July 8, 2019

Long before Dear Abby first appeared in the San Francisco Chronicle in 1956, we have been seeking the advice of others. The Athenian Mercury, considered by many to have published the first modern advice column, put reader questions in print in the late 1600s.1 

While it is now possible to obtain the answer to most any question by checking Google or asking the nearest voice assistant, we sometimes hesitate to follow up on the weighty issues associated with our financial goals. But such questions are essential to our financial well-being, even if the answers are not as instantaneous as finding out the seven-day weather forecast or checking the showtimes at the local movie theater. We move forward with our financial plans because we have the knowledge and confidence to proceed accordingly.

Thus, dear readers, in the spirit of answering a few questions that might be on your mind, we address the following relevant topics. 

1. Since the beginning of the year, the market has been up significantly. What’s the harm in trying to predict the market for the remainder of 2019? 
2. Regarding portfolio performance for the first half of 2019, it is noteworthy to have double-digit returns follow a year of relatively poor returns (the MSCI All Country World Index Net lost 9.41% in 2018 and was up 16.23% in the first half of 2019). It may feel as if now is a good time to attempt to time the market (perhaps to lock in gains or protect against future losses) or adjust your portfolio without having changes in your investment objectives or financial circumstances. But since neither you nor anyone else can predict the future, the best course of action is to stay disciplined and remain diversified.
3. Last year was a rough year for the bond market. Has the tide turned for fixed income in 2019? 
4. Bonds have had a strong showing so far in 2019, which is worth mentioning especially given the level of concern about fixed income in late 2018.2Less than a year ago, people thought the Federal Reserve would be hiking interest rates even more aggressively and that rates could only go up. In January, most of the respondents in The Wall Street Journal survey of economists predicted interest rates would rise in the first half of the year, and some predicted an increase of more than 1%.3 Not one respondent predicted rates would drop below 2.5%, which highlights the fruitlessness of predicting things that are effectively unpredictable.

Within the first six months of the year, 10-year Treasury bonds have dropped almost 1% and now the consensus is that the Fed is going to start cutting rates instead.4 The good news is that lower rates mean bond prices are higher and most portfolios have seen large gains in their bond portfolios in the first half of this year. The downside is that lower interest rates mean lower future returns are expected.

1. What is the most important consideration in ensuring that our money lasts for a lifetime?
2. It’s different for individuals who are currently saving versus those who are retired. For those currently saving, creating a savings plan (one that outlines how much to save and which accounts to use) is the most critical part of making sure you are going to be ready for retirement. Your advisor can help you assess whether you are on track for where you want to be and if not, what can be changed to make sure you get there.

For those already in retirement, understanding how much spending money can be generated from Social Security, pensions and your portfolio is essential. Your advisor can help you review your spending needs to ensure they are fully covered and should be checking in on a regular basis in the event of any changes.

In closing, we offer for your enjoyment several questions from The Athenian Mercy Oracle (1703).5 

1. Why is thunder more terrible in the night time? 

A: In the dead of night, noises are rendered more distinct and consequently more terrible by the universal stillness everywhere else. 

1. What’s love? 

A: Love, and you’ll know … We’ll give you the best description we can of that passion, which we have some reason to know … ‘Tis a mixture of friendship and desire, bounded by the rules of honor and virtue … Love, being a medium between pure friendship and pure desire, ‘tis warm enough to keep friendship from an ague, but not so furiously hot as to set all on fire.

1. Is there, do you think, a large part of the world still left to discover? 
2. Yes. 

Please contact your advisor if you have any questions about the market or your portfolio.  

Meet With Your Advisor

It is important to let us know when you have any changes in your investment objectives or financial circumstances. It is also important to review your account beneficiaries each year to make sure that no personal changes need to be made and the primary and contingent beneficiary designations are up to date and accurate. To notify us about any such changes that have occurred since we last met with you, please contact our office and schedule a meeting with your advisor.

We look forward to helping you stay on course.

Greg Feese, CRPC®
Financial Advisor

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 Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses. All investment strategies have the potential for profit or loss. Historical performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. There are no assurances that a portfolio will match or outperform any particular benchmark.

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Sources

1 Adrienne LaFrance, “The Questions People Asked Advice Columnists in the 1690s.” The Atlantic, May 1, 2015. 

2 Bonds as proxied by the Bloomberg Barclays U.S. Aggregate Bond Index. 

3 Avantika Chilkoti and Daniel Kruger, “Some Investors Had Hunch Yields Were About to Fall.” The Wall Street Journal, June 9, 2019. 

4 Long-term U.S. Treasury securities as proxied by the Bloomberg Barclays U.S. Treasury Bond Index Long. 

5 Adrienne LaFrance.