The Independent Market Observer

Why You Should Have a Financial Advisor

July 29, 2016

Writing my last few posts, about the real possibility of lower returns over the next few years, I got to thinking about how financial advisors add value—and how a skilled advisor can really help investors advance toward their financial goals.

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Looking at Future Portfolio Returns

July 28, 2016

The past two days, we’ve considered the likelihood that future returns for bonds and stocks will be disappointing.

Now, we get to the punch line: what does this mean for our own investments? And is there anything we can do about it?

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Looking at Future Stock Returns

July 27, 2016

Yesterday we talked about future bond returns, noting that while bonds have done very well over the past several decades, current conditions suggest their returns over the next 10 years could be significantly lower. Today, we’ll focus on stocks, making the same distinction between returns from income and returns from capital gains.

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Looking at Future Bond Returns

July 26, 2016

You’re probably familiar with the standard investment disclaimer “Past performance is no guarantee of future results.” In other words, just because something worked in the past is no reason to assume it will work in the future. This is true: asset classes, in particular, tend to outperform and underperform in regular cycles.

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Monday Update: Housing Continues to Grow

July 25, 2016

Last week’s data came in above expectations, marking the fourth straight week of good news on the economy. Housing starts and sales grew and the industry remained confident, despite some signs of stabilization in the sector.

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How to Spot a Bubble: 2016 Edition

July 22, 2016

It’s been almost a year since I last wrote about investment bubbles. Although there have been ample grounds for discussing the topic, I suspect that other events have seemed more pressing.

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More About Student Debt: A Justified Investment

July 21, 2016

A couple of months ago, I wrote that the student debt problem isn’t as bad as it looks on the surface. I recently found a more up-to-date take on the subject from the White House, which came to the same conclusion.

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Presidential Politics and the Stock Market

July 20, 2016

Now that both parties have nailed down their presidential nominees, it’s time to take a quick look at politics and how it may affect the economy and markets this year. As usual, we’ll focus on the policies that the two candidates have offered and their likely consequences.

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U.S. Financial Markets: Strength Amid Global Turmoil

July 19, 2016

The last couple of weeks have been tough. Between the multiple tragedies in the U.S., the attempted coup in Turkey, Britain’s decision to exit the European Union, and the subsequent change of government there, it’s been difficult to keep an even keel.

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Monday Update: Three Strong Weeks in a Row

July 18, 2016

Yet again, the economy surprised us with good news last week. U.S. consumers went shopping, driving retail sales numbers higher. At the same time, both industrial production and manufacturing beat expectations and moved back to growth.

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Lower Yields: Not the Typical Risk-Off Trade

July 15, 2016

With all of the headlines about interest rates hitting record lows—and with the worries about why this has happened and what it means—it is important to put some facts and context around what, in many ways, is an unprecedented set of circumstances. The following piece by Meagan Rogers, manager of Commonwealth’s Fixed Income Research team, does just that. She does an excellent job explaining the what, why, and how of lower yields, and I think it is well worth your time. Thanks, Meagan!

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Appearance on CNBC's Power Lunch, July 14, 2016 [Video]

July 15, 2016

With markets returning to all-time highs, where are the opportunities? Yesterday afternoon, I was on CNBC's Power Lunch to discuss where I see chances for potential growth, including within consumer staples and financials, with co-anchor Tyler Mathisen.

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Should We Be Worried About the Chinese Currency?

July 14, 2016

After the pullback in the first quarter of the year, followed by the Brexit collapse and quick recovery, it seems as if the market has pretty much decided to head up. With U.S. markets at all-time highs and earnings coming in better than expected so far, it seems quite likely we will see continued appreciation.

That said, we also need to start thinking about what could potentially bring the stock market's updward climb to an end.

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The Market’s New High Score

July 13, 2016

This morning, the Dow Jones Industrial Average hit a new all-time high, as did the S&P 500. The news coverage seems to be split between those calling for even higher stock prices and those who are worried that a new bubble is forming.

In fact, it could be both.

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Monthly Market Risk Update: July 2016

July 12, 2016

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.

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Monday Update: More Positive Surprises

July 11, 2016

For the second week in a row, the U.S. economy offered positive surprises. Both the service sector—the largest portion of the economy—and the employment market showed marked improvement, with data coming in well above expectations. Coupled with results from the previous week, the latest numbers suggest the economy has started to move again.

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Economic Risk Factor Update: July 2016

July 8, 2016

The news this month is much better than last, with the most recent economic data showing sharp increases against previously worrying downward trends. Although one month’s data won’t undo those trends, the consistency of the reversal across multiple data sets and the magnitude of the positive surprises are very encouraging.

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Tesla Crashes, Faulty Airbags, and How We Perceive Risk

July 7, 2016

One story I’ve been following is the recent fatal crash of a Tesla Model S. The car, which was set to autopilot, apparently collided into the side of a truck while the Tesla driver was watching a movie, killing him. Since then, there have been several other Tesla crashes that may have involved the autopilot function failing while the drivers weren’t paying attention.

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Record-Low Interest Rates: Not Necessarily a Bad Thing

July 6, 2016

“More than any other time in history, mankind faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction. Let us pray we have the wisdom to choose correctly.” — Woody Allen

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Appearance on CNBC’s Squawk Box, July 5, 2016 [Video]

July 5, 2016

After a disappointing six-month period, are things turning around? Two huge headwinds—dollar strength and the collapse in oil—seem to be abating, a positive sign. I discussed these developments and other economic expectations on CNBC’s Squawk Box this morning. 

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Monday Update: Positive Surprises Across the Board

July 5, 2016

Last week’s economic news offered several positive surprises. Consumer confidence improved and incomes also rose, indicating that Americans are both more willing and more able to spend. Manufacturing, the weakest part of the economy for some time, moved back to material growth levels, raising the hope that the sector is finally reviving.

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Brexit and the Fourth of July

July 1, 2016

Okay, unless something else happens, I promise this will be it for the Brexit posts. I’m probably as sick as you are of the “all Brexit, all the time” coverage, and I’ve been guilty of that here on the blog as well. That said, I do think there’s one final point worth making about Brexit.

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Market Thoughts for July 2016 [Video]

July 1, 2016

June was busy, particularly near month-end. The news that Britain had voted to leave the European Union came as a shock and sent markets tumbling. But then a funny thing happened: the fear dissipated, and as investors started looking at the fundamentals, the markets began to recover. 

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