September Sunshine
In the United States in 1900, life expectancy was 47, which meant midlife crisis came early. Today, life expectancy is at least 80 in the U.S., and those 85 and older are the fastest-growing part of the population. Moreover, the World Health Organization calculates that a typical 60-year old may look forward to not just more time alive, but nearly 20 more years of healthy life without significant disability. Medical advances and technology may extend those years of health even further, granting us a longevity dividend of nearly 30 to 40 years more than we enjoyed a little more than a century ago. Researchers are now suggesting that half of babies born today in the industrialized world will live to 100 years, and some are predicting even longer lifespans than that. It is now reasonable to begin looking at 100 years of life as the new normal, especially for those with access to good food, water, shelter, education, and-of course-healthcare. (MIT AgeLab)
It is important to keep this in mind as our negative news headlines have the ability to make one uneasy about their current and future financial situation. Trade War, Inverted Yield Curve, Recession, Stock Market Crash and Slow Growth are not the types of headlines that make one jubilant about the future. I asked a friend of mine who works in the news biz how much of the news reported is actually positive or uplifting. His response was about 10-15%. That’s terrible! Why are we drawn to negative information and poor reality T.V.? (sorry) I’m not exactly sure why, but, I see a lot of good in the world and frankly there have always been “issues” throughout time. Even still, assets from Stocks to Real Estate have continued to grow over time.
As referenced above, people are living much longer, healthier lives. If one wishes to retire in their 60’s, they’ve got to have proper planning in place and a sound investment strategy that will produce the outcomes they desire. This requires navigating through various market storms & cycles. Often you may hear someone from doomsday say “this time it’s different”...”these are different times”… Are they really? We’ve had a great deal of horrible things happen throughout history that have contributed to economic turmoil and uncertainty.
The picture in this newsletter is my wife and I in Kauai for our 10-year anniversary over the summer. Minutes before we took the picture, a nice rain came through, then, it passed. In spite of the brief “storm”, my wife was more beautiful after the rain and we still had an incredible dinner. Things turned out just fine. As the storms come and go in our economic conditions, stay focused on your goals and enjoy your financial peace. Our job here at Intrepid is to be sure you’ve got the right umbrella, clothing and tools (asset protection, financial plan & investment strategy) to accomplish the specific financial goals you’ve set out for yourself, business and family. It is an honor to guide you and we are grateful you don’t want to do it alone. Now that’s scary! Thank you for your business and relationship.
Positive Quote:
"Courage is one step ahead of Fear”
Fun Fact
The average person spends 6 months of their lifetime waiting on a red light to turn green.
The Markets
Second Quarter Overview
The second quarter was full of ups and downs for stocks as investors had plenty to worry about. Throughout the quarter, the trade war between the United States and China ebbed and flowed as news continuously changed from positive to negative. Employment was steady and the unemployment rate remained low, but wage growth was moderate at best. Manufacturing and industrial production hit a snag during the second quarter, as did business fixed investment.
April saw stocks post solid returns as each of the benchmark indexes listed here enjoyed gains of at least 2.5%. The yield on 10-year Treasuries increased by 10 basis points as prices fell. A solid start to corporate earnings season helped support stocks, as did low interest rates and weak consumer price pressures. The March labor report helped quell investors' fears, as almost 200,000 new jobs were added. As to the major indexes listed here, the Nasdaq led the way, gaining over 4.7%, followed by the S&P 500, which closed the month up by almost 4.0%. The small caps of the Russell 2000 and the Global Dow each rose by nearly 3.3%. The Dow, while pulling up the rear, still gained over 2.5% by the end of April.
Unfortunately, the gains of April were lost in May as stocks fell sharply, closing out their worst month since last December. Encouraging rhetoric at the end of April that a trade deal could be reached between the United States and China was quickly replaced in early May with the imposition of new tariffs on U.S. imports from China. Retaliatory tariffs on U.S. exports entering China soon followed. The Nasdaq and Russell 2000 fell almost 8.0% in May, while the S&P 500, Dow, and Global Dow each dropped by more than 6.5%. Money moved from stocks to bonds, driving prices higher and yields lower. The yield on 10-year Treasuries sank 37 basis points to close May at 2.13%. Crude oil prices, which had exceeded $60 per barrel in April, plummeted by almost $10 per barrel by the end of May.
Stocks rebounded during the middle of June and soared by the end of the month. The tech-heavy Nasdaq led the monthly gains, reaching almost 7.5%, followed by the Dow, which also gained over 7.0% for the month. The Fed's decision to hold interest rates helped drive investors to stocks. Still, investors sought long-term bonds, driving prices higher and yields lower.
Ultimately, stocks posted solid gains by the end of the second quarter. Each of the benchmark indexes listed here closed the quarter with gains, although not close to the double-digit returns earned at the end of the first quarter. Low inflation, the trade war between China and the United States, and news that the Fed is considering lowering interest rates helped quell investors' concerns. The large caps of the S&P 500 led the way at the end of the second quarter, gaining 3.79%, followed closely by the tech stocks of the Nasdaq, the Dow, the Global Dow, and the small caps of the Russell 2000, which eked out a quarterly gain of 1.74%. By the close of trading on June 28, the price of crude oil (WTI) was $58.16 per barrel, up from the May 31 price of $53.33 per barrel. The national average retail regular gasoline price was $2.654 per gallon on June 24, down from the May 27 selling price of $2.822 and $0.179 lower than a year ago. The price of gold soared by the end of June, rising to $1,413.30 by close of business on the 28th, up from $1,310.30 at the end of May.
Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.
Eye on the Month Ahead
The third quarter of the year will likely bring much of the same tumult as was found in the second quarter. Employment should remain strong, although wage growth has been relatively slow. It is worth noting that the Federal Open Market Committee has scaled back its views on economic growth and inflationary trends. In response, interest rates are not likely to increase in the foreseeable future and actually may be reduced. In any case, it appears that the ongoing trade war with China, coupled with tensions between the United States and Iran, will continue to impact the world economy and the U.S. stock market.
Data sources: Contribution provided by Forefield. Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indices listed are unmanaged and are not available for direct investment.
I look forward to continuing to guide clients through 2019 and beyond. If you have a friend or family member that you think would benefit from working with me, please don’t hesitate to make the introduction. Thank you for your trust and business.
