The first week and a half of trading this month took investors on a wild ride. The Dow Jones Industrial Average, for example, posted its biggest point gain and loss back to back for the first time since 1997, according to the Wall Street Journal. Tuesday’s 273-point “Dow Dive” was reversed by Wednesday’s 275-point “Dow Wow.” But then the Dow slumped again, dropping 335 points on Thursday. Other indexes were not immune, with the Nasdaq, S&P 500 and the small-cap Russell 2000 dropping sharply during the week. A roller coaster ride to be sure, but all three major indexes are still up year to date. The Dow is up just 0.5% for the year; the S&P 500 is up 4.3% and the Nasdaq has gained 4.8% thus far.* And earnings report season has just begun, with companies like PepsiCo and Alcoa beating analysts’ estimates.

The recent sell-off focused on energy companies, likely triggered by a drop in crude-oil prices and fears that global growth is slowing, particularly in Europe and China. While weaker global growth is expected to have an impact on many U.S. firms, it may have some benefits for the broader U.S. economy. The stronger dollar is putting downward pressure on commodity prices. Lower prices at the pump should boost consumer purchasing power, which would have a positive impact during the important holiday shopping period and support stronger consumer spending growth into early 2015.

Volatility is to be expected as part of a normal, healthy market. Long-term investors have faced ongoing geopolitical concerns and general nervousness over the Federal Reserve’s eventual move to raise interest rates at some point next year. “The Fed has plenty of time to decide when to begin raising short-term interest rates,” explained Chief Economist Scott Brown. “The economic figures over the next several months should dictate that decision.” However, weaker growth in Europe and the strong dollar’s impact on inflation will likely delay the Fed’s initial hike, and increased capital inflows should keep long-term interest rates relatively low.

As always, we remain focused on making progress toward your long-term goals. Of course, we’ll continue to monitor developments in the markets and the latest economic data, as well as any global news. And, we’ll be sure to share any trends that could affect your long-term financial plan.

In the meantime, if you’d like to discuss recent market events or want to review your portfolio as we head into year-end, please call us.  We look forward to speaking with you.

 

 

 

Investing involves risk, and investors may incur a profit or a loss. Past performance is not an indication of future results. Investors cannot invest directly in an index. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The Russell 2000 Index is an unmanaged index of small cap securities which generally involve greater risks. The performance noted does not include fees or charges, which would reduce an investor’s returns. There is no assurance the trends mentioned will continue.   Market letter data and information is compiled from a variety of reputable resources, including Raymond James financial experts, such as Chief Economist Scott Brown and Chief Investment Strategist Jeff Saut. Our research also uses third-party sources, such as Federal Reserve publications, CNBC, CNNMoney, Bloomberg and Yahoo Finance. The information is then vetted through the relevant product areas, as well as compliance and editing before being distributed.

 

*Price returns as of October 9, 2014.

 

“The only thing we have to fear is fear itself”

The above quote is from Franklin D. Roosevelt and was part of a speech given in 1932. At the time the country was coming out of the great depression.

“This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”  

Many of the same concerns that prevailed in 1932 affect us today with regard to the economy.   In addition we have a heightened awareness of terrorists.  That is their goal – to create fear.   Whether it is ISIL,  Hamas or a domestic incident like the Boston Bombings terrorist incidents are seemingly inevitable as is the reaction of markets.   We cannot predict what the future holds but strongly believe that a proactive approach to allocating your portfolio is always the best strategy. Those that react after something happens are too late. While we all want to maximize our growth it is important to understand that greater growth potential brings greater potential for volatility. Now is a good time to think about your personal risk tolerance and allocation. If you have any concerns please touch base with your financial advisor. We will also go over this at your next review.

As always we believe you should have enough cash on hand for any short term needs to so that any market fluctuations do not affect you financially. Psychologically, however, it is important that your portfolio meets your risk tolerance so that you can remain invested regardless of short term volatility.   We remain optimistic about the outlook for the markets over the next five to ten years but also expect increased volatility in the near term.   The most important thing is to stick with your long term plan and not have fear or panic derail it.   We are here for you.

 

Any opinions are those of Randy Carver and not necessarily those of RJFS or Raymond James. Investing involves risk and investors can incur a profit or loss regardless of strategy selected

The only time in our lives when we don’t look forward to Friday might be when it happens to land on the 13^th of the month. Friday the 13^th will occur once this calendar year, in June, which is fortunate for the 17 to 21 million Americans who admit to being afraid of the day. That statistic, gathered by the Stress Management Center and Phobia Institute in Asheville, North Carolina, establishes Friday the 13^th as the most feared day and date in recorded history.

So where did this fear come from? It’s not entirely clear where the superstition began, although our historical perception of Friday as an unlucky day and 13 as an unlucky number probably didn’t help. An intense fear of this specific day is known as friggatriskaidekaphobia, a word I’m more afraid of than the day itself.

The upcoming 13^th might cause those who believe in the superstition to curl up in bed and avoid the world entirely. But for those of you who scoff at superstition, here are some things you might try this Friday the 13^th (if you can handle tempting fate and the shocked stares of those around you):

Open an umbrella inside – you might have trouble squeezing through doorframes, but that’s a risk you’ll have to take.

Hand someone an empty wallet – though this is thought to bring bad luck, it’s also guaranteed to confuse the recipient, so be mindful.

Trip over a black cat – but make sure no feline friends are injured as you defy this superstition.

Spill salt everywhere – the floor, your desk, the laps of others; no place should be safe.

Schedule a haircut and a nail appointment – legend says cutting your hair or nails on a Friday is bad luck, so why not go ahead and do both?

Have a party with 13 guests – don’t forget to offer some refreshments (this isn’t to avoid bad luck, it’s just good party etiquette).

Whether you buy into the ideas surrounding Friday the 13^th or not, it’s undoubtedly a day that brings a little more excitement into our lives. Plus, just think, if you can get through it unharmed, you’ll have the whole weekend ahead of you to celebrate your good fortune!  As always we are here for you.  Feel free to contact us whenever we can be of service to you, your family or your friends!

 

This month Sochi, Russia, will be the site of another major international multi-sport event – the 2014 Paralympic Games. From March 7 to 16, almost 700 athletes, 227 from the United States, will compete for gold, silver and bronze medals.

The origins of the Paralympics can be traced back to the 1948 Summer Games in London, when British World War II veterans with spinal cord injuries participated in the International Wheelchair Games. The first official Paralympics took place in Rome at the 1960 Summer Games.

The Winter Paralympics began in 1976 in Ornskoldsvik, Sweden, and were held every four years in the same year as their summer counterpart. Beginning in 1994, the Winter Paralympics were held in the same year as the Winter Olympics and at the same sites, beginning with the games in Lillehammer, Norway. The event was held in the U.S. in 2002 in Salt Lake City, the same venue for the 19^th Winter Olympic Games.

This year’s Paralympic Games in Sochi will feature athletes from 44 different nations competing in 72 events in five sports. The sports are similar to the Olympic versions but adapted to accommodate the competitors’ range of disabilities. In the alpine skiing competition, seven events are designed for standing athletes, three for sitting athletes and three for visually impaired athletes. Similar adaptations are made for the cross-country skiing event and the biathlon (a combination of cross-country skiing and target shooting). Ice sledge hockey is played on modified sleds that allow players to navigate the rink and the puck to go beneath the players. And wheelchair curling allows for athletes to push the stones down the ice sheet using hands or poles. A new event, para-snowboarding, will be introduced at this year’s Paralympic Games, featuring two events for athletes with upper-body impairments and lower-body impairments, respectively.

The Paralympic Games have grown from an effort to give war survivors the opportunity to showcase their strength, abilities and integrity despite their physical limitation. Today’s Paralympians, in their often amazing demonstrations of skill and determination, represent what is best about the entire human race. Their desire to go faster, higher, stronger in the spirit of the Olympic motto truly serves as a reminder to us all of the limitless potential and ability of the human spirit.

PS –  Remember, daylight saving time begins at 2:00 a.m. on Sunday, March 9. Be sure to move your clocks forward one hour. And take that opportunity to check the batteries in your home’s smoke detectors, too!

Why is it when the market moves up  the media uses phrases like –  “the market moved up today” or “the broad index was higher” yet when the broader markets move  down the exact same amount we see phrases like “market plunges” or “mini crash”?   The reason is that the media knows that these things will draw us in.  Volatility refers to both up and down days – not just negative ones– and is a  part of investing.  While each market correction is unique, the media’s reaction is usually pretty consistent—sound the alarms!  Ultimately market pullbacks happen relatively frequently for a variety of reasons and should not alter a well-designed goal-based financial plan.

In 2013 we had an extraordinarily strong year.  Since 1926 there have been 17 years where the Dow Jones Average was up 30% or greater – as was the case in 2013. Historically, in the year following the 30% gain the market experienced at least a 10% correction 88% of the time which is @ 1,645 points today.   100% of the time there has been a pullback of 6% – roughly 1,000 points today – or more (Raymond James equity research).

Over the last 50 years  (i.e., 1964-2013) the differential between “up” and “down” days for the Standard and Poors Index is 53% “up” and 47% “down.”  For calendar year 2013 this differential was  58% up days and  42% down. Fluctuations are a healthy part of long term market performance.

We believe that if an investor is putting money into the equity market it should be earmarked as long term and one can expect both up and down days.  Money that you may need in the near term should not go into equities and therefore the fluctuations should typically not matter.   So the next time you read, see or hear some dire headline about the latest Armageddon you can rest assured this really is nothing new or unusual.   As always please contact your financial advisor with questions or whenever we may be of service.

 

Source http://www.standardandpoors.com/home/en/us . The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market but which individuals cannot invest in directly. All S&P 500 returns provided in the commentary calculated on a total return basis. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete   The Dow Jones Industrial Average is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. Individuals cannot invest directly in an index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Past performance does not guarantee future results. Any opinions are those of Randy Carver and not necessarily those of Raymond James.

While the overall total return for the last decade has not been spectacular the S&P 500 stock index has been positive on a total return basis in 8 of the last 9 calendar years.  In 2008 the index dropped 37.0%.    Over the last 50 years the S&P 500 stock index has averaged a 9.3% gain annually.   While we often hear about the market averaging  9% or 10% the fact is that there wasn’t any year in which the market actually returned +9% in the last half century.  The closest that any year came to the historical average was in 1993 when the stock index gained 10.1%.    Investors need to keep in mind that the long term average is just that and is made up of a number of up and down years.

In fact over the last 50 years the market has been down 47% of the time if you look at individual days. Markets fluctuate over the short term and this is to be expected.    In 2011 the market was down 45% of the time and up 55%.

2013 proved once again why trying to time the market is impossible.  Aside from the potential for extra transaction costs and income tax implications you also have to be right both on when to sell and then when to buy again.   Moreover, most people do not own the market but a diversified portfolio.

While we anticipated continued volatility in the markets nobody can predict exactly what will happen or when.   As always we recommend that you utilize a diversified asset allocation based upon your needs, objectives and risk tolerance.  Changes to your portfolio should be made based upon changes in your situation and not the day to day or even quarter to quarter market swings.   We believe that the long term (five year) outlook for the markets is good given the historically strong fundamentals.  We also believe that there will be unexpected events and concerns that continue to create short term volatility.  The key is to stay focused on your plans and your ability to maintain your standard of living – not look at the day to day swings in the markets.   As always we are here for you should you have any questions or concerns.  We look forward to being your partner and wish you all the best for a healthy, happy and prosperous 2012!

 

Source http://www.standardandpoors.com/home/en/us .     The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market but which individuals cannot invest in directly.  All S&P 500 returns provided in the commentary calculated on a total return basis. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete