Updates to Social Security & Medicare

Written by Brandon Grundy, CFP®.

A couple of weeks back we learned about some important updates regarding Social Security and Medicare. I had meant to write about them at the time but, as happens every now and then, the markets turned volatile and took precedence within these posts.

While I'll address the updates below, here's a quick note from my research partners at Bespoke Investment Group. The note came out last week on the anniversary of so-called Black Monday. The important takeaway is, as the saying goes, "it's time in the market and not timing the market" that pays the most over time.

Please feel free to ask questions regarding current market volatility and the general outlook.

From Bespoke...

While Halloween is still 12 days away (remember, this note came out last week on the 19th), the scariest day of the year for many equity investors is today, as it represents the anniversary of the 1987 stock market crash 31 years ago. When you consider the fact that the S&P 500 fell 20% in a single day back in October 1987, the recent weakness seems like peanuts.

For anyone who was sitting around a trading desk at the time, we're told that it was the scariest day of their careers. That being said, look at the simple historical chart of the S&P 500 since 1928 below. You can barely see the 1987 crash.

More importantly, though, remember the number 9.9% because that is what your annualized total return would have been if you had 'bought' the S&P 500 at the end of September 1987 before the crash and held through today. While anyone making that trade in 1987 would have felt pretty stupid pretty quickly, over the long term, even buying equities at one of the worst possibly timed points in the last 50 years would have netted you an annualized return of 9.9%. Nobody knows where the market is going in the short term, but time and time again throughout history, the long-term direction has been the same.

sp 1928 - 2018

On to my post...


Volatility is Normal

Written by Brandon Grundy, CFP®.

As you are no doubt aware, last week was a wild one in the stock market. The Dow Jones Industrial Average, the index most widely quoted in the media, fell about 5% over two days before eventually ending the week on a positive note. The index ultimately declined a little over 4% for the week.

Other indexes did worse while some fared better. The index for small company stocks, which had been on a bit of a run lately, dropped over 5% last week. Emerging markets, the worst performing asset class this year, did better, only dropping about 2%. Bonds, which had been lagging all year, largely did their job and held their value, increasing a fraction for the week. In short, returns were all over the place while being generally negative.

I've mentioned before how so much of successful long-term investing is counterintuitive. Well, this is another perfect example. During times of market volatility, it's easy to get caught up in the emotion of seeing prices fall and thinking you have to do something. The irony is that it's often best to do nothing, or at least nothing rash.

What are some things to do when volatility spikes? Rebalance if needed, "harvest" some losses if reasonable, confirm your holdings are of good quality and in the right proportion, and generally stick to your plan. You know, the boring stuff.

But why did the markets suddenly get volatile last week, and so far this month in general? The following note from JPMorgan lays it out better than I can. The note also suggests (and I agree) that this is probably a short-term volatility spike and should serve as a reminder to stay calm and be well diversified.

Continue reading...


The Expectations Game

Written by Brandon Grundy, CFP®.

Managing our expectations is a hard thing to do. Should we lean negative so we're never disappointed, or should we always expect the best and revel when life goes our way? How does this impact our happiness? While people tend to put themselves firmly in the pessimist or optimist camp, can there be a middle ground where we try to set realistic expectations?

I've always liked the quote from Tom Magliozzi, the late co-host of the long-running NPR show, Car Talk, "Happiness equals reality minus expectations". The so-called Happiness Equation has been written and talked about a great deal and can be useful for investors, or anyone for that matter, when setting expectations in uncertain environments.

It's important to focus on controlling the things we can control as investors, such as quality, cost, allocation, and rebalancing. You can absolutely add setting and controlling expectations to that list.

But how do we know what to expect when we don't always fully understand what we're getting into? Investing, as we know, is risky but it's also incredibly confusing and full of contradictions. When markets are positive we tend to expect that to continue and the same is true for down markets. We know that we have to take risk to grow but we also fear loss more than we value gain. The financial media touts recent performance, but real wealth is usually built brick by brick over time.

There are many ways to consider setting realistic expectations when it comes to investing and we've likely discussed some of them in the past. The following article from Dimensional Funds, The Expectations Game (emphasis mine), does a good job of addressing this question and how it relates to our happiness as investors.

Continue reading...


Quarterly Update

Written by Brandon Grundy, CFP®.

The third quarter (Q3) of 2018 brought new highs for U.S. stocks, volatility overseas, and the continued trudging along of the bond market. Politics held most of the headlines during the quarter, both at home and abroad, but stocks were largely able to ignore this as various aspects of the U.S. economy remained strong.

Here's a summary of how major market indexes ended the quarter and year-to-date:

• S&P 500: up 7.7%; up 10.6%
• Down Jones: up 9.8%; up 8.3%
• Russell 2000 (small company stocks): up 3.6%; up 11.5%
• MSCI EAFE (foreign stocks): up 2.1%; down 1%
• MSCI EM (emerging markets): up 0.5; down 7.4%
• U.S. Aggregate Bonds: about flat; down 1.6%
• Municipal Bonds: down 0.1%; down 0.7%

Top performing sectors in Q3 included Technology, up about 8.4%, and Healthcare, up over 14%. Poor performers included Utilities and Energy, up about 1.5% and 0.4%, respectively. Real Estate was flat.

Across the U.S. economy companies are generating more revenue, consumer confidence is up, investors are generally more "bullish", and other key indicators are positive. The Institute for Supply Management's Manufacturing Index just dipped below 60 (readings above 50 are said to be "expansionary") but is still elevated, even amid tariff concerns.

While this growth has been good for stocks, it has weighed on bonds. For some time, the bond market has been trying to "price-in" assumptions about how quickly the Fed will continue to raise interest rates as the economy grows. With three increases this year and one more expected, bond investors have readjusted prices downward (prices move in the opposite direction of interest rates). The Fed's projections seem to indicate more increases during the next year or so, followed by a leveling off. This path is uncertain, however, so the bond market could continue to be shaky in the near-term.

Continue reading...


A Couple of Updates

Written by Brandon Grundy, CFP®.

While my weekly posts are generally geared toward financial planning and investment topics, on occasion I'll veer off course and offer business updates. This is one of those weeks.

As I continue to build this business to serve you and your long-term goals it's important to keep up with the evolving technological landscape. Along these lines, here are a couple of updates designed to make your life just a little easier.

Setting Appointments Online

We've all experienced going through multiple steps when trying to set appointments. Maybe it's the back-and-forth via email or rounds of phone tag to set dates and times.

Starting today, you'll have the ability to schedule meetings with me using the "Schedule an Appointment" or "Let's Set a Time to Talk" links at You'll be able to quickly set up phone appointments, in-person reviews, or even virtual meetings. 

And yes, you're still able to simply pick up the phone and call or send me an email to set an appointment. This new tool is meant to offer more ways to connect, not restrict your access.

Virtual Meetings

In terms of expanding how we connect, now our entire meeting can be online. If it's more convenient for you, we can meet virtually, share screens, have conference calls, use video. This can be a simple way to check in on a few topics or even have a full planning meeting, all within a secure virtual platform.

We'll still be able to meet in person, of course. Whatever works for you works for me. This is simply another way to connect and address your questions and other pressing matters in a convenient way.

I hope you'll take time to try both new tools. And please let me know of any feedback. These updates are geared toward your convenience, so it will be good to hear what you think.

As always, it's on honor and pleasure to serve you. Thanks for your business.

Have questions? Ask me. I can help.