How to Remain Financially Empowered During a Hurricane

September 6, 2017 | posted in: Blog, Uncategorized | by

To remain financially empowered following potential hurricane damage, implement these three planning steps: Review and Update | Gather and Organize | Protect

The NBA, The Markets…And Plenty of PB&J!

April 27, 2017 | posted in: Blog, Financial Insights | by

As I began to write this blog post on the outlook for financial markets, I received a fun article from ESPN highlighting a surprising NBA-wide team tradition of featuring a variety of yummy peanut butter and jelly sandwiches for their player pre-game and post-game buffets. Who knew? There is actually a competition between teams regarding the creativity and quality of their PB&J offerings. For example, the world champion Cleveland Cavaliers’ scrumptious pre-tip-off PB&J line-up boasts artisanal breads, homemade grape and raspberry jellies, peanut and almond butter, Nutella and bananas.   Read More  »

Next stop…DOW 36,000?

January 27, 2017 | posted in: Blog, Financial Insights | by

With the Dow conquering 20,000 on Wednesday, there is a bit of euphoria out there on “The Street,” along with a healthy dose of skepticism. I’m now fielding questions such as “Is this the start of a new upward leg of the stock market?” or alternatively, “Should I sell my stocks now because they are so pricey?” And, of course there are the general types of questions along the lines of, “What does Dow 20,000 mean?” or “What effect does Dow 20,000 have on my portfolio?” The answer to these questions requires some perspective and experience, and since I’ve been in the investment world since 1975, I believe I maintain a good inventory of both. Let’s travel back to 1999 together for a moment, and let me set the scene. The Dow has risen by close to 18% per year for the prior 20 years* and optimism reigns supreme. I am at an investment seminar in Boston and the huge concern on the minds of the participants and the speakers is the “Y2K problem,” (remember that?), which addressed how computers would handle the century’s turn. Massive spending increases on the parts of corporate IT departments attempting to ward off the potential Y2K disaster are adding fuel to a seemingly unstoppable tech stock rally. During this seminar, I am presented with a signed copy of a book by Glassman and Hassett called “DOW 36000: The New Strategy for Profiting from the Coming Rise in the Stock Markets.” At the time of the book’s publishing in early 1999, the Dow is trading close to 10,000. Many professionals embrace the book’s thesis that a “new paradigm” for evaluating stocks is taking hold – one not as concerned with underlying fundamentals such as price/earnings ratios…Accordingly, stocks are deemed to be underpriced and ready to soar to unfathomable heights. So goes the thinking. Sadly, the book’s publishing was followed by the worst decade in stock market history, which included a tech crash, and later, a devastating full market collapse. After reaching a high of close to 14,000 in October 2007, the Dow dropped to 6,500 during 2009. Glassman and Hassett, the former Wall Street darlings, were eviscerated by the press and in academic circles. As a reminder of what occurred, I always keep my signed copy of the book close at hand to show to clients and colleagues. It invariably draws out a few laughs and stimulates lively discussion. So what does 20,000 mean? On the surface, it doesn’t mean a whole lot. After all, 20,000 is just a weighted measurement of the prices of 30 stocks which comprise the Dow Jones Industrial Average index. But to me, after I dive beyond the surface and reflect on what has occurred in the markets over my career, it actually has much greater significance.. Dow 20,000 means and affirms to me that stock prices DO rise in the long run, and if one holds on to their quality stocks through bad times and good, they will always make money. The ride may be rough, and at times appear to be bleak and hopeless; look no further than the state of economic affairs in 2008-9, during the mortgage and real estate collapse, when the Dow fell to 6,500. But, do the math: a new $1000 investment in the Dow in 2009 would be worth over $3000 today. Good investing takes patience and a long view. At the same time, 20,000 also indicates that it may be time to proceed with caution. It means we must not forget that when markets are frothy, investors can get too optimistic and not see the danger lurking around the bend. Euphoric investors can drive stock prices to unsustainable levels, resulting in inevitable large market corrections. And, as we experienced in recent years, depending on the magnitude of the correction, it may take years for the market to recover. So, Glassman and Hassett were appropriately discredited, but in fact, in one aspect they were right. I am certain the Dow will, indeed, reach 36,000 one day. But when will it happen? That I can’t tell you, and the Dow may very well fall back to 15,000 again before reaching 36,000. But I do believe 36,000 is inevitable, in the same way that rocky markets and large market corrections are. It is the nature of financial markets. Understanding the bumps and turns, and keeping a lid on the euphoria, will serve you well and ensure that you capture the returns that the markets will inevitably bring you. Do I hear Dow 50,000?   *Dow Jones 12/31/79-12/31/99, via AmericanFunds.com/advisor/tools/planning/hypotheticals/update-review/htm   DISCLOSURES: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. This is a hypothetical example and is not representative of any specific investment. Your results may vary. Stock investing involves risk including loss of principal.

Market Volatility

February 11, 2016 | posted in: Blog, Financial Insights | by

Many of you are understandably concerned about the current volatility we are experiencing in equity markets. As my staff and I continue to reach out to review your particular situations with you, I want to convey a general message regarding how I feel about current conditions.

A Note From The Desk of Austin Frye…

January 13, 2016 | posted in: Blog, Financial Insights | by

While a new year means new beginnings-changing to a new calendar, signing up for a new gym membership, and struggling to remember to write 2016 on our checks-markets are starting 2016 off with the same growth concerns and heightened volatility that made the second half of last year a challenging one for investors. In fact, the calendar year 2015 was highlighted by essentially flat returns across stocks, bonds, and cash. Notably, this was the first time in over 60 years that all three major investment categories were simultaneously unchanged-plus or minus 2%-over a full calendar year. With the Federal Reserve (Fed) raising rates for the first time in nine years, the arrival of the presidential election campaign season, and moving another year closer to the end of the current economic expansion, we expected more volatility in 2016, but we didn’t expect it so soon in the year. Normally, the first few trading days of the year are buoyant as investors look optimistically ahead. Instead, 2016 has started off on a sour note, as a rise in geopolitical tensions stemming from North Korea’s possible nuclear test, discord between two of the most powerful Middle Eastern countries, and the ongoing fear of terror attacks at home and abroad have all weighed on investor sentiment. Continued concerns arising from the slowdown of the Chinese economy have brought about volatile movements in global currencies and have driven down the price of oil to levels even lower than in the depths of the Great Recession. While some investor confidence has been rattled by the recent volatility, overall consumer and corporate optimism remain constructive. To date, there are only limited signs that the market’s global growth concerns have begun to negatively affect U.S. economic activity. The labor market continues to showcase strength, with an average of 212,000 jobs created per month over the last six months. In addition, layoff announcements remain near all-time lows and new claims for unemployment insurance continue to hover near the lowest level in 42 years. Importantly, the Institute for Supply Management (ISM) services reading for December 2015 came in near all-time highs and indicates that the services sector, which represents over 80% of the U.S. economy, remains strong and has not been hindered by the global weakness in energy prices or manufacturing. Risks remain, however, as continued declines in energy prices have delayed vital capital investment by a major segment of the U.S. economy, corporate earnings remain muted, and manufacturing remains weighed down by tepid global demand and a stronger dollar. Although the turmoil in the oil markets remains a top concern, the lower prices should help speed up the painful supply adjustment process and may bring about greater stability as the year unfolds. Should the supply-demand imbalance in energy stabilize as we expect, this could be a potential catalyst for additional capital spending and accelerated profit growth as 2016 progresses. Overseas, the Chinese economy continues to struggle as it embarks on what will be a lengthy transition from a manufacturing-based, export-led economy to a more consumer-led, domestic economy. Perhaps more importantly, the market seems to be losing confidence in the Chinese government’s ability to manage this transition as well as it managed its economy over the past 15 years. However, other emerging markets are still adding to global growth, and central bank actions in the Eurozone and Japan should help to boost growth in those countries. In addition, we continue to expect China’s growth to stabilize, as it has the resources to do more to stimulate its economy. It is important to remember that investing is a marathon, not a sprint. It is about endurance. Volatility has always been a part of investing and always will be. In fact, over the last 15 years, every calendar year has seen at least one pullback of at least 6% and a median correction of 14%. So while volatility is normal (and even expected), it is always nerve-wracking. These short-term market flare-ups are often quick and severe, but fueled by feelings of fear and concern over perceived risks that may not be actual threats. Volatility is expected to remain heightened for the remainder of 2016, which is common as the business cycle ages, and in turn, makes sticking to your long-term investment plans even more important to avoid locking in losses and missing out on opportunities. This current pullback, which is now approximately 5% year to date and 7% from the November 2015 highs, could continue over the short term as fear and concern trump much of the good news coming from the U.S. economy. What remains as the key to weathering these short-term bouts of volatility is a commitment to a well-formulated plan, a long-term focus, and good headphones to tune out the noise of short-term negativity. While a new year often brings about new resolutions, it is important to maintain these time-tested investment habits and a long-term perspective. As always, if you have questions, I encourage you to contact me.       The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly. Economic forecasts set forth may not develop as predicted. Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks. Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal, and potential liquidity of the investment in a falling market. Because of its narrow focus, specialty sector investing, such as healthcare, financials, or energy, will be subject to greater volatility than investing more broadly across many sectors and companies. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond and bond mutual fund values and yields will decline as interest rates rise and bonds are subject to availability and change in price. Commodity-linked investments may be more volatile and less liquid than the underlying instruments or measures, and their value may be affected by the performance of the overall commodities baskets as well as weather, geopolitical events, and regulatory developments. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a nondiversified portfolio. Diversification does not ensure against market risk. INDEX DESCRIPTIONS The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Barclays U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS (agency and non-agency). The Institute for Supply Management (ISM) Index is based on surveys of more than 300 manufacturing firms by the Institute of Supply Management. The ISM Manufacturing Index monitors employment, production inventories, new orders, and supplier deliveries. A composite diffusion index is created that monitors conditions in national manufacturing based on the data from these surveys. This research material has been prepared by LPL Financial. Securities offered through LPL Financial. Member FINRA/SIPC.

A Close Call With An Important Lesson… A True Tale

December 1, 2015 | posted in: Blog, Financial Insights | by

Last week a client of mine was eating dinner with his wife and daughter at a South Florida restaurant when he began to show signs of having a stroke. His wife panicked and actually passed out. EMS had to come to the restaurant and cart both of them away in separate ambulances to the local hospital.