Tag Archives: Equities

Stock Markets: Global Trade Summit Could Change Investor Sentiment

Stock Markets: Global Trade Summit Could Change Investor Sentiment

The first half of 2018 has proved to be an average year for DIA index compared to the first half of 2017.  DIA is down by 2.16% (YTD), while in 2017 it was up by 7% during the same period. It has a dividend yield of 1.86% and an annualized payout of $4.52.  The annualized growth in the last three years was 9.6% with a growth of 7% in 2017.

ASX 200
AUSTRALIAN ASX 200

The current half of 2018 has seen its own mix of political and economic upheavals thus bringing in serious volatility in all the exchanges around the world.  The events that caused headwinds were the historic meeting between President Donald Trump and President Kim Jong Un of North Korea and, the G-7 Summit. 

Macro factors continue to dominate the investment news headlines, and this is unlikely to change any time soon (as long as the trade war discussions are widely covered in the financial media).

How is global trade affecting performance in 2018?

The graph of DIA has been showing substantial ups and downs in the first half of 2018 due to the impending fears of a trade war and the federal interest rate hike.  

In mid-June, the stock tumbled down 1% on the wake of President Trump’s threat of imposing tariffs on $200 billion worth of Chinese products. The major stocks to be hit were Boeing (BA) and Caterpillar (CAT) which dropped by 4% each.  Goldman Sachs (GS) was up by 0.9%, 3M (MMM) was up by 0.6% and Home Depot, Inc (HD) was down by 0.3%.

Dow Jones Industrial Average
Dow Jones Industrial Average

The DIA index fell down from its 50-day moving average.  Compared with S&P 500, DIA has been seeing a downtrend mirroring the performance of Dow Industrials.  It is a signal that DIA would thus be weaker than SPY and S&P 500. The tariffs would come in force on July 6; however, its impact on the broader exchange market is yet to be seen.  In the meantime, the trade war continues between US, China, and the Eurozone markets.

Trends in stock market ETFs

DIA, like other ETF’s, showed a positive growth in June 2018 due to the recently released job data and falling unemployment rates.  The greatest shock to the Dow Jones Industrials was the removal of General Electric, the longs standing and continuous member since 1907.  

In the DIA, Boeing had a weight of 10% in the index, while General Electric was 0.35%. Wallgreens Boots Alliance Inc (WBA) entered as the replacement stock on June 26.  The removal of GE will have a big impact on thousands of investors who have holdings in the Dow Jones.

All in all, the stock market is now in precarious territory and investors in assets like the SPDR Dow Jones Industrial Average ETF will need to remain nimble (and attentive to economic data) in the weeks and months ahead.

Australian equities markets

After facing considerable plunges during February and March 2018, the shares of S&P/ASX 200 showed substantial volatility during the first six months of 2018 after settling down with a YTD growth of 2.2%.  The Index had shown a steady growth of 7% in October 2017 ($6,029) against the backdrop of the positivity brought by the announcement of the US tax cuts.  This growth remained steady till February 2, 2018 ($6,121), when the S&P/ASX 200 fell down 4.7% in the next two days.

The Index plunged by 5% or 300 points during the period from February 2 ($6,121) – February 12 ($5,820).  The stocks fell due to nasty selling by the investors due to the fear of an increase in the interest rates followed by the testimony from new Fed Chief Jerome Powell.

February 5 was the worst day for the index since June 2017 as prices fell 95 points or 1.6%.  This was primarily due to the release of the US jobs data. The wage data led to panic among investors that interest rate hike was likely too.  This uncertainty coupled with the inflation fears started the market rout on Wall Street which then affected other exchanges across the globe. The Australian dollar too touched an all-time two-month low.

Banking stocks

The stocks, however, rebounded back in the coming weeks by 4% after National Bank of Australia (ASX: NAB) posted an increase of 3% in the first quarter profits.  Following NAB was AMP Limited which posted an increase of 24% in its revenue, while Mirvac Group and AGL Energy both posting an increase of 8% and 7% in its half-year revenue.

In March 2018, the ASX 200 dropped another 5% (February 27 – March 29) due to the US-China trade war.  This heavily impacted the Wall Street and spiraled across Asia leading to a fall in the ASX 200 and All Ordinaries, with Banks and the Miners taking the biggest hit in this debacle.  However, the market gained momentum in April helped by the rising commodity prices and positive growth in the Energy (+10.7%) and Materials (+7.4%) sector.

From its all-time 2018 low of $5,751 on April 3, it shot up to $6,225 on June 22, an increase of 8.35%.  This was particularly due to key global events like the meeting of the President of the US and North Korea and the updates on the jobs growth in Australia and China.  June 15 was termed as the best day in the ASX, as All Ordinaries saw a growth of 1.2%, while ASX 200 grew by 1.3%.

Taxes, Insurance, and Portfolio Planning at Morris Retirement Advisors

Taxes, Insurance, and Portfolio Planning at Morris Retirement Advisors

Retirement planning is one of the most important investment phases in the lifetime of any person, and there are several important issues that are often missed in the process.  Some of these issues include less-glamorous factors like investment insurance and taxes but the fact that they are often neglected makes them no less important.  In order to successfully structure your retirement portfolio, you need to find a retirement advisory that can help you plan in these areas.  One of the fastest-growing names in the sector is Morris Retirement Advisors, which has shown a stable track record in all of these areas.

Morris Retirement Advisors (MRA) offers solutions for:

  1. Financial Planning
  2. Wealth Management
  3. Taxes
  4. Insurance

Investment Solutions for Retirees

MRA offers 5 basic service plans for clients based on differing needs:

  1. Wealth Management: A basic investment management solution allowing investors to select and automatically invest from a list of risk-based model portfolios. Expensed as a fee-based investing plan wherein customers are charged a wrap fee on percentage of assets managed. Tax planning and preparation with an in-house accountant/CPA is also offered for an additional fee.
  2. Wealth Management and Basic Financial Planning: In addition to the services offered by the wealth management basic plan, this plan offers basic financial planning solutions including Budget, Cash Flow, Net Worth Projection and Analysis, Cash Management Strategies, Retirement Planning, Goal Tracking and Education Planning. A Digital Wealth Management Portal offering a consolidated view of all the client’s in-house and external accounts is also provided. Insurance solutions are also available as additional commission based solutions.
  3. Wealth Management and Advanced Financial Planning: Aimed at career professionals and business owners with emerging wealth, this plan offers advanced financial planning solutions like Executive Benefits, stock option analysis, Estate and Legacy Planning along with Tailored Goals based wealth planning in addition to the services offered by the above plans.
  4. Wealth Management and Complex Financial Planning: This plan is tailored for pre-retirees and retired clients looking to preserve, grow and distribute their wealth across generations. This plan offers Retirement Income and Distribution Planning in addition to the services offered by the above plans.
  5. Customized Solutions for Business Owners: Offers solutions for business owners customized to their business needs. The wealth management solution allows clients to select and automatically invest from a list of risk-based model portfolios. Financial planning services include Complimentary Tax Assessment, Executive Benefits Planning, Key Person Retention Strategies, Quarterly Tax Filings, strategic planning for board of directors, Employee Benefits (retirement, life, health, etc), Succession Planning, Entity Formation and Use Evaluation, Estate and Legacy Planning. Insurance solutions are offered as additional commission based solutions.

Broad Approaches to Wealth Management

MRA’s wealth management approach focuses on helping clients understand and manage investment risk, as well as increasing their chances for goal achievement. The portfolio return expectations of clients are set using risk rather than return, which is generally preferable for a long-term outlook.  The investment risk is quantified using a risk number. The risk number is determined using Riskalyze, a cutting-edge technology that identifies acceptable levels of risk and reward. Individual client portfolios are also stress-tested for a variety of stock and bond market scenarios.

MRA maintains multiple model risk portfolios that are used as the basis for implementing a client’s investment plan in the Wealth Management Program. The models range from income, conservative, moderate, moderately aggressive and aggressive. Each portfolio has varying degrees of asset categories and is reviewed with the client prior to implementation and periodically thereafter. The Wealth Management program can be summarized as follows:

Financial Planning for Retirees and Pre-Retirees

Investment advice offered by MRA is tailored for each client to address his/her financial goals, objectives and risk tolerance and structured in view of any outside investments held by the client, considering each investment’s effect on the client’s total portfolio. The financial planning services offered are:

  • Personal budgeting and cash flow
  • Personal financial statements
  • Life, disability and long-term care insurance consulting
  • Investment due diligence, management and portfolio construction
  • Financial independence planning
  • Estate planning and wealth transfer
  • Education and specific goal/need planning
  • Foundation management and charitable giving
  • Business investment analysis and succession planning

The Financial Planning program for every client has 4 stages:

Proven Investment Strategies

MRA maintains multiple model portfolios that are used as the basis for implementing a client’s investment plan. Portfolios are comprised of Core (traditional asset allocation) and Explore (tactical asset allocation) investment themes. MRA’s Investment Committee meets monthly to review investment policy and strategy. 

During the investment committee meeting, there is a review of each investment model that may result in tactical adjustments to each model determined by market and economic conditions. The committee also reviews core recommendation list of investments, analyzing each individual asset class that supports the investment models.  In the video below, we can see how Morris Retirement Advisors is redefining what it means to plan for retirement:

Here, we can see that MRA investment strategies work because they employ the following analytical criteria to select the funds and securities in its recommended portfolios:

  • Past risk-adjusted performance and expense ratios relative to other investments within the same asset class having similar investment objectives
  • Consistency of performance and rankings over time
  • The historical volatility and downside risk of each proposed investment
  • Consistency of investment style and tenure of the portfolio manager
  • How each investment complements the others in the portfolio
  • Economic conditions and comparisons to other investment opportunities

MRA re-evaluates portfolios using fundamental and tactical analysis each quarter, and rebalances them as necessary. For portfolio risk assessment, the company utilizes its sophisticated software services that provide risk management analytics for investing. Based on the risk metrics of each portfolio, these strategies can limit exposure to volatility and enhance your returns over the long-term.  These are strategies that have been tested over time and can be tailored to the needs of the individual.  For more information, visit MorrisRetirementAdvisors.com.