As unsettling as these selloffs are, they are actually natural and healthy ... the short-term, but we do know what it ha
QUARTERLY NEWSLETTER
MARKET COMMENTARY - BY MATTHEW ROGERS
FAMILY LOVE LETTER
After a fairly quiet year in 2017 with very little volatility, the global markets have been quite volatile in the first half of 2018. With no shortage of economic or political news, the financial markets have been on a roller coaster ride this year. Investors experienced an official ‘stock market correction’ (defined as a 10% or greater decline in an index) in the first quarter of 2018. Since that time, the equity markets have rallied and then declined once again. Overseas markets have fluctuated even more than domestic markets in the first half of the year. Many things have contributed to this volatility and weakness. There are seemingly daily political headlines with policies causing debate. In addition to that are the ongoing interest rate increases (seven of them thus far) by the Federal Reserve which has seen the Prime rate climb from 3.25% to 5.00%. These rate increases have not only affected the equity markets but have made managing fixed income vehicles extremely challenging as well. Like we stated in our spring newsletter, it is very important to ‘Keep An Eye On Interest Rates’.
ON THE HOMEFRONT
More Risk In Bonds Than Stocks?
TRIVIA
There are pros and cons to every investment as well as pre-conceived notions about different asset classes. Most investors understand that owning stocks (or stock mutual funds and other ‘equity’ vehicles) have a higher level of risk and chance of losing money than some other ‘safer’ investments like certificates of deposit (CDs), government bonds or bond mutual funds (all considered investment vehicles in the ‘fixed income’ asset class category). However, it is important to understand that some ‘fixed income’ vehicles can be risky and at times have greater downside than equity investments. There are times in economic cycles when fixed income vehicles lose more value than equity vehicles. This can occur when interest rates are increasing like we have seen this year. Again, quoting our spring newsletter, we wrote “as long as rates don’t rise too much or too quickly, the equity markets could still offer the best return possible for investors”. That has been the case thus far as domestic equities have outperformed even the normally less risky fixed income markets (as measured by the S&P500 Equity Index compared to the domestic bond indices). Having said
SUMMER 2018 MARKET COMMENTARY CLIENTS' GREATEST FEARS?
Matthew J. Rogers Senior Vice President, Investments Managing Director
[email protected]
Christopher Norton, AAMS® Vice President, Investments
[email protected]
Adele L. Jacques Senior Registered Sales Associate
[email protected]
this, it is still very important to maintain a diversified portfolio that is suitable for each investor’s timeframe, risk tolerance and long-term goals. The S&P 500 is an unmanaged index of 500 widely held stocks. Keep in mind that indexes are unmanaged and individuals cannot invest directly in any index. Individual investor results will vary. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices rise. Diversification and strategic asset allocation do not ensure a profit or protect against a loss.
Clients’ Greatest Fears? There are many studies and surveys done with investors to try and understand their greatest fears. One major worry for investors these days is outliving their assets AND being able to pay for long-term care. The good news is that Americans are living longer. The bad news is this increases the likelihood that we will need some sort of care whether in our own home or in a facility (both of which are expensive but necessary). It is important to be aware that there are annuity products available now that are specifically designed to offer attractive long-term care coverages. If you would like more information on this, please contact us.
Family Love Letter We recently hosted our second educational event entitled ‘Family Love Letter’ which was once again well received by those who attended. This was not a sales event in any way. This was a presentation that should be heard by anyone who has a family and cares what happens to them after they pass away. If you were unable to attend but would like to get information that was handed out, please let us know.
ON THE HOMEFRONT Matt – Nate just finished his sophomore year and will be a junior at Cheverus High School in the fall and Liza will be a sophomore. They will both be working at the Long Beach Marina this summer on Sebago Lake. The family will be spending time at the lake as well as traveling for Nate’s baseball and Liza’s volleyball. Nate is on a select college showcase team and Liza was recently selected to the HP National Volleyball Team. She was one of 10 girls selected out of nearly 400 who tried out for the team. They will be competing in a national tournament in Tulsa, OK this summer.
On a sad note, Matt’s mother passed way in May. The family memorialized her (and their dad) by renaming their annual golf tournament the Hon. Edward & Joyce Rogers Memorial Golf Tournament benefitting The Maine Children’s Cancer Program. They raised another $18,000 to bring their 19 year total to $493,000. Chris - Chris is looking forward to boating on Casco Bay this summer with his girlfriend Shannon and two dogs. He recently returned from a great trip to Colorado to visit his brother, sister-in-law, and two nephews. Adele - Samuel and Charlie graduated from elementary school on June 20th. They are excited and anxious about starting 6th grade at King Middle School in the fall. Adele, Jim and the boys will be staying closing to home this summer to enjoy some beach time and the beautiful Maine weather.
Matt with his mother, Joyce Rogers
Chris with his nephew, Gus
Matt, Liza, Nate and Stacey
Chris on the San Juan River, NM
Ranger and Arlo, Chris’ dogs
TRIVIA QUESTION How many people were living in the United States of America on July 4, 1776? PREVIOUS QUARTER Q: How was the name of America's epicenter Wall Street originated?
A: A wooden wall built by Dutch colonists to defend New York against invaders.
