June 2018 Comments: Stock Indexes

Sam Ngooi Comments

During the month of June, it was announced that General Electric’s stock would be dropped from the Dow Jones Industrial Average (DJIA) of 30 large company stocks. For those of us who remember GE as the largest company by market value in the stock market, this was shocking news.  The stock that people had been told never to sell had …

May 2018 Comments: Political Conflict and its Impact on Financial Market Prices

Sam Ngooi Comments

In our July 2017 Comments, we wrote that….”following Donald Trump’s surprising presidential election victory, the major US stock market indices have registered their own surprising gains, with the S&P 500 increasing from 2,140 on election eve 2016 to 2,470 as of the end of July 2017, a gain of 15.4 %. Without taking any position on the current political situation …

April 2018 Comments: Inflation & Financial Market Prices

Sam Ngooi Comments

Inflation refers to the declining purchasing power of money over time, caused by a general level of rising prices.  In an economy with a 2% annual inflation rate (the favored figure for the US Federal Reserve; see NY Times article cited below), items that cost $10,000 today would have cost $5,000 36 years ago, using that 2% rate. This also …

March 2018 Comments: The Volatility of Stock Prices

Sam Ngooi Comments

There have been many days during the first quarter when stocks have fluctuated, either up or down, more than one percent. Some days, those fluctuations have exceeded two percent. The investment community and media refers to these kinds of large fluctuations as volatility. We can use the major US stock indexes as illustrations: With the Dow Industrials at approximately 24,000, …

Feb 2018 Comments: The Difficulty of Attributing Causation to Stock Price Movements

Sam Ngooi Comments

This month’s Comments provide current examples of an important point we have made regularly in the past: no one really knows the causes for stock prices and their sometimes dramatic changes. Current case in point: from Friday, February 2nd through Thursday, February 8th, covering only five business days, US stock prices (S&P 500), declined by approximately 9% (2,832 to 2,581, …

Special Memo: Longer Term History of Stock Price Declines

Sam Ngooi Comments

As stock prices continue their recent sharp fluctuations, mostly to the downside, we are writing again with more information (research from Guggenheim Investments), to present a long term perspective. From year-end 1945 to year-end 2017, covering 72 years and using the S&P 500 index (note: S&P 500 index and Dow Industrial average often have similar percentage price changes), there have …

Jan 2018 Comments: How Interest Rates Impact Stock Prices

Sam Ngooi Comments

  Last month in our discussion of interest rates, we stated that ”one major interest rate story for the year 2017 deserves additional comment:  the fact that while there were three one-quarter point increases in the short-term rates controlled by the Federal Reserve, the ten-year US Treasury rate, set by the marketplace of buyers and sellers, was almost unchanged for …

Special Memo: Current Stock Price Declines

Sam Ngooi Comments

Whenever stock prices experience large short-term declines, we make sure to check in with you to put the declines in perspective. The chart at the bottom of this memo provides figures that should help. The media likes to present large numbers in its reporting, but the focus should always be on percentages. Using end of January 2018 price levels, a …

Dec 2017 Comments: Bitcoin & Interest Rates

Sam Ngooi Comments

Since Bitcoin has become a very popular topic of discussion in and out of the financial world, we thought it was time for Park Piedmont to add our viewpoint. As you might imagine from a firm that advocates long-term investing with asset allocations implemented using low cost index funds, even the mention of Bitcoin would be highly questionable. Nevertheless, we …

Nov 2017 Comments: Giancarlo Stanton & the Folly of Prediction

Sam Ngooi Comments

As you may know, the Levinsons are pretty big baseball fans. Vic and Nick actually coached Tom’s little league teams (photos are available upon request), and Nick and Tom (and their sister Lynn) grew up going to Yankees games on the 4 train in the 70s and 80s.  So there was some excitement upon the announcement, made this past weekend, …