3rd Quarter 2019 Investment Newsletter

Economic and Market Overview

  • Global economic growth appears to be slowing, prompting the Federal Reserve to cut the federal funds target rate by 0.25% in September. This is the second time that rates have been reduced in 2019.
  • U.S. Manufacturing may be in a mild recession, perhaps the most sensitive of U.S. sectors to tariffs, while U.S. services and consumer spending have so far not been affected.

Think Opportunistically

  • With interest rates falling back to historic lows, this could be a good time to borrow for business needs, to buy a home or refinance existing debt. A 30-year fixed mortgage rate is around 3.625% – 3.75% for those with strong credit.
  • Make your decisions based on long-term goals and take advantage of market dips as they occur. In addition to holding diversified stocks, having an allocation to high credit quality, short-term bonds help to stabilize a portfolio.
  • Don’t overlook international stocks. Current research suggests that U.S. and foreign stock movements are less correlated with each other than they have been in years. This could make the benefits of global diversification even more powerful.
  • Presidential impeachment is rare, but history suggests no clear effect on the markets. The S&P 500 fell 13% during Nixon’s impeachment, and gained 28% during Clinton’s, continuing the direction in which they were headed prior to the proceedings. In both cases, the underlying economy had a larger impact.

Safeguard Your Investments

Every investor should have a trusting relationship with his or her advisor, but that doesn’t mean safeguards shouldn’t be in place.  We’ve all heard of Bernie Madoff and his well-documented Ponzi scheme, but there are many other instances in which investors have been scammed by financial advisors, including several in Indianapolis.  While the Madoff crime brought needed attention to financial regulation and oversight, the system still isn’t perfect.  Here are some ways that Elser Financial Planning protects its clients, and encourages all investors to research a potential advisor:

  • Use an independent custodian – Independent, third-party statements and online account access provide a check and balance of the activity of your advisor, and independent verification of the value of your accounts. Elser Financial Planning uses Charles Schwab & Co. as custodian for clients’ investments.
  • Ask questions – Ask your advisor (or potential advisor) questions such as: 

Do you work with an independent custodian? We do.

Can I move money in and out of my accounts? Our clients can.

If I need money within a few days, can I access it? Our clients can.

Are the recommended investments publicly traded and independently verifiable? Our investments are.

Are there any hidden sales fees paid to you or whoever recommends me to you? We neither pay nor receive hidden fees. 

  • Secure your login credentials – Don’t write your username and password down on a sticky note next to your computer. That’s taunting someone to access your accounts.  Instead, use a password management application such as LastPass (lastpass.com) or Dashlane (www.dashlane.com) to safekeep this information.  That way, you only have to remember one username and password!

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We welcome and encourage your calls with questions, and sincerely appreciate both your business and referrals.

 

Market Index Returns QTR 2
S&P 500 (Large Cap)      1.7%
Russell 2000 (Small Cap)    – 2.4%
MSCI International Index     -0.9%
MSCI Emerging Markets     -4.1%
US REIT Index (Commercial Real Estate)       6.8%
DJ Commodity Index      -1.8%
BofA 1-3 Year Corproate & Gov’t Bond Index       0.7%
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