a key benchmark, has risen almost 35%, from about 1.7% to 2.3% (rising yields mean falling prices). In terms of actual investment impact, the broad bond market index is down about 2.5% since November 7th. Short-term bonds are down about 1.5%, but long-term bonds, which feel the impact of rate changes more dramatically, are down over 5%. That's a big move in the bond world and more may be coming.
