Category Archives: Market Comments

Earnings Matter, ultimately the most, let’s take a peek at how they are doing

With earnings being the ultimate driver of Capital Markets it’s always good to stick our heads down into the weeds occasionally to see how corporate managers are navigating the waters.

Our favorite go-to source for this information is from our friends at Factset, a research arm that does terrific tracking …

Here are a few charts with our notes:

This following is an estimate of Earnings for the remainder of 2019 and for the year 2020 – notice expectations are positive year over year 2018 to 2019 but not much growth is expected from the analyst community – Tariff agreement would likely change this expectation quickly…

img_1243-e1557890593225.png

Next up, how the change in estimates has occurred in real time – take note of the drop near the end of the year 2018 – while it looks like a larger than normal drop, and we prefer it increasing, it is only about a 5% total expected drop but again still a year over year increase as seen from the prior chart.

img_1242-e1557890631119.png

Lastly, we had to throw one of our favorite charts in from our friends at JPMorgan – the lagging blue line, that actually looks out of place, is the current market expansion rate – note how slow this expansion (2007-current) has been. We find this very interesting as even the 2001 expansion was at a much faster pace than our current. Could we be entering an extended period of slower, but more stable growth? This would also speak to lessened concerns of inflation and lowered expectations moving forward…

img_1244.png

Overall, lets give corporate managers an A to almost A+, especially those dealing with overseas trading partners of any kind.

Have a Great “Update Earnings” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Sometimes Market Movements Make Sense – but not always

The Hissy fit that Capital Markets threw in late 2018 were puzzling, if not weird, at best.

Oddly, there are more times than not puzzling or strange market movement that the so called “Pundits” can reason why things occur, but really “Only the Shadow Knows!”

The recent market movement, although very small in context, makes sense.

Smart Market?

Over the weekend, it appears that talks broke down on the China trade deals, and Tariff threats have made the headlines again…

This is fast news and can change in a nano-second, so knee jerk reactions are NOT needed or worthy! 

This time, the market pause makes sense as increased concerns over the Tariff talks may cause slow downs in certain areas…

Here is a very short term chart that speaks to what makes some sense AT THE MOMENT!

5-7-19 SP 500

Will it turn into something more? Maybe, or Maybe not, but it does make some sense, IN THE VERY SHORT TERM!

Longer term, just a speed bump in the Parking Lot of Investing!

Have a Great “Sensible Market” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

 

April 2019 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Hello and Welcome to our April 2019 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast format as well as Video!

Newbies – We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

April – 2019 Video

Financial Planning Tip (s) –

Source of Funds Entrance Into Capital Markets

Here in this post we discussed the possible ways to most comfortably enter new capital into the Capital Markets.

Super Safe sources of capital may be best suited for an entrance over time, while funds coming from the Capital Markets, may go directly back into the Capital Markets, especially if risk reduction is also part of the allocation.

Over a 5 – 10 year time frame it does not matter, but why twist an ankle in the short term!

Social Security Event – Questions

Wow – all of these great questions were sent to us for our Event this month…. all were answered, if not directly, indirectly.  We look forward to sharing actual audio (Tom speaks very fast and covered a lot of ground) from the event in a multi-part post series over the summer months! DCIM100GOPRO

 

  1. Last time we spoke you were VERY certain Social Security would be there for all of us upon retirement – With all of the changes, do you still feel this way?
  2. Can you explain the divorced verses divorced and remarried benefits?
  3. Have you ever heard of someone being offered a lump sum of retroactive Social Security benefits?
  4. November of 2015 ushered in new laws and changes, are there any neat techniques that survived?
  5. Can you explain non US citizen spousal benefits?
  6. We have been told many of the benefit statements are not always accurate, understating the actual eventual benefit, has this been your experience?
  7. How much can I earn and not receive penalties if I retire before my full retirement age?
  8. The Full Retirement Age keeps being pushed out, will this continue? Is there a schedule?
  9. How long do I have to report my Social Security earnings if they were not reported by an employer?
  10. For many years I did not draw on an ex-spouses earnings by accident – using only my earnings benefit, can I request some sort of look back to get my full benefits?
  11. If want to change my Social Security election decision after I made it and have been drawing benefits, Can I do that?
  12. Do I have to take Social Security Benefits ? What if I do not want to?
  13. Is it better to sign up in person or use the website, or does it matter?
  14. My wife is not a US citizen, does that affect her spousal benefits?
  15. Will Social Security always be there in your opinion?
  16. What percent of people take benefits early, at full retirement age and as late as possible?
  17. I am 65 and working with a good healthcare plan. I wasn’t going to sign up for Medicare until after I retire. However I am told a Medicare Part F; a supplemental plan eliminating deductibles, will not be available after 2019; Should I enroll and sign up for Part F?
  18. I was married for more than 10 years to a high income earner, if I get remarried to my new spouse who is not a high income earner, will I give up benefits?
  19. Have you seen any of the on-line Social Security Optimization Programs? If so, any you like better than others? (From JK)
  20. What are your thoughts about an income based phase out of Social Security in the future? Much like the penalty for W-2 income and having started early Social Benefits ? (From JK)

Capital Market Comments –

Happy Again

After throwing a Hissy Fit near the end of 2018, “Everybody Is Happy” again !

This is a total index chart, note that it has not reached new highs yet, however many other indexes have.

Let’s not forget that we DID have an inverted yield curve which is a great predictor of a pending recession …. only the Shadow knows when! We have our eyes peeled!

4-29-19 Vanguard Total World Index Fund

 

Have a Great Day – Talk to you at the end of May!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
street-cents

Why Source of Funds May Determine Entrance into Capital Markets

Before we jump into this post we know that in 5 to 10 years our starting point hardly matters.

We also know that we’re all human and we like to get off on a good start in anything that we do, especially when it’s dealing with our hard earned capital!

What follows is our belief of the best possible way to get started on good footing, and keep a positive investment allocation.

There are always outliers and unique events – this is a template, and loosely the starting point for funds entering the capital markets … but by no means a written in stone … exact map.

Let’s start with the easypuit-1555653

New investment dollars that came from … say the backyard …  under your sofa … your overfilled emergency fund, or some other super safe and stable asset class . … almost certainly should be work into Capital Markets over time.

Depending on the situation, the amount, the time horizon … the time frame may vary from months to quarters or even longer depending on the situation to gain entrance to the Capital Markets …

A typical scenario would be to divide the time frame into equal parts and allocate over that period of time.

The goal is to take advantage of the ups and downs upon entrance into the Capital Markets ….

Funds such as 401k rollover’s, current investment portfolios that are moving from one pocket to another most certainly do not need this staggered entrance into the capital markets as they were invested already.

An accurate statement can be “If it just came out of the capital markets it can go back into the capital markets” even though it may be cash today.

Here are the gray areas

Of course there are gray areas that need judgment…

A large block of stock options sold. The funds where IN the Capital Markets but depending on the size and the situation, it may not make sense for these funds to be moved directly back into the capital markets all at once.

A sudden liquidity event such as the sale of a business – yes in essence it was in a investment that had volatility similar to the capital markets, but in most cases, risk reduction is desired and a staggered entrance along with a conservative allocation may be the best.

Inheritance..

It all depends on the form?

Some inheritance come in the form of cash … others may come in the form of investments that are already invested – again depending on the situation, it may make sense to stagger entrance, or it may be just fine to  continue the allocation or even re-allocate in one swoop.

Bottom Line, there is no exact way for all situations, but there are ways to go without raising the blood pressure!

Have a Great “Good Entrance Capital Market” Day!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents

Q 1 2019 Report Cover

 

No one really knows for sure!

Just like we weren’t certain what caused a hissy fit the last quarter of 2018, no one really knows for sure why everyone became so happy this quarter. Needless to say, we think this is a more normal reaction and possibly a reversion to the mean from the hissy fit.

As mentioned in our Q2 2019 Newsletter, capital markets could have been protesting higher interest rates – or as mentioned in one of our most read posts at Street-cents.com, it could have just been that it was amateur hour and movement during a Gentleman’s agreement no movement time was exaggerated. No matter the reason, capital markets have a happier face.

Inverted yield curve

Just as we pushed the Q2 Newsletter off to the presses, the yield curve did officially invert – as a reminder, yield curve inversion is when short term interest rates are higher than long term rates, which occurred in the last five days of the quarter. The reason we, as well as many other in the industry crow about this unique situation, is it has been a precursor to recessions with great accuracy.  Before taking shelter and hiding under the covers, this precursor has no accuracy on the depth, and very little accuracy on the timing of a recession.  In some instances a recession occurred two years after the inversion.

Recession Definition

As mentioned again in our Q2 Newsletter, the definition of a recession is two consecutive negative gross domestic production – GDP prints – yes that could be – .01% and -.01% making for a mini-mi recession, but still a recession. No matter, just as you can’t be partially sick or partially have an accident the inverted yield curve did occur. As such we will be monitoring the situation very carefully and remembering that now, is not the time to be taking extra risk.

Interest Rates

Given the yield curve inverted, no steep inflation signals are occurring, and the economy is growing, but not red hot, it is likely we have seen the highest short term rates for a while. Fed officials seem very comfortable at the current level. As more data is recorded, things can change.

We will talk to you again in the summer, have a great day!

John A. Kvale CFA, CFP

 

Q 2 2019 Newsletter Video Audio Podcast Review By John Kvale

Welcome to our Video and Audio Podcast Review of our Q 2 2019 Newsletter. For those on the road or just unable to grab the time to read, our podcast type review gives you the behind the scenes insight to our thoughts, observations and deep views of the entire Newsletter.

Click Here for direct link to an electronic version (an early peek-good ole fashion paper versions are on their way to you shortly) and here for our Newsletter page

Let’s get going!

 Q 2 2019 Newsletter

And here is your review!

Capital Market Talk

Recession and the Inverted Yield Curve

Ask any long distant runner what happens when they start out too fast and they will tell you it is not good new – The saying goes for every minute you go out too fast, you come back two minutes slower than normal…

In our main capital market article we discuss the reasons why we may have a recession by definition, but why it may not be a big deal (hopefully).

The Inverted Yield Curve (Short term interest rates higher than long term rates) and infrequent event, did occur for five days – so far – just after our Newsletter went to the publisher. The Inversion has been a good signal of recession, EVENTUALLY – some times as long as two years in advance.

They Don’t Want Your old 401k

A recent Cerulli study finds that once you leave the company, most really do not want your funds anymore. We have long suspected this.

  1. Frequently a short wait time turns into a long wait time with a different and much more general help line.
  2. Forms may be much more difficult to acquire.
  3. Paper work received, saying take it or we will distribute it and you will have taxes and penalties.
  4. Rolling over into an account that is TERRIBLY hard to get out and has hurdles to jump through, high monthly service charges as well as limited investments, if any.
  5. A general feel of everything is hard to do, once again explaining the Cerulli study results.

Are a few items we have run into over the years!

Iron Clad Trustee

General order of Trustee or other important people to execute your wishes when you are incapacitated or deceased, generally go like this:

  • Spouse
  • Sibling
  • CLOSE friend
  • Similar Aged Relative
  • Grown Children

As we can all imagine, this list can easily be very short and insufficient.

In our deep dive of the Institutional Trustee Services, we discuss the handiness of having such a great service as well as the ability to offer these services ourselves.

Choose Your Beneficiaries Carefully

In this article that fit nicely with our Trustee article we mention different types of Beneficiaries and most importantly. Make sure you confirm that your beneficiaries are correct as this will over ride you other documents, including a Will or Trust.

We hope you enjoy … talk to you in the Summer!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com

March 2019 Podcast Video, Financial Planning and Capital Market Update – By John Kvale

Break in Reminder for our Social Security Event

Saturday April 27th at 10 am and Dallas Athletic Club

 

Hello and Welcome to our March 2019 Financial Planning and Capital Market Update!

If you are too busy to read, feel free to listen as we describe our post and thoughts in friendly podcast format as well as Video!

Newbies – We like to articulate our thoughts and review on a Monthly basis our Financial Planning Tips, Capital Markets and current events!

March – 2019 Video

Financial Planning Tip (s) –

IRS Dirty Dozenburglar-308858__480

Each year the IRS publishes their top dozen tax scams, here in our post we cover all dirty dozen tax scams to be aware.

Our top three are their first three-

  • Phishing
  • Phone Scams
  • Identity Theft

Which are the ones we see most frequently!

For the record, we have seen way less this year than in years past!

Choose Beneficiaries Carefully Part IIbeneficiary - 42001392872_ddd235968d_m

Here in our Part II beneficiary post, we discuss the two most common types of designations you will likely see on Beneficiary paperwork, Per Stirpes (flows to heirs, irregardless of survivors) and ProRata (funds only to survivors) and once again as a reminder that Beneficiary language will over ride Wills and other types of Estate Planning documents – choose carefully!

Capital Market Comments –

Inverted Yield CurveFOMC Lowers Rates and buys longer to lower

Here we spoke of the three hour inverted yield curve in a Break In abbreviated post. As an update, the yield curve has been inverted most of this week, making is a TRUE inversion.

We will have a detailed review soon, but again the importance of this event is the recession signaling prowess.

All recessions are not equal, and we highly suspect the next one will be a shallow one, but our radars are up.

Have a Great Day – Talk to you at the end of March!

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
street-cents