Asset Class Returns - 11/30/2018

US equity markets recovered a bit after the rough October returns, though still down over the past two months.  For the year, US large caps are holding a solid gain but small caps are roughly flat.  At the sector level, the monthly return range was about 9%, with Health Care having a positive 7% and Technology down almost 2%.  The REIT sector was strong on the back of lower interest rates, along with Utilities.

International equity markets were mixed.  Developed countries were relatively flat for the month while emerging markets had a solid gain.  Unlike the US equity markets however, the YTD returns remain down close to 10%.  The US dollar remains strong which adds to the negative returns, despite some market participants thinking the Fed is getting less hawkish (won’t raise rates as much).  Valuations remain attractive.

Two asset classes most notable to me were high yield and commodities.  All year the investment grade bond index was drifting down on the back of rising rates and not enough credit spread to offset this market loss.  High yield had enough extra spread to show positive gains.  That changed this past month as credit spreads rose noticeably, hitting high yield returns.  In the commodity space energy was down significantly, holding down overall returns.  Those who invest in the energy heavy GSCI index felt this especially hard.  I prefer the more diversified Bloomberg Commodity index for this reason.

Interest rates started the month on a continued climb higher.  The 10-year treasury approached 3.25% before reversing course on the back of nervous equity markets and various Fed speakers discussing current target rate vs. the neutral rate (in economic-speak).  Fed Chair Powell also mentioned the neutral rate but included the word ‘range’.  The neutral rate range is about 2.5% - 3.5% based on economists.  There is a difference of four Fed hikes in that range.  Finally, based on FRED, the 2s/10s curve went from 30 bps at the beginning of the month down to 21 bps at the end.  The first few days of December saw an even further flattening and bears watching.  As a reminder, check out the graphs on my website if you want to see a picture for historical context.

Posted by Kirk, a fee-only financial advisor who looks at your complete financial picture through the lens of a multi-disciplined, credentialed professional.

Medicare Premiums for 2019 – Small Increase Except for Highest Earners

The 2019 Medicare Part B premiums have been set.  There is a small increase of 1.1% or $1.50/month for the standard premium up to $135.50/month.  Those with higher income that are impacted by income related adjustments (IRMAA) have the same % increase but will see a slightly higher dollar increase.  The one major change is a new income tier for the highest earners.  Those re

Asset Class Returns - 10/31/2018

October.  The month of fall colors, crisp nights, kids ringing door bells for candy... and market volatility.

2019 Social Security Inflation Adjustments: 2.8% for Benefits; 3.5% for Max Wage Limit

Last month I posted the 2019 Social Security inflation adjustment estimate of 2.8% based on 2 of the 3 months' CPI data available at that time.  This morning the final CPI-W data point was released and the final inflation adjustment for benefits is 2.8%, the highest since 2012.  Unlike last year when most of the increase went to pay for catch-up Medicare premiums for many (due to

Asset Class Returns - 9/30/2018

The month of August saw mostly negative returns for the major asset classes I list below.  The exceptions - US Large Caps, International Equity Developed, High Yield and Commodities.

2019 ESTIMATED Social Security Inflation Adjustment: 2.8%

The fall season brings us changing leaves, harvest, football - and the inflation adjustment for Social Security benefits and maximum salary subject to Social Security payroll taxes.  The final CPI-W data point will be released October 11th but with 2 of the 3 data points known, an early estimate can be calculated.  Retirees will be happy to learn the approximate increase for benefits

Asset Class Returns - 8/31/2018

Another hot month for US equity and REIT markets; not so much for international equities and commodities.  Bonds had a strong month as rates fell though still struggling YTD.

An old classic – “Father Forgets”

It is back-to-school time for many.  Whether the first day of kindergarten or the last year of college, it is a reminder to parents, grandparents and aunts/uncles how quickly the young ones grow up.  It also reminded me of a poem I ran across while reading (ok, listening to on a cassette or CD back in the day) “How to Win Friends and Influence People” by Dale Carnegie.&nbs

Asset Class Returns - 7/31/2018

Posted by Kirk, a fee-only financial advisor who looks at your complete financial picture through the lens of a multi-disciplined, credentialed professional.

Back to School Special – Higher Student Loan Rates!

It is hard to believe but soon there will be “back to school specials”.  One critical supply many college students need are student loans.  This year's fashion includes a higher interest rate.  Like most products linked to interest rates, the rate is up from previous year.  The rate charged depends on the type of loan but for most students using the Federal D

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