Stock Market Archives - Cadence Wealth Management

May 12

Ask Cadence: When Will Stocks Look Attractive Again?

By Cadence WM Blog

When we look back 100 years at the relationship between the size of the stock market and the underlying economic fundamentals either by way of gross domestic product (GDP) or the amount of “stuff” that corporations produce (Gross Value Added), there are two things we can learn. First, stocks tend to rise with economic output. Makes perfect sense. Corporations do well, people do well, the economy does well, stock prices go up. The second observation however, which is far more important to investor performance over time, is that stock prices tend to rise faster than economic output when times are…

Aug 21

Retirement Uncertainties: Why Financial Planning is Necessary > Issue 6 > The Investment Elephant in the Retirement Room

By Cadence WM Blog

You may have to account for at least one, but probably more of the preceding issues before and during your own retirement. However, the biggest threat that we can think of is also the one that gets almost no attention in the “biggest threats facing retirees” research we conducted, and it illustrates the need for people to work with a professional more than any of the items mentioned in the preceding paragraphs. With the U.S. stock market currently enjoying its longest and largest bull market in history, the potential for large investment losses is very high. The last two major…

Aug 07

U.S. Stocks – How Risky is This Party?

By Cadence WM Blog

The month of July has seen the broad U.S. stock indexes such as the S&P 500, Dow Jones Industrial Average, and Nasdaq achieve new highs – which of course is a good thing for those with meaningful exposure to them. On the surface it appears that the party is still in full swing. We don’t have to go back very far however for a reminder of how quickly things can go bad and how uncomfortable it can be when losses start to pile up quickly. The fourth quarter of last year saw stocks sink almost 20% while May of this…

Apr 22

Either You Believe in Magic or You Believe in Math

By Cadence WM Blog

What we have been experiencing in financial markets the last few years has been truly mind-boggling. We would venture to say that nobody could have come even remotely close to forecasting the combination of events that have played out since the global financial crisis in 2008. Above average U.S. stock market growth with below average economic growth? No way. Foreign stocks being worth less ten years later? Not likely. More than $10 trillion in sovereign (governmental) bonds yielding less than 0%? To be clear, this means you pay the government to lend them money. That would be ludicrous. It will…

Apr 10

There Will Be A Downside To This Investment Cycle

By Cadence WM Blog

Since the US stock market bottomed after the Financial Crisis in March of 2009, large cap US stocks have returned around 15% per year. The vast majority of other investment categories have not enjoyed nearly the returns of the US stock market, however as that is the investing area that receives the most media attention, its behavior over the past ten years has shaped a lot of our expectations for what will happen going forward. Our brains have a tendency to assume the conditions to which we have grown accustomed will keep going, a tendency which has been labeled “recency…

Mar 25

What’s Changed Since December?

By Cadence WM Blog

Simply put, stocks have continued to rise in February while growth data has continued to weaken – fairly decisively. If all one cares about is investing in what’s currently going up, then this rally in stocks seems like a no-brainer. The only problem is that the preponderance of evidence suggests that this rally is the textbook bear market variety, which means it will likely change course just as quickly as it began. If one’s looking to generate fast losses, there’s really no better way. Our position on portfolio composition for the time being hasn’t changed. We will change it when…

Feb 11

What to Think of Interest Rates and Bonds – Revisited

By Cadence WM Blog

We wanted to revisit a blog post from exactly one year ago today that touched on why a rapid rise in interest rates matters for stocks. At the time – Feb 9, 2018 – interest rates had risen over 100% from their lows in 2016. Our point was that when interest rates, one of the key lubricants particularly in a highly indebted economy rise, it presents a strong headwind to continued growth and could serve to catalyze the changing of the business cycle. This dynamic could be even more pronounced in an environment where financial markets are extremely overvalued which…

Nov 13

Ask Cadence: If I haven’t participated in the stock market gains over the last couple of years, will my retirement be negatively affected as a result?

By Cadence WM Blog

Put simply – no, and here’s why. Think about it this way: Stocks at any point in time can be ranked on a scale of one to ten based on how expensive they are. The vast majority of the time, they’ll score somewhere between 3 and 7 where they’re neither cheap nor expensive. This is where one can have a traditional exposure to stocks based on the timeframe of their goals and risk tolerance. If stocks are scored below 3 and considered cheap, one might take a little more “risk” since over time prices stand a much better chance of…

Sep 12

Thoughts from the Investment Team – This is Where Mistakes Are Made

By Cadence WM Blog

John Pierpont Morgan was known to have said, “Nothing so undermines your financial judgement as the sight of your neighbor getting rich.” Understanding the bigger picture can help us avoid unrealistic performance extrapolation (both up and down) and stay focused on those things that truly offer the most opportunity for lasting gain. There’s no more important time than now to look forward rather than backward. This year has been particularly dangerous, not because markets have imploded, but because the way they are moving exposes our psychological vulnerabilities as investors. After a strong 2017, U.S. stocks ran up very aggressively in…

Aug 23

It Pays To Understand The Indexes

By Cadence WM Blog

There’s an old business axiom “You Are What You Measure” and when it comes to investing, there is no shortage of things to measure: returns, risk, alpha, beta, tracking error, and so on. Each has its purpose. Measuring investment performance is frequently a two-part process comprised of measuring returns over a designated time period, and then comparing that performance to something. The first part determines your absolute performance, and the second part determines your relative performance; the first part tells you what you did, the second part tells you if it’s good or bad relative to something else. That second…

Stock Market

Ask Cadence: When Will Stocks Look Attractive Again?

Retirement Uncertainties: Why Financial Planning is Necessary > Issue 6 > The Investment Elephant in the Retirement Room

U.S. Stocks – How Risky is This Party?

Either You Believe in Magic or You Believe in Math

There Will Be A Downside To This Investment Cycle

What’s Changed Since December?

What to Think of Interest Rates and Bonds – Revisited

Ask Cadence: If I haven’t participated in the stock market gains over the last couple of years, will my retirement be negatively affected as a result?

Thoughts from the Investment Team – This is Where Mistakes Are Made

It Pays To Understand The Indexes

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