Category: Economy

11
Aug

Lackluster Market Returns and the Growing Responsibility of the Individual Investor

Picture 1574

Content provided by Paula Wieck, CLS Portfolio Manager

Back in May, the McKinsey Global Institute published a report, Diminishing Returns: Why Investors May Need to Lower Their Expectations. The title is self-explanatory. In essence, the report states circumstances of the last 30 years produced returns in both stocks and bonds that were above the long-term average. Those circumstances include: drastic declines in inflation, strong global GDP growth, positive demographic attributes, productivity gains (think of the robust growth of technology), and rapid growth in China.

Today, those circumstances are changing. We face a higher probability of inflation in the years ahead, slowing global growth, and an aging demographic as baby boomers exit the work force. In addition, most of the robust growth in technology has already taken place (we will likely continue to see incremental improvements, but nothing like what we’ve witnessed over the last three decades). China is also slowing as it strives to transition from a developing, export-driven economy to a more developed, consumer-driven economy.

Not only will we likely see lower market returns than we’re used to, but there has never been more responsibility on individual investors as there is today. Individuals must prepare for the costs of educating their children and the potential costs of assisted living for their parents, all while saving for their own retirement without the safety net of a pension plan or the guarantee of Social Security in the future. With the costs of education and healthcare outpacing the rate of inflation by two to three times, investors should be concerned.

While this may seem like dire news, in reality, it is. Are you prepared? It has never been more imperative that we save more, spend less, and maintain globally diversified and balanced portfolios. It’s important to prepare a plan with a financial advisor, someone who has the tools to project future costs compared with up-to-date market projections, so you can save and allocate appropriately to reach your financial goals. We must stay disciplined. We must stay diversified. We must take action into our own hands to prepare for the obstacles ahead.

Economic Drivers

25
Sep

Investing Through the Emotional Ups and Downs

Content provided by Scott Kubie, CFA, CLS Chief Strategist More than any other season, fall brings greater emotional volatility. I’m not talking about the markets (yet). I’m talking about sports. The four most important sports to me are tennis (my son’s high school team), Nebraska football, Nebraska women’s volleyball, and baseball (Minnesota Twins). All have...
11
Aug

Budgeting and Retirement

Content provided by Kostya Etus, CLS Associate Portfolio Manager Retirement marks the beginning of a permanent vacation. Something very near and dear to most people’s hearts. Although I know there are some out there who want to work until they aren’t able, the majority of us want to retire early. What many don’t realize, however,...
04
Aug

Grexhausting

Content provided by Grant Engelbart, CFA, CLS Portfolio Manager As the market has seemingly put the Greek crisis behind it for a couple of weeks, I might as well bring it back up!  The media certainly hasn’t let it go. Financial news is still enamored with Greece. The country, whose economy is the size of...
14
Jul

Market Horror Picture Show

By Kostya Etus, CLS Associate Portfolio Manager I love watching movies. It is one of my favorite things to do in my spare time. I really enjoy all types of movies, and I will give almost any film a chance except for one genre: horror. I find horror films typically do not have well-developed plots,...
08
Jul

Emerging Market Divergence

Content provided by Sierra Morris-Fuchs, CLS Investment Research Analyst Emerging markets have shown favorable valuations and stronger global growth prospects recently, which have presented intriguing opportunities. But lumping these markets together as a single country or region can be quite deceiving. Instead, the emerging markets should be analyzed individually because their characteristics vary widely —...
24
Jun

First Take on Fed’s June Meeting

Content provided by Marc Pfeffer, CLS Senior Portfolio Manager Round one of Federal Open Market Committee (FOMC) communication delivered mixed messages to markets, as expected. The FOMC statement was upgraded to acknowledge better data, while movements in the “dots” (assessments of appropriate monetary policy) implied a slightly more accommodative fed funds rate path. The communication released...
15
Jun

Interest Rate Hike – The Waiting Game

Content provided by J.J. Schenkelberg, CFA, CLS Senior Portfolio Manager I think we have all experienced this at some point: We go to the store, proceed to the checkout counter, and face the daunting choice of which line to enter. We pick one and stand there waiting in uncertainty. Every movement begs the question: Should...
20
May

Weak Dollar Pushes Commodity Prices Up

Content provided by Paula Wieck, CLS Manager of Investment Research/Portfolio Manager So far this quarter, we’ve observed reversals in the strength of the U.S. dollar and prices of commodities such as gold and oil. As U.S. economic data has weakened, expectations have risen that the Federal Reserve will raise interest rates later than anticipated. This...
15
May

Keeping Clients Invested

Content provided by J.J. Schenkelberg, CFA, CLS Senior Portfolio Manager We all know “the market” (stocks, bonds, commodities, real estate, etc.) is where we should invest our money for the best opportunity to grow funds for future needs. We also know the more risk we take, the more return opportunity there can be. So, why...