Category Archive

In our most recent July 2019 Monthly Comments, we discussed the media coverage of early August stock price volatility on days when prices were lower. Key market movers were presented as 1) the direction of interest rates; 2) tariff and currency disputes with China; and 3) the inverted yield curve for ten-year and three-month US treasuries, perhaps signaling an economic …

After relatively modest price changes during July in both stock and bond markets, early August witnessed a return of substantial stock and bond price volatility. Although the recent declines (and gains) appear large in absolute numbers, the important figures are the percentage gains and declines. A drop of 500 points on the Dow, for example, sounds huge, but at current …

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 …

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 …

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 …

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 …

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 …

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: …

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), …

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. …