The Federal Reserve recently announced that they are going to maintain very low short-term interest rates for bonds over the next couple of years. On the other hand, long-term interest rates seem to be rising in recent weeks. We dedicated this week’s episode to reviewing how a savvy investor may respond to these developments. Throughout the episode, we discuss how bonds work, the risks associated with bonds, interest rates, why bonds are a crucial element of a healthy portfolio, and more. Stay tuned until the end of the episode, where Grant talks about why having non-US-denominated bonds could be beneficial to you.Continue reading
Picture what you were doing on January 1st of 2019. Maybe you were getting an early start on your fitness goals for the year. Maybe you were up early, ready to take in some New Year’s day football. Maybe you were in bed all day nursing a hangover.
If I were to ask you what you thought the stock market would do in 2019, what would you have said?
Would you have guessed that 2019 was the year that the 10-year bull market finally came to and end? Would you have said you had no idea?
What I’m guessing you wouldn’t have said was that the S&P 500 would be up 30% on the year, tossing market bears aside like leftover confetti from the night before. At least I wouldn’t have.
Yet here we are, about one year later, and that’s exactly what happened. And not only did the S&P climb 30% on the year, it did so in extremely steady fashion. This was true in the fourth quarter of 2019, just as it was in the first three.
Could this be the year that the bull market wanes? Read on for more details and background.
I’ve written and published quarterly market updates religiously since launching Three Oaks Capital Management back in 2014. At first I had physical newsletters printed out on six thick pages of card stock, and mailed them out to clients and other contacts. Shortly afterward I began adding the commentary to www.3oakscapital.com, and started calling the distribution “Investment Insights”. A few years after that I abandoned the print version, and distributed the commentary solely through the blog.
Writing a market update at all is starting to become less common in the financial planning community. Many of my peers, colleagues, and friends prefer NOT to publish or distribute market updates at all, as they believe it diverts their clients’ attention away from long term & consistent strategies.
The market updates I’ve written have evolved quite a bit over the years, but they’ve received a good amount of positive feedback all along. Clients like to know my take on the markets, and feel comfortable knowing that I have my eye on them. Other readers and contacts seem to enjoy the content too.
This quarter I am making a minor change to the format of Investment Insights. While I plan to continue producing them, starting this quarter all new editions will live on Above the Canopy as opposed to Three Oaks Capital’s blog. We have other changes to the blog, format, and site forthcoming, and this change makes the most long term sense. (Hint: there is a podcast on the way). But from here on out, you’ll find market updates on this site as opposed to Three Oaks Capital’s.
Speaking of this quarter’s edition, we have a number of items to touch on. First, the Federal Reserve reduced short term interest rates in both of their third quarter meetings. There continues to be a lot of trade uncertainty globally, inflation remains low, and there continues to be some weakness in global economic growth. This is the first time the fed’s reduced rates in ten years – the last time being December of 2008, when it cut rates from a range of 75 – 100 basis points to 0 – 25.
Elsewhere, US equities had another strong quarter, value shares outpaced growth in the small cap space, and the yield curve in US rates inverted for three days in August. Read on for more details.