January Stock Price Declines as of Friday, Jan. 21, 2022

Victor Levinson Comments

During periods when stock price declines attract the attention of many people outside the financial and investment communities, it has been Park Piedmont’s (PPA) practice to share our perspective. We want to emphasize the importance of taking a longer-term view of investments and avoiding the short-term, day-to-day fluctuations of the markets, which are driven by those seeking to benefit from …

Summarizing Previous Eleven Months of 2021 Comments

Victor Levinson Comments

As we move into the new year, many articles review the year just completed. For example,  Neil Irwin’s article in the New York Times reports that “[f]or people who study the vicissitudes of the economy… 2021 has been a year in which economic dynamics that had seemed entrenched for decades came apart, or changed in fundamental ways. Workers attained the …

Inflation as a Driver of Financial Market Prices

Victor Levinson Comments

Since the financial media continues to stress the importance of inflation on financial market prices, we will once again discuss this topic (the most recent previous coverage was in April 2021). Inflation refers to a situation in an economy where prices in general are rising. When this occurs, the impact is that the same amount of money buys less, also …

The Importance of Asset Allocation

Victor Levinson Comments

PPA discusses asset allocation regularly in our monthly commentaries. This concept refers generally to the amounts invested in stocks and bonds, and how this split determines the risk-return trade-off as we help you pursue your long-term goals. Once we’ve established an asset allocation customized to your situation, a second level of analysis focuses on asset location, or where it makes …

Financial Media and the Search for/Fallacy of Causation

Victor Levinson Comments

During September 2021, the three major US stock indices declined between approximately 4.5% and 5.5%, with nine down days out of twenty-one total trading days. The financial media found it necessary to attribute causes to declines of this magnitude. But the frequent price increases in the midst of declines make the effort to attribute daily causation highly suspect. What we …

Are There Any Losers in the Financial Markets?

Victor Levinson Comments

After another month of modest, slow and steady gains in the financial markets, even in the face of what seems to be unrelenting negative news in the “real world,” we consider the existence of so many “winners” in the financial markets, compared with what appears to be precious few losers  A recent piece by Jason Zweig in his “Intelligent Investor” …

Asset Allocation & Rebalancing in a Rising Stock Market

Victor Levinson Comments

Asset Allocation, as our clients and readers know, refers to the diversification of an investment portfolio among a variety of liquid asset classes. At Park Piedmont (PPA), we use four such asset classes: Cash Equivalents; High Credit Quality Bonds; High Yield/Lower Credit Quality Income; and Stocks. In times of modest market price changes, allocations that have been established to meet …

Impact of Government Actions on Financial Markets

Victor Levinson Comments

With financial markets showing modest changes in May, even with Inflation fears and improving economic activity continuing to dominate the financial media (see also our April 2021 Comments), we add the impact of government actions to our discussion. While the market-based private sector dominates U.S. economic activity, there are times when government action plays a crucial role. When the Coronavirus …

Inflation, Financial Markets, and Bitcoin

Victor Levinson Comments, Digital Assets

INFLATION AND THE FINANCIAL MARKETS As the financial media continues to stress the role of inflation in the financial markets, we will discuss this topic of inflation here in the US. The Ibbotson 2020 SBBI (Stocks, Bonds, Bills, Inflation) Yearbook describes inflation as “the rate of change of consumer goods prices,” with the figures coming from the US Department of …

A More Detailed Look at Stock Market Results

Victor Levinson Comments

In March, market interest rates, which are set by buyers and sellers in the bond market, continued their rapid rise from year-end 2020, with the ten-year US benchmark rate increasing from 0.93% to 1.74%. But even in the face of these rising rates, stock prices continued to advance. Since we have discussed rising rates, inflation, and their impact on bond …