When we talk about saving and investing for the future, the conversation usually steers quickly towards retirement planning – IRAs, 401(k)s, pensions, Roth IRAs, and so on. After all, retirement is when all of your careful saving, well-intentioned investing, and hard work pays off. It’s when you’re finally supposed to be able to live the good life. But investing isn’t always about retirement planning. Nor should it be. While it’s true that many people share the same goal of retiring with financial security, there are myriad of other life goals that require careful saving, planning, and investment returns. J.P. Morgan Asset Management created a graphic that effectively illustrates this point: [+] Read More

We’ve all heard the term “don’t put all your eggs in one basket”. Of course, this concept can be easily applied to investing. Many sophisticated investors understand that investing in only one stock, or only one asset class, or only one anything is risky. However, the question of whether or not you should invest in just one money manager is rarely directly addressed. A key objective of diversified investing is to build a portfolio that is spread across multiple asset classes in an effort to lower the overall volatility of the portfolio. If you invest your entire portfolio in one single stock it’s clear that your entire portfolio will be tied to the fortunes, and therefore risk of that one company. Adding additional investments to the portfolio can lower the overall volatility and risk of the portfolio, especially if you are adding additional holdings with low correlations to one another. In other words, if your portfolio zigs, you want to add something that zags to get the most effective diversification benefit. To take this further, if your portfolio is made up entirely of one large cap telecom stock, adding a second and third large cap telecom stock may give you little in the way diversification benefit if each of these companies have similar factors that drive their returns. Ideally, a portfolio will be well diversified among different sectors. That way, if one sector is performing poorly, this poor performance may be offset by other sectors with stronger performance. Likewise, geographical diversification is important to help mitigate the impact of a poorly performing market. [+] Read More

Having a baby (or babies!) and starting a family means so many exciting, happy, but also unknown things. For first time parents, in particular, it means navigating the often head-spinning tasks of feeding, caring for, and cleaning a baby while also working, taking care of the house, and if you’re lucky, sleeping. For most new parents, there’s not enough time in any day to get everything done, and by the end of every day you’re exhausted. Making time for budgeting, financial planning, and taking steps to prepare for the child’s future can often seem so far out of reach. But at the end of the day, it must be done. A recent study found that in the first year alone, the cost of raising a baby can run upward of $21,000 – and that’s not even factoring-in any unexpected illnesses or conditions an infant might have early-on, which are quite common. From the time the baby is born until he or she turns 18, the total cost of upbringing can range from $260,000 (“no-frills”) to $745,000.¹ In short, it’s no financial walk in the park. [+] Read More

A recent study of 22,000 publicly traded companies found a correlation between profitability and women in leadership roles. Specifically, when companies increased leadership positions for women from 0% to 30%, profitability increased by 15%. In the private technology sector, it was found that women-led companies were not only more efficient, but also brought in a 35% higher return on investment.[1] But statistics also show that the business world has yet to fully bridge the benefits of women in leadership roles with actual participation and investment. Recent data showed that less than 2% of all venture capital goes to female founders and fewer than 8% of investors are women. And even though American, women-owned businesses represent 28% of American enterprises – while employing 7.7 million people[1] – in the publicly-traded sphere women only hold 5% of CEO positions at S&P 500 companies.[2] [+] Read More

How important are jobs and the unemployment numbers to financial markets? So important that strict rules were put in place over 30 years ago in an effort to prevent the numbers from being prematurely released to the public. Generally speaking, the only people with access to the numbers – before their official release – are the staff of the agency issuing the data, and the President of the United States and his executive team. Since the jobs numbers are considered “market-moving data,” it makes sense that the data should be treated, in a sense, like insider information. Here’s how it works: The Bureau of Labor Statistics (BLS) releases its monthly employment report on the first Friday of the month, at 8:30 AM. But the night before, the president and several senior administration officials — including the Treasury secretary and the chairman of the Council of Economic Advisers — are briefed on the numbers. By rule, no one can discuss the numbers at all before the official release at 8:30 AM. In fact, the data is considered so sensitive that staffers are supposed to wait until a full hour after the release to make any public comments about it. [+] Read More

Trade Wars: Don't Panic, Prepare Trade tensions are here to stay. Even without a full-blown trade war, escalating frictions could weigh on business confidence – and growth. Economic fundamentals are still running strong and underpinning our risk-on view in the short term, but we advocate building increased resilience into portfolios as macro uncertainty rises. Economic tensions between China and the U.S. have shot up, confirmed by our BlackRock Geopolitical Risk Indicator. This has coincided with an out performance of quality stocks, as the chart shows. Investors appear to be heeding risks, trade included. Trade risks are not limited to China. The prospects of a North American Free Trade Agreement (NAFTA) deal have deteriorated. The European Union (EU) and others have retaliated against U.S. steel and aluminum tariffs, while the U.S. has threatened to impose tariffs on cars imported from the EU. [+] Read More

Some investors wish to align their personal values with their investment portfolio, but there have traditionally been several stumbling blocks for investors looking to assemble a diversified ESG (Environmental, Social, and Governance) portfolio. Fortunately, WrapManager now offers an innovative ESG investment solution which seeks to provide diversification among asset classes, market capitalization, country of domicile, and ESG methodology. What are ESG criteria? Environmental, Social, and Governance (ESG) criteria is a set of standards for company’s operations that socially conscious investors can use to screen investments. Environmental criteria look at how a company performs as a steward of the natural environment. Social criteria examine how a company manages relationships with its employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights. [+] Read More

The dollar debate between investors, economists, and politicians has been rolling on for years. Is a stronger dollar or a weaker dollar better for the US economy and the stock market? Doing research on this question will turn up views from every corner of opinion with no definitive answer. The reality: the dollar debate is complicated, and it depends on who you ask. Opinions within the current administration even appear to be somewhat split on the issue. Treasury Secretary Steve Mnuchin said in January that dollar weakness was “not a concern,” and President Trump has hinted in the past that he prefers a weak dollar. These views appear to differ from Larry Kudlow’s, who now heads the National Economic Council. Kudlow stated recently on CNBC’s “Closing Bell” that “a great country needs a strong currency” and that he favored a strong and steady dollar. So, which is it? [+] Read More

Over the past couple of years, the S&P 500 Forward P/E ratio has been above its 25-year average. This has led some market commentators to warn that equities aren’t attractively valued. A Price to Earnings (P/E) ratio is a valuation measure that shows how much investors are willing to pay for a dollar of a company’s earnings. For example, a company that has a stock price of $30 and earnings per share of $2 would have a P/E ratio of 15 ($30/$2 = 15). A reading above the long-term average is typically interpreted to mean that stocks are expensive relative to the historical average. Similarly, a reading below the long-term average is typically interpreted to mean that stocks are cheap relative to the historical average. The recent pullback in equities to start the year coupled with continued strong earnings growth has left the S&P 500 Forward P/E ratio at 16.1x at the end of April 2018. The 25-year average S&P 500 Forward P/E ratio is exactly 16.1x. This marks the first time in over 2 years that this reading has not been above the 25-year average. [+] Read More