Commonwealth Financial Network

One of the most surprising things to come out of the first half of 2022 was the walloping fixed income investors received from bonds. The Bloomberg U.S. Aggregate Bond Index posted its worst 12-month return in its entire history, which caused many investors to shed exposures, particularly longer-term sectors.

As we move into the second half of 2022, there are lots of things to worry about.

The client experience—from both an advisor/firm and advisor/client perspective—is a differentiating factor in an independent advisor’s success. In Focus on the Experience, the second white paper in a four-part series with Cerulli Associates, you’ll learn how partner firms can support advisors and why choosing the right firm partner will allow you to create the optimal client experience to build strong, lasting relationships.

We hit a milestone just recently, although it’s certainly not one we wanted to hit.

Did you know that 89 percent of advisors who are looking for independence want more autonomy over their business, and nearly all of them want higher payouts? In Demystifying the Independent Channel, the first white paper in a four-part series from Cerulli Associates, you’ll find a further breakdown of which advisors seek independence, and why. You'll also discover what it really means to manage your own business, and how advisors can make a successful transition.

Markets stabilized in May after one of the worst months since the start of the pandemic.

Yesterday was another bad down day in the markets.

April was a hard month for the markets.

As more and more people approach their golden years, you may see a shift in your practice—from a focus on accumulation and growth to one of income and distribution. It’s important that you’re prepared to not only ensure that your clients have enough to live comfortably, but to help them properly allocate the assets they have.

The economy seems to be doing well, with job growth still at high levels, consumer spending still healthy, and businesses continuing to invest.

Markets rebounded in March, but it was not enough to offset earlier losses in January and February.

We saw a bit of a bounce in stock markets in March, but not enough to recover from a terrible first quarter.

All compliance teams are bound by the same rules, but it’s how they create policies to comply with those rules that may make them different.

In this white paper, you’ll learn:

• How to define your ideal compliance partnership
• Which questions to ask about potential firms’ compliance teams
• How to use practical resources to help your evaluation
• What an ongoing relationship should look like

We’ve talked a lot about higher interest rates and what they mean for the market.

Yesterday, I laid out why I am not concerned, in general, about what a yield curve inversion means for the economy, while still being very aware of the increasing risks.

Have you experienced sticker shock at the pump recently?

You may think that going independent means you’ll have less time for client interactions—after all, you’ll have an office to run. Well, that’s not true for breakaway advisors who partner with the right firm. A recent study from Cerulli Associates breaks down how much time breakaway advisors save by choosing a collaborative firm partner.

Recent equity market volatility is being partially attributed to potential Fed tightening, as the Fed has signaled a shift from an accommodative monetary policy stance to one that is more restrictive.

I have been holding off on commenting on the Russia-Ukraine conflict until some sort of resolution occurred.

How do advisors leave the employer-based channel stress free? John Pratti did it by finding a collaborative partner who was right for him. Learn how his move to independence and client focus led to revenue growth and a better work-life balance. You’ll take a deep dive into what drove John’s need for change, how Commonwealth supported his goals, and how he more than doubled his fee-based AUM since joining!

Over the past decade, interest in environmental, social, and governance (ESG) investing has grown dramatically.

January was a terrible month.

The official jobs report comes out this Friday. Expectations are for another slowdown, with about 175,000 jobs added, down from 199,000 in December.

Tensions between Russia and Ukraine are showing no signs of abating.

On February 1, China bids farewell to the Year of the Ox and rings in the Year of the Tiger.

The panic of the day is the news about interest rates.

We are just starting earnings season, when companies will be reporting how much money they made in the fourth quarter of last year.

What’s in store for the markets and economy? According to Commonwealth CIO Brad McMillan and his A-team of analysts, the recovery is no longer dancing to the tune of the pandemic. While the emerging Omicron variant and factors like the Fed’s tightening of monetary policy make for uncertainty, the team outlines the upside possibilities for regaining balance and redefining normal in the year ahead.

As we closed out 2021, the world looked both different from a year ago and very much the same. Another wave of the virus was underway, with a new variant that may be even worse than the one before.

High-net-worth clients can play an integral role in the profitability of your advisory practice. Are you prepared to meet their multifaceted financial planning needs? Follow this guide for a walkthrough of advanced wealth management strategies, including estate planning, special needs care planning, asset protection, and charitable giving.

Inflation and what it means for investing is one of the biggest issues I have been hearing about recently. The topic can generate quite a bit of anxiety. But before we start to worry, let’s take some time to understand what actually happens when inflation hits the economy. Then we can panic—or not.

What really happens when you go fee-only and run your own RIA? The Road to RIA-Only: One Firm’s Journey follows the story of two advisors who are doing both. In it, they speak candidly about the highs and lows of the experience and offer advice for others considering a similar path.

It’s been a while, but it’s time for another COVID update. Compared with a month ago, the medical situation continues to improve, which is good news, although there are reasons to be concerned over the next month or two.

After a great start to the quarter in July and August, September was when the storms hit. Here in the U.S., markets pulled back significantly.

Clients looking to give to charity often already know where they want their money to go based on a personal connection or passion for a particular cause. Where they’ll need your help is deciding how to make those donations.

A Quick Guide to Charitable Giving Options reviews a variety of giving methods—offering potential benefits and other considerations for each—and includes a glossary of related terms. With it, you’ll be better equipped to help your clients find the right giving method based on their philanthropic goals.

For those who haven’t heard, global markets slumped yesterday as a Chinese real estate developer, Evergrande, was reported to be approaching bankruptcy. For many, this news brings to mind the great financial crisis of 2008.

U.S. equity markets continued to rally in August, with all three major indices setting new record highs during the month. We did see some midmonth volatility, but the Dow Jones Industrial Average gained 1.50 percent, while the S&P 500 experienced a 3.04 percent gain.

You’ve put time and effort into cultivating great relationships with your clients. As you prepare to leave the wirehouse for independence, learn how to mitigate risk, announce your departure, and create a seamless transition process for your assets.

My colleague Sam Millette, manager, fixed income, on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update.

Breaking away from your wirehouse is a life-changing decision. If you know it’s the best move for you and your clients, you’ve taken the first big step. We can help you with what comes next. Download our guide to learn about picking an affiliation model, choosing the right firm to partner with, and starting a new business.

Yesterday was an interesting day.

What’s the story for the rest of the year? In his Midyear Outlook 2021, Commonwealth CIO Brad McMillan says it will depend on whether the economy can find its way through a maze of problems—including rising inflation, labor shortages, and supply-chain gaps. Despite these risks, we’ve made real progress, and a return to normal could soon be in sight.

If we could travel back in time to the beginning of 2020, many of us would be surprised at how good things were.

The regular meeting of the Fed starts today.

May was another good month, albeit one with some ups and downs.

Leaving your wirehouse for the independent channel means you have an exciting opportunity to redefine yourself, what you do, and who you serve. Let our checklist help you create a strong brand identity that resonates with your ideal clients and sets you apart from the competition.

Today marks, in many ways, the birthday of my profession.

Thinking about leaving the wirehouse? Starting your own firm isn't for everyone, but it can be a rewarding journey for you and your clients. Read this case study to learn about two former wirehouse advisors who made the leap to independence, the challenges they faced, and the success they found.

Infrastructure is the backbone of any healthy economy, and America’s is in desperate need of refurbishment and investment.

The first quarter looks to be the turning point, both for the pandemic here in the U.S. and for the economic damage it has caused.

One of your best chances for growth comes from client interactions and networking activities. That’s where additional assets, opportunities, and referrals come from. Simply put, the more time you spend with clients and professionals already in your circle, the greater your productivity potential.

Is inflation coming? At some point, yes. We know what generates inflation, and we will be watching for it. Until then, we do not expect a wildfire in inflation land.

Examining your marketing strategies and committing them to paper can transform your ideas into a powerful platform for success. 5 Steps to an Effective Marketing Plan will help you create an organized, thoughtful written plan to raise your competitive profile and enhance your ability to attract and retain valuable clients.

There has been a lot of talk about whether the stock market is in a bubble. As usual, there are distinguished professionals on both sides of the debate, armed with convincing statistics and arguments. So, what is the average investor to do?

The economic news has continued to soften in recent days. December saw layoffs go up and the number of jobs decline, and, this morning, the retail sales numbers dropped. Consumer confidence has gone down. Clearly, the economic headwinds from the pandemic are getting worse.

What’s the story for the economy and markets in 2021? According to Commonwealth CIO Brad McMillan, the recovery has been steady and much faster than expected. Even with ongoing uncertainties surrounding the coronavirus and some anticipated setbacks, McMillan outlines why we may still be on track to something approaching pre-pandemic normal by the end of 2021. Download his 2021 outlook.

The third wave of the pandemic may be showing signs of a peak. While new cases remain very high, the seven-day daily average was down for two days in the past week, suggesting we may be close to a peak.

As we consider what may happen in 2021, it’s useful to reflect on how we ended 2020—both the good and the bad. For the good, the election is behind us. Vaccines look to be more effective than anyone expected. Jobs and confidence are holding up surprisingly well as the economy adapts. In many ways, things are much better than we thought.

Total new jobs came in at 245,000. This result was well below the 460,000 expected and even further below the 638,000 we saw last month. Looking under the hood, the details were not great either.

As expected, the medical news continues to get worse. New infections hit all-time highs last week as the third wave of the pandemic has accelerated around the country. Case growth in many states remains at levels that threaten health care systems.

A lot has changed in the past week. I normally try and get this post up earlier in the month, but with everything that has happened—and which has demanded comment—this is the earliest I could fit it in. But that is a good thing...

“It will take as long as it takes,” a reported quote from the Pennsylvania attorney general about the vote count, can also apply to the election itself. Indeed, from where we stand right now, the Pennsylvania vote count will determine the election. We don’t know what the final answer is, and we don’t know when we will know. So, are we any further along than yesterday?

Want to make the most of year-end planning conversations with clients? This checklist outlines 10 key points to get you started, including new tax and retirement changes in 2020 due to the pandemic. Use this easy reference guide to help your clients get a jump on planning.

Implementing a comprehensive estate plan requires meticulous coordination of the financial, legal, and tax aspects of your client’s life. By asking the right questions and being prepared for issues that may arise, you can take a central role in the planning process and cement yourself as a trusted advisor. Our guide provides the steps you can take to help ensure that all your client’s needs and wishes are being met.

Hiring a next-gen advisor can benefit every aspect of your business and set you up for long-term success and growth. Download our free white paper to learn insights and actionable steps you can take to help you find the perfect candidate and retain top talent to position your firm for the future.

Although many millennial women’s needs will overlap with their more established counterparts, younger female clients face unique challenges and opportunities. Our complimentary checklist shows how you can guide these clients to become more knowledgeable, empowered, and confident about their financial outlook. Learn more about why millennial women are an emerging clientele, ways advisors can serve them better, and the right questions to ask to encourage independence.

Markets continued to rise in June, as efforts to reopen state economies across the country continued throughout the month. Investors reacted to the continued reopening with optimism, driving the S&P 500 up 1.99 percent in June following a 4.76 percent increase in May.

June was a mixed month. The national reopening in May and June led to new viral outbreaks and a spike in new infections in multiple states. Surprisingly, though, both the economic recovery and financial markets did very well. As we enter July, the question of many minds is whether the medical situation will improve—and whether the good economic and market news will continue.

May was a good month, in terms of the virus, the economy, and the markets. But what does this positive news mean for the month ahead?

April saw markets rebound from the recent lows set in March, as progress combating the spread of the coronavirus gave hope to investors. The S&P 500 gained 12.82 percent during the month, marking the best single month for the index since 1987.

In unsteady times, steady talk with your clients can make all the difference in enabling you to strengthen bonds and solidify trust with them. You don’t have to have all the answers—but an effective communications approach can help them feel anchored and ensure that your practice keeps thriving. Our complimentary guide outlines five clear-cut strategies for helping you talk through the uncertainty and position yourself as your clients’ solid ground.

It was the best of times, it was the worst of times. April was a Dickens of a month. But what lies ahead? Let’s take a closer look.

As we did last week, I’d like to provide an update on where we are in the coronavirus crisis. This week, the news has generally been good. The virus continues to come under control, with the growth rate slowing (although the case count has not declined as much).

Things have quieted a bit (but only a bit) in terms of the coronavirus crisis. As such, I thought it would be a good time to provide an update on this evolving situation. Let’s start with the trends in the spread of the virus to understand what they mean in the present for the markets, as well as in the future for the pandemic itself and the economy.

March was a really tough month. After a terrible February, all major stock indices were down by double digits, leading to significant declines for the quarter as a whole. All of the major indices ended the month and quarter below their 200-day moving averages, often a sign of more trouble ahead.

Numerous surveys show that women often defer to their male partner regarding financial decisions. By doing so, they may be tragically unprepared to deal with their financial affairs in the event of divorce or death of a spouse. But there’s a solution: get women involved in financial planning by sharing your knowledge. Our free checklist details key steps toward helping female clients understand and gain control of their finances.

As expected, the initial jobless claims report—the one that shows how many people have been laid off and are newly applying for unemployment assistance—was a shocker this morning. Three million people lost their jobs and applied for unemployment last week. This is by far the highest number ever, with the previous record at just under 700,000 in 1982.

With everything that is happening in the world, now is a good time to step back and think about where we are and where we might be going. There is a tremendous amount of information available. But what’s missing is a framework for that information that would help clarify the big picture.

We have finally seen the end of the bull market, with the Dow dropping 20 percent from its highs and the S&P 500 following today. We are officially in a bear market, with all that implies. Stock markets around the world are down again today on the news.

Monday, March 9, will be the 11th anniversary of the bull market that started back in 2009. With recent pullbacks and turbulence around the coronavirus, it is reasonable to worry that this anniversary will be the last and that a bear market will break the streak sometime in the next year. As such, now seems a good time to consider where we stand—and where the market might be headed.

In yesterday’s post, I pointed out that the markets were taking a break, stopping the sudden slide to think about whether the news surrounding the coronavirus is really as bad as all that. Today, they appear to have decided that, yes, things are that bad and may be even worse. Perhaps, then, it is time for me to reassess my conclusions.

It is now clear that the coronavirus has escaped the attempted containment by Chinese authorities and has spread around the world. According to the World Health Organization, there are 79,331 confirmed cases, of which 77,262 are in China and 2,069 are outside of China (as of February 24, 2020).

It’s time for our monthly look at market risk factors. We had a strong start to the year, with U.S. markets at all-time highs by mid-January. But a risk-off sentiment driven by the spread of the coronavirus from China spooked investors, leading to modest declines for equity markets at month-end.

January was a tough month. We started with a U.S. attack on an Iranian general (creating thoughts of war) and ended with the possibility of a new global pandemic (with the Wuhan coronavirus spreading around the world). In between, of course, we had the impeachment spectacle here in the U.S., as well as the British exit from the European Union.

Today, we get the big one, the most (in my opinion) significant economic report of all: the jobs report. So, what should we expect?

As we move into 2020, we find ourselves in an uncertain place. Economic trends have deteriorated, and growth levels have flatted. Plus, the impeachment process and election could have negative repercussions. Indeed, the risk of recession is real—although its impact may be much milder than many fear.

Brad McMillan, Commonwealth’s CIO, provides his 2020 market outlook. After a strong 2019, worries are starting to build for the year ahead—especially over a potential recession. But the data is actually improving. As such, 2020 may look much like 2019. Job growth might slow, but consumers are likely to keep spending. Plus, business investment is showing signs of a comeback, which would be a significant tailwind. The news for the markets may not be as positive, as we may see some volatility. But as long as the economy keeps growing? The markets should continue to move forward.

Do you have clients who are overspending, have lost sight of their goals, or are stuck in a state of inertia? This guide explains the steps you can take to help them regain control of their financial lives. Understanding the principles of behavior modification, including the five stages of change, is the key to leading clients to execute change and build true confidence. Plus, you won’t want to miss these tips on coaching best practices and keeping your empathy in check.

Overall, the economic data released last month came in worse than expected. There was a sharp decline in two of our metrics, consumer confidence and service sector business confidence. Job creation was more mixed, as the pace of new job growth remains below that of 2018 but is still at a level above the trouble zone on a year-to-year basis.

Yesterday, the FOMC decided to reduce the target range for the federal funds rate from 2–2.25 percent to 1.75–2 percent. As the headlines put it, the Fed cut rates by one-quarter of a percent. The headline version is certainly pithier, but the first version is more accurate—and gives a better sense of what actually happened.

August was a tough month pretty much across the board, with politics rocking markets around the world. So, what should we expect for September? Let’s take a closer look.

We saw the largest stock market drop of the year. The Dow Jones Industrial Average was down more than 800 points (over 3 percent), an even bigger decline than we saw earlier this month. Plus, we are on track for the worst week of the year. It is a tough time for markets, and investors are worried. But should they be?

The past week has been a tough one for stock investors. The S&P peaked on July 26, and it has dropped every day since then for a total decline of almost 6 percent (as of the close of August 3). This is a large and fast drop that has understandably rattled investors, who wonder why the sudden pullback—and whether it will continue.

In July, U.S. markets were up overall, between 1 percent and 2 percent, and bonds also had gains as interest rates declined. Although international markets were down slightly, by about 1 percent or so, they remained above their long-term trend lines. From a financial perspective, July wasn’t a great month, but it was a pretty good one for investors.

This morning’s announcement of the deal between Congress and the White House to suspend the debt ceiling for the next two years is undiluted good news. With an agreement that the government can borrow to spend the money that it has already committed to spending, we can avoid a totally unnecessary, politically driven crisis that could have caused real economic damage.

This morning, I spent some time speaking with a client who wanted to know why markets had slowed down recently. But I am not sure I agree with her. We hit all-time highs just the other day, although in recent days, the market has been taking a bit of a breather. Will that down time continue, or could we get another leg up?

Although there was some good news last month—job growth bounced back to come in well above expectations—the overall trend remains negative. Confidence has continued to decline, while the yield curve hit an official inversion as of the end of June.

Q2 2019: it was the best of times, it was the worst of times. Okay, it wasn’t either, but last quarter we did see something that looked like both.

One of the most reliable signals of a pending recession is when, in the jargon, the yield curve inverts. This sounds like a fancy phrase, but it simply means that investors demand to be paid more for a short-term loan than for a long-term one.

“Sell in May and go away” was certainly on point last month. With U.S. and global markets down significantly, investors closed out the month with a level of worry we have not seen since the end of 2018. Let’s take a look back at this volatile month, as well as what we might expect going forward.

Commonwealth Financial Network® offers a range of affiliation models for wherever you are—and wherever you're going—in your business evolution. Learn about the vast infrastructure, the people, and the indispensable service that are here to support you and your clients, whether you choose to maintain a mix of fees and commissions or you decide to operate as a fee-only advisor.

Recently, I've fielded a few calls from advisors asking for my thoughts on media coverage declaring that current market conditions are similar to those of the late 1990s. Their clients are worried about what might happen. Could we see a replay of 2000?

After yesterday’s terrible performance—with U.S. stock markets down more than 2 percent—worries are starting to rise. Combined with last week’s declines, it looks like we may be seeing the end of the bull market. So, is it time to panic?

On the face of it, this morning’s strong jobs number should elicit a full three cheers. Job growth came in at 263,000. This result was up from last month’s downwardly revised 189,000 and well above the expected 190,000. Looks like a home run, right?

Today we will take a look at an old investing adage: “sell in May and go away.” It is supposed to reflect the idea that market returns over the summer and fall are worse than those in the winter and spring. Under this theory, you should sell all your stocks in May and then buy them back in November.

We got the first estimate of economic growth for the start of the year. Despite quite a bit of concern about slowing growth, the figure came in at 3.2 percent. This result was well above the expected 2 percent and a substantial acceleration from the 2.2-percent gain in the last quarter of 2018.

This morning’s news revealed that, as of yesterday, both the S&P 500 and Nasdaq stock indices had hit new highs for the first time in six months or so. Let’s cut right to the chase here. For me, the appropriate response to this news is, “So what?”

With the Mueller report scheduled to be released later today (as of this writing), preceded by the press conference with the attorney general this morning, the newspapers are on high alert. This report is being billed as a potential constitutional crisis and, if it doesn’t approach that level (as it almost certainly will not), as the beginning of the next round of political wars.

It’s time for our monthly look at market risk factors. Just as with the economy, there are several key factors that matter for the market in determining both the risk level and the immediacy of the risk. Although stocks have largely recovered from their recent pullback, given valuations and recent market behavior, it is useful to keep an eye on these factors.

Institutional-quality research for you and your clients. Guidance on investment management programs, equities, fixed income, and alternatives. A dedicated SRI/ESG resource. Direct access to our chief investment officer. That’s the value-add you get from Commonwealth Financial Network’s Investment Research team.

If you think about it, the fact that you can borrow cheaper for 10 years than for 3 months is a signal that something is broken. It is simply riskier to lend for longer, so the imbalance shows that something is wrong. As such, the yield curve inversion makes sense as a risk indicator.

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for March? Let’s take a closer look at the numbers.

I am in Colorado this week at a Commonwealth conference, spending some time at high altitude when I normally live pretty much at sea level. The altitude seems somehow appropriate, though, when I look at where the markets are right now compared with where they were 10 years ago. We have climbed to astonishing heights since the bottom—heights almost no one expected back then.

From a financial markets perspective, last month was a good one. U.S. markets were up between 3 percent and 4 percent, developed international markets were up 2 percent to 3 percent, and even emerging markets managed to notch a small gain. Overall, February was another step forward from the decline at the end of last year, suggesting markets have regained their footing.

We talked yesterday about the possibility of another government shutdown and the effect that could have on both business and consumer confidence. That shutdown looks to be something we will avoid. But now there is another potential confidence buster ahead being talked up in the media: an earnings recession.

After a terrible fourth quarter in the financial markets, we had a sizable bounce in January. Markets were up significantly, both here in the U.S. and around the world, and sentiment seemed to change markedly from pessimism to a new optimism. The question going forward is whether things have really changed that much.

Well, as expected, the Fed did not raise rates yesterday. Further, it came out with what was perceived as a much more dovish statement than anticipated, essentially declaring a pause in rate increases. In response, markets cheered.

With the brutally cold weather locking down large parts of the country, the hope today is that the Fed will heat up the markets by both holding rates steady (as expected) and dialing back the liquidation of its balance sheet.

Right now, the base case remains positive. With earnings expected to keep rising and with valuations low per recent history, continued appreciation seems reasonable. Add in the real possibility that many of the issues currently weighing on the market will be resolved, and the positive scenario looks even more likely.

I wrote about the big-picture effects of the government shutdown the other day, which are likely to be longer term. As it continues, though, the shorter-term effects continue to pile up. As such, it is time to take a look at what the shutdown means now and over the next month or so.

As we approach year-end, we find ourselves in an unfamiliar place. Despite mounting worries over the past couple of years about politics and other issues, the market and economy continued to grow. Through the first half of 2018, the markets were moving higher, despite a few breakdowns, and economic growth was accelerating.

Yesterday morning, the major headline was the downward revision in Apple’s revenue projection—the first time this has happened in well over a decade—on lower sales in China. The reaction to this news was apocalyptic, with markets around the world selling off.

Brad McMillan, Commonwealth’s CIO, provides his 2019 market outlook. As we approach the new year, hiring is strong and both business and consumer confidence remain high. With these solid fundamentals, the financial markets are likely to respond. Earnings should go up, so we should expect to see rising stock prices as well. Of course, there are always worries, including political concerns in the U.S. We may also see slowing growth. All in all, the year ahead looks to be much like earlier years in the cycle. But the name of the game in 2019? Solid fundamentals and, very likely, solid markets.

Yesterday, there is no doubt that markets were expecting a bailout from the Fed—and threw a tantrum when they didn’t get it.

As we approach year-end, we find ourselves in an unfamiliar place. Despite mounting worries over the past couple of years about politics and other issues, the market and economy continued to grow. Through the first half of 2018, the markets were moving higher, despite a few breakdowns, and economic growth was accelerating.

Yesterday’s market drop reversed all of Monday’s gain and then some, reportedly on growing doubts regarding the exact terms of the trade war truce announced by President Trump. That might be the case, but I suspect the headlines pointing out that part of the yield curve had inverted played a bigger role in the decline.

Some advisors today are rushing to sell their practices after very little forethought, and they could be leaving money on the table. If you want to get what your practice is worth, focus on four key tenets—business, management, financial, and market—to demonstrate your value to potential buyers.

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for November? Let’s take a closer look at the numbers.

Growing your business through practice acquisition is a good goal, but it's a long-term strategy that can take years to accomplish. How can you meet your growth objectives in the meantime? By focusing on these client-facing activities that are proven revenue drivers.

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for October? Let’s take a closer look at the numbers.

Yesterday was a bad day in the market. The Dow was down more than 800 points (800 points!), and the S&P was down almost 100 points (100 points!). Surely, this is the beginning of the end.

The third quarter looks like another good one, at least here in the U.S. Despite ongoing turmoil—both political (with the Kavanaugh confirmation battle) and economic (with the rising trade conflict and tariffs)—markets rose steadily, reaching new highs. Markets abroad were not as positive, with emerging markets down and developed markets generally flat.

There has been much discussion recently about how the great financial crisis kicked off 10 years ago this week. We have retrospective interviews with participants, updates on how people fared during and after the crisis, and all of the typical media storytelling.

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for September? Let’s take a closer look at the numbers.

As Turkey’s crisis rumbles on, investors are on the watch for signs of contagion. Emerging markets in general are getting hit, so contagion remains a possibility. Still, there are reasons to believe the crisis will burn out in Turkey itself.

To end the week, I have a couple of quick takes on some hot topics from the financial news. Let’s start with inflation.

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for August? Let’s take a closer look at the numbers.

As we begin August, let’s take a look back at the markets in July, plus what to expect in the month ahead.

Coming off of a strong year for the economy and markets, we had high hopes for 2018, but the first half of the year didn’t play out as planned. Between the stock market pullback early in the year; the slowdown in economic growth; and rising risks, largely in trade, expectations softened. As we hit the midway point for 2018, though, it looks as if those initial hopes might be more realistic than they seemed even a month ago.

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for July? Let’s take a closer look at the numbers.

2017 was a great year for the economy and financial markets, and we started 2018 with high hopes for even faster growth and continued market gains. But between the stock market pullback early in the year; the slowdown in economic growth; and the rising political risks in Asia, with North Korea, and in Europe, with Britain and Italy, expectations softened. Perhaps 2017 was the end of the cycle after all.

One of the big pieces of news in the financial world today focuses on General Electric (GE). The iconic American conglomerate has been removed from the Dow Jones Industrial Average, and its stock will no longer be included when the index is calculated. It will be replaced by the drugstore chain Walgreens.

Much of the economic data suggests that the slowdown in the first quarter is passing—this morning’s personal spending report is a good example. But, as always, what matters most for the economy is jobs.

First, there was “Grexit,” which was the name given to the possibility that Greece would leave the eurozone. Then, there was “Brexit,” the plan for the U.K.’s exit from the European Union, which is actually happening (at least potentially). Now, we have “Italeave,” which I think sounds better than the other contender, “Italexit.” So what’s going on with Italy?

We closed yesterday’s post on whether markets are efficient with the conclusion that it could be possible to beat the market. But, to do so, we would need either better information or to view things differently—specifically referencing time horizons as one way to do that. Let’s start with a couple of areas where better information is a real possibility. Then, we’ll take a deeper look at the second idea, which is both more subtle and more interesting.

Oil has been in the news quite a bit recently. Prices have risen to multiyear highs, and the recent decision by the U.S. to reimpose sanctions on Iran has rattled markets even further. We know that oil prices are a key risk indicator for the economy, but is it time to start worrying? Plus, what do higher oil prices mean—if anything—for the financial markets?

As we start moving further into May, I think it’s a good time to take a look back at April’s economic news, plus what to expect in the month ahead.

As we move away from the financial crisis and as policies normalize, it is a good time to take a look at what the removal of those policies might mean. After all, many of the actions taken in the aftermath of the crisis were explicitly designed to do certain things. If those actions were successful, then presumably their reversal would have the opposite effect.

Yesterday, we had another breakdown in the stock market. Major indices dropped for the third day out of four, and they were down this morning. Once again, we are getting close to the long-term trend line, the 200-day moving average, which is where I personally start to pay attention.

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for April? Let’s take a closer look at the numbers.

The first quarter of 2018 saw the end of the bull market. Not in stocks necessarily, as the upward trend remains intact, but certainly of the bull market in confidence. January was a strong month, but then the world changed. Markets dropped in early February, only to bounce and then drop again in March. Let’s review why things changed in Q1, plus what we might expect in Q2.

I consider housing to be one of the key drivers of the economy. This is true from a fundamental basis—with housing driving construction and mortgage finance, which are significant parts of the economy, plus all sorts of indirect spending such as furniture.

Today marks the 10th anniversary of the failure of the Wall Street firm Bear Stearns, widely considered the opening act of the great financial crisis of 2008. Bear was done in, so the story goes, by a mix of ill-considered bets on mortgage securities and excessive borrowing.

I woke up this morning to a surprise. It had snowed, which was expected. After all the fear-mongering coverage, in fact, I expected the house to be covered, but it wasn’t so bad. The real surprise was the fact that a combination of wind and heavy snow had taken down several trees—including an 18-footer right across most of my driveway. All of a sudden, I was cut off.

Yesterday, I wrote that the markets were likely to continue to trend upward, on the idea that the U.S. tariffs were not really going to happen. But then the news that Gary Cohn had resigned as head of the National Economic Council was announced—and this has changed that perception entirely.

Yesterday, President Trump announced that the U.S. will be imposing tariffs on steel and aluminum imports. This shocked markets here in the U.S. and around the world, driving them back down just as it looked like they were recovering from the downturn last month. What happened? And is this a more serious threat going forward? In a word, yes.

With the declines yesterday, U.S. markets are now in an official correction. Just to get the terminology straight, a “correction” means a 10-percent decline, while a "bear market" indicates a 20-percent decline. As of the close yesterday, the Dow was down 10.3 percent, and the S&P 500 was down 10.1 percent.

Today’s big news is the jobs report. It is the single most informative and important economic report there is. As such, it always gets a great deal of attention. In general, the news this month is quite good—but not perfect.

There is a market adage that states, “as goes January, so goes the year.” We certainly should hope this is the case for 2018, as January was another month of great stock market returns. The U.S. indices were up by 5 percent or more, while international markets—both developed and emerging—did the same.

With President Trump scheduled to give the annual State of the Union address tonight, I thought it would be a good time to consider the economic state of the union. As usual, of course, I am going to pass on the politics and instead take a big-picture look at the economy.

One of the dominating economic headlines of late has been the weakness of the dollar. These stories have been exacerbated by Treasury Secretary Steven Mnuchin’s comment that the “dollar is not a concern of mine.”

With the market surging and expectations high, I want to look at the actual corporate earnings numbers for 2017. Of course, it is early in the season to do any definitive analysis. But we can certainly set some context, which will be particularly useful for this year.

With the Dow opening above 26,000 yesterday morning, I was all set to continue down the same path of my Dow 24K and Dow 25K posts. Alas, it wasn’t to be. Although markets are up, the Dow is below the magic number as I write this, which is certainly okay.

Yesterday, I noted briefly that I would be “keeping an eye” on how long the good times last in the new year. It was one of those offhand comments that, once you think about it, really requires quite a bit more thought and analysis than at first glance.

With interest rates rising recently, I have received a number of questions about what that means for our investments. It’s not as simple a question as you might think. As such, it is worth taking some time to think things through.

The Dow has hit yet another milestone: 25,000. By all means, cue the fireworks, cheering, champagne, and so forth. But since this is the sixth time since the start of 2017 that a 1,000-point milestone has been reached, let’s take a step back. After all, anything that happens six times in 12 months is hardly uncommon—and perhaps not worth getting too excited about.

It was the best of times, it was the worst of times. Catchy beginning, yes? Dickens certainly used it to good effect. As I was thinking about 2017 in retrospect, it seemed almost unavoidably appropriate.

Yesterday’s news that the Democrats won the Alabama special Senate election, for the first time in 25 years, rattled U.S. politics. By taking the Republican majority in the Senate from 52 to 51, it reduces an already tight margin for difficult votes.

I have been wrestling with what to write about today. There’s not much to add that is new. The economy is doing well, and the data is coming in strong. Although the stock market is reacting to events in Washington, it is still within 1 percent of its all-time highs. From my beat, there is not a lot worth commenting on at the moment.

As I have been saying, things are pretty good, economically speaking, as we approach the end of the year. At the same time, there are some significant risks in the next couple of weeks that we need to keep an eye on.

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Many of us were under the assumption that we could go into the holiday season with Europe pretty much checked off the risk list. The economic news is good and getting better, and the major elections that have caused so much angst have passed. Not so fast, bub.

With the passage of the House’s tax reform bill, the Republicans have moved significantly closer to one of their key political goals. Of course, the Senate bill still needs to pass that chamber, and then the reconciled bill must pass both chambers. But the fact that the fractious Republican factions in the House have come together is a signal that passage is a real possibility. 

I am really coming to grips with my 2018 outlook, and I find myself wrestling with the implications of slowing growth on the economy and, in particular, the markets. The fundamentals have been strong, with good earnings growth driving the markets up.

Market risks come in three flavors: recession risk, economic shock risk, and risks within the market itself. So, what do these risks look like for November? Let’s take a closer look at the numbers.

It has been a busy couple of days in the news. So, while I don’t ordinarily quote Lenin, his statement that “there are decades where nothing happens; and there are weeks when decades happen” is just too applicable to ignore. 

October 19, 1987, is a date that will live in stock market infamy. Known as Black Monday, it marks the largest one-day loss in history, with the Dow down exactly 508 points (22.61 percent).

One of the key points in my argument that things are actually pretty good—and likely to get better—has been that with a growing economy, companies are selling more and making more money. Rising profits, especially on a per-share basis, are the foundation for a rising market.

As we close out the third quarter of the year, here’s what we know. It has been a great year and a great quarter for stocks around the world. We’ve seen a really good month for all areas except emerging markets, which pulled back a bit but still posted the strongest quarterly gains overall. 

After a dip and recovery yesterday, the markets were down this morning. It is clear that the developing situation between the U.S. and North Korea is rattling financial markets. Should we be worried? If so, what should we do?

It seems like just a couple of months ago that I was writing about record highs for the Dow. In fact, looking at the data, it was only a few months ago, on January 26, that I wrote about Dow 20K. Reviewing that post, it notes that I last discussed stock market records 58 days before that. Are we seeing a pattern here?

There’s an important—and potentially very disruptive—issue that has been largely ignored during coverage of the health care debate. The U.S. government hit its borrowing limit on March 16, 2017. Yes, that’s right—the U.S. borrowed as much as it legally can four months ago.

Valuations continue to reach new highs, and the market looks very expensive—by some measures, the third highest of all time after 1929 and 1999. Meanwhile, the economy is showing signs of slowing.

When looking at the stock market, one of the key things we should focus on are earnings, as they represent the bedrock of a stock’s value. The best way to value stocks—the dividend growth model—analyzes earnings, growth rates, and required returns to determine what a stock is worth fundamentally.

Market risks come in three flavors—recession risk, economic shock risk, and risks within the market itself. Using a red light/yellow light/green light system, this monthly post explores the risk level in the markets, based on a number of factors.

The data for June was generally positive, with a rebound in job growth and a surprise increase in business confidence supported by continued high levels of consumer confidence.

Despite a weak first quarter, the second quarter has looked good, and signs are pointing to a solid remainder of the year. Recent data has shown an expanding economy, while companies have grown both their top and bottom lines. Markets around the world have reacted to this by rising substantially, and we’ve continued to hit new highs here in the U.S.

Brad McMillan, Commonwealth’s CIO, discusses the markets and economy in May. It was a good month, with financial markets around the world rising and strong gains in the U.S. Still, we’ve had political and economic concerns, with the first quarter of the year being quite slow. But the data in May suggests this slowdown was temporary: Jobs came back, consumer spending was up, and consumer confidence remained high. We also saw growth in business investment. Are these positive trends likely to continue? Stay tuned to find out. Follow Brad at blog.commonwealth.com/independent-market-observer.

I am in California, which means that I woke up this morning to a market that was already open—and dropping. Washington, DC is the cause once again. Growing turmoil in the nation’s capital has called into question the ability of the Trump Administration and Congress to enact their policy goals.

Economic data in April was mixed, with first-quarter weakness lingering in some risk indicators. Overall, though, the news was positive, and most forward-looking indicators we track bounced back from decreases in March.

As April draws to a close, the old adage “Sell in May and go away” may be on some investors’ minds. The saying refers to the tendency of markets to underperform during the period from May to October (as compared with better performance from November through April), advising us to sell and wait for brighter days ahead.

The big news today is the White House's tax plan, which proposes to cut taxes across the board, relieve millions of people from the burden of paying income taxes, and make filing much simpler and easier—all while keeping the budget in balance (or at least not making the situation worse).

With Emmanuel Macron through to the second round, the French election is (largely) off the table as a systemic risk. Polls show Macron well ahead of Marine Le Pen of the National Front, and the likelihood is that the next French president will be a pro-European centrist rather than an anti-European populist.

First, there was hype and then improving sentiment in the real economy, along with a nice initial rush in the stock market. More recently, we’ve seen doubts and weak numbers creep in for the economy and worries and a small pullback for the stock market.

The monthly employment report comes out tomorrow, and markets are watching closely to see whether the string of positive surprises continues. If it does, it could be the start of a new upward run in the stock market. If not, it will suggest that economic strength may be starting to moderate. Either way, it will be big news.

As we close out the first quarter of 2017, all I can say is that it’s been a great one, economically and financially. Despite all of the worry and turmoil—in Washington, DC, and elsewhere in the world—markets have risen substantially and the economy has continued to grow.

The big news of the day is that the United Kingdom has finally pulled the trigger on its exit from the European Union. The letter initiating Brexit was delivered this morning, and the parties now begin the two-year process of negotiating the exit terms and subsequent relationship.

Today, the Republicans are set to make a high-stakes gamble on one of their signature issues, repealing the Affordable Care Act. They don’t know whether the bill will pass, but at President Trump’s behest, they are bringing it to the floor.

Just as I do with the economy, I review the market each month for warning signs of trouble in the near future. Although valuations are now high—a noted risk factor in past bear markets—markets can stay expensive (or get much more expensive) for years and years, which doesn’t give us much to go on timing-wise.

Will the stock market rally continue? That’s a big question right now, and the answer will depend on two things...

The speech presents a chance for the president to clearly define what he wants Congress to accomplish.

Every so often, I like to look back. Not too often, because life is lived moving forward. Occasionally, though, we can learn a lot about where we are going from considering where we've been

Just as I do with the economy, I review the market each month for warning signs of trouble in the near future. Although valuations are now high—a noted risk factor in past bear markets—markets can stay expensive (or get much more expensive) for years and years, which doesn’t give us much to go on timing-wise.

Since the election, the market has been driven up largely by a combination of economic improvements and a vast increase in hope. Although the fundamentals continue to improve, there are signs that may be slowing down. Even without the slowing, the gap between expectations and reality is large. A lot has to happen to close that gap and fulfill investors’ hopes.

In the past couple of days, I’ve led a pretty optimistic quarterly call for investors, given a couple of pretty optimistic TV interviews, and written some fairly optimistic pieces here on the blog. Although I stand by all of my statements, it occurs to me that, for someone known as Eeyore, I’ve displayed an unusual amount of optimism lately. Time for a reality check.

The key driver of the stock market, over the long term, is earnings. In the short term as well, earnings can be the primary driver of market performance. So, each quarter, it makes sense to review whether earnings are doing well or poorly, and why.

ust as I do with the economy, I review the market each month for warning signs of trouble in the near future. Although valuations are now high—a noted risk factor in past bear markets—markets can stay expensive (or get much more expensive) for years and years, which doesn’t give us much to go on timing-wise.

This week, someone asked me about the excess reserves held by the banking system and what the Federal Reserve is likely to do about it. As it turned out, what he really wanted to know was whether inflation is likely to take off and which signals might alert us if the economy and markets are about to roll over.

It’s the most wonderful time of the year! I suspect many of you are as tired of hearing that as I am. I love the holiday season, but the endless repetition of carols can get to you after a while.

It was 243 years ago today that a group of Massachusetts Bay colonists threw the Boston Tea Party, protesting a law they did not like by dumping tea from British ships into the harbor. This, of course, led to further British laws and colonial unrest—and eventually to where we sit today, in the United States of America instead of Greater Britain.

I remember when the Dow Jones Industrial Average hit 10,000, both going up and going down. It was a lot more fun going up, especially the first time. The index is now approaching double that level—Dow 20,000. If we get there, it should be exciting.

With U.S. stocks surging to new highs and trouble brewing elsewhere in the world (the failed Italian referendum and resignation of Matteo Renzi, not to mention the continued decline in the Chinese currency), I’ve been getting questions about whether investors should just stay here in the USA.

Over the past couple of weeks, everyone’s been wondering how long the stock market's “Trump bounce” will last.

With everyone out shopping today, we'll soon be seeing the usual slew of Black Friday data (and the instant economic analysis that goes along with it).

Since the election, much of the financial commentary has centered on the stock market's surprising surge.

Although many were predicting a significant pullback on Mr. Trump’s election, we, in fact, got a fairly significant advance. What’s up with that? I suspect there are several reasons.

Throughout the campaign, much of the media coverage on both sides has verged on the apocalyptic, and, indeed, there may be substantial challenges as a new administration comes into power. But the reality is that the sun will continue to come up each day, and the country will move on.

After significant bouncebacks in the major indicators over the past couple of months, we saw a bit of a pullback in several components of the data in October.

A few weeks ago, I wrote a piece on what the election means for investors’ portfolios. Longer term, the answer was not much. Shorter term, there’s potential for market volatility...

It’s been a while since I wrote about inflation, the general increase in prices that makes everything cost more. Inflation has been so low recently that it hasn’t really been a priority.

Amazingly enough, after the concern about another Black Monday, the 1987 drop's anniversary today hasn’t generated much media attention. It’s almost like it never happened.

In the past couple of days, three different people have forwarded me an opinion piece that attempts to draw some parallels between the way the market acted in October 1987 and the way it’s acting now.

There’s no escaping coverage of the presidential election—what it means, whom to vote for, whom not to vote for. Many of us are deeply engaged in the process and passionately committed to one of the candidates.

Tomorrow, the Labor Department releases the jobs report—probably the most important economic report of them all. After all, jobs drive everything.

I woke up early this morning to check the results of the British referendum on leaving the European Union. Against expectations, the Leave vote won a convincing victory, defying the polls and the prediction markets. There’s no doubt the world has changed, significantly. There is considerable doubt about what that actually means and—more immediately—what to do about it.