June 2019 Comments: Impact of Economic Recession on Stock & Bond Prices

Sam Ngooi Comments

During June, stock and bond prices in the US increased. Some of the likely reasons for these increases seemed to be contradictory, but all centered on the likelihood that an economic recession may be on the horizon. A recession refers to an economy that has two consecutive quarters of negative gross domestic product (GDP) growth. In the current economic and …

March 2019 Comments: Inverted Bond Yield Curve

Sam Ngooi Comments

As has been discussed in many previous Comments, interest rates (also called yields) are typically higher on longer maturity bonds, to compensate for the greater price risk associated with having to wait longer to get the initial principal back, called “maturity.” At maturity, investors can buy new bonds at then-current interest rates. When yields on longer bonds fall below those …

February 2019 Comments: Spending Income or Spending Total Return

Sam Ngooi Comments

Most clients, when starting to use their investment portfolios for part or all of their spending, have as an objective to spend the income but not the principal. We would like to take this opportunity to discuss this objective and why it is so difficult to achieve in a low-interest rate environment. First, some definitions: Income is interest on bonds/bond …

January 2019 Comments: Observations on Stock & Bond Markets

Sam Ngooi Comments

Once again, for some time perspective, we are using the chart below from our Special Comments to set out a few price points for the S&P 500 index since Donald Trump’s 2016 election (point and percentage increases calculated from November 9, 2016).  Other charts providing long-term context appear on pages 6-9. Day After Election, November 2016, Base Level: 2,163; Year …

Reflections on John Bogle

Sam Ngooi Comments

John Bogle, retired founder of Vanguard and champion of low cost index funds, passed away on January 16th, 2019 at age 89. Two separate articles in the NY Times Business section (NYT, 1/17/19, page B1 & NYT, 1/16/19, page A23) pay deserved homage to Bogle’s contribution to the world of individual investors. The articles cite his emphasis on keeping investment …

December 2018 Comments: Observations on Stock & Bond Markets

Sam Ngooi Comments

Once again, for some time perspective, we are using the chart below from our Special Comments to set out a few price points for the S&P 500 index since Donald Trump’s 2016 election (point and percentage increases calculated from November 9, 2016). Day After Election, November 2016, Base Level: 2,163; Year End 2017: 2,674; +511; +23.6% February 2018 Recent Lows: …

November 2018 Comments: Market Observations & ‘Factfulness’

Sam Ngooi Comments

OBSERVATIONS ON NOVEMBER 2018 STOCK and BOND MARKETS Two front page headlines from the NY Times, nine days apart, tell a good deal about November volatility, both up and down, for the US stock markets: On November 19th (NYT, 11/19/18, page A1), “Tech Stocks Dive as Wall Street Loses Gains for Month,” and then November 28th (NYT, 11/28/18, page A1), …

October 2018 Comments: Observations on October Stock Price Declines

Sam Ngooi Comments

During October, US and international stock prices fell sharply, although US stocks continued to outperform international for the year. These Comments will discuss mostly US stocks (we discussed international stocks last month). Using the S&P 500 as a proxy for US stocks, the chart below shows results since Trump’s election in early November 2016, through the end of October 2018. …

Special Memo: Continued US 2018 Stock Price Declines

Sam Ngooi Comments

As stock prices continue their sharp October declines, we are writing to follow up on our October 10-11, 2018 Special Memo, which also discussed these declines. This memo uses the S&P 500 as a proxy for the US stock market, which closed today, October 24, at 2,656. We highlight a few price points for that index since Donald Trump’s surprise …

Special Memo: October 10th Declines

Sam Ngooi Comments

As is our practice when US stock prices experience significant declines, we write to comment on what we think is happening. The declines of October 10th were as follows: S&P 500, down 95 or 3.3%; Dow Jones, down 832 or 3.1%; NASDAQ, down 316 or 4.1%. We suggest putting the declines in the context of recent gains, in this case …