Most of our Posts are a work in progress for 3-5 business days prior (at least, many take months) till the actual post. We started our theme of Too fast of a Pace way before the Capital Markets started pulling back the reins. We left the title on this post as an odd coincidence of good timing!
One quick note before we start.
Points Versus Percentage
It has been a LOONG time since we have had a meaningful pause in the capital markets.
While we watch all indexes but not the Dow Jones as much, we do understand that this index is one of the most watched. “The Market” in most circles means the Dow Jones .. such the reminder.
As the Dow Jones Index has risen over the last few years, a percentage move has become a greater number of Points.
Today a 2% move is around 500 Dow Points. At the lows of the great recession of 07-09 a 500 point move would have been near an 8% move … just a friendly reminder to keep things in perspective.
Whoa Baby Whoa
Don’t get us wrong, we like growth, but just like starting a long distance race too fast, this year started too fast … proving even too much of a good thing, is still too much !
The first white trend line is a high double digit (~20%) annual growth line … unsustainable in itself over a longer period. The second “Super Aggressive is an approximate 40% annual rate, only to be out done by the third trend line which is over a 60% annual clip. This last line is 3x an aggressive pace … clearly unsustainable!
It would not surprise us to rest a while … a much needed rest that is.
Oh, we have plenty of excuses (rates, hot economic numbers, Fed Reserve talk) but we think the unsustainable pace was the key
Have a Great “Paced” Day!
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
$treet-¢ents 
All About the ETF (Exchange Traded Fund), The Creation and Growth (Part 1)
Working on the Q2 Newsletter and with a fabulous article about ETF’s (Exchange Traded Fund) in the making, as promised from last week, wanted to share in short version, here in this format, in advance….
ETF Index SPY is Born
This first Index ETF, traded (s) on the exchanges as SPY can be purchased just like a stock, during market hours and even after market hours in the much less stable and liquid extended market hours. Today just like when it was established, trades at 1/100 of the actual index value. I.e. Index 3300, SPY 330.
This Index ETF allowed investors the ability to purchase one asset, under the ticker SPY, just like an individual stock, but hold 500 stocks, in this case the Standard and Poor’s 500, generally known as the largest US public companies in the world all at once and have throughout the day ability to buy or sell.
Prior to the SPY, there were certainly Mutual Funds (and still are today) that represent the same index, but were only tradable at the end of each day, also called end of day settlement.
In an ever faster moving world, the ETF has gaining appeal and continued money flows through low cost purchase.
Time Flies When We Are Having Fun – National Quote 1.5 Decade Ago Still Pertinent
Oddly, the following quote in 2006, actually still hits to the heart of an important topic of this article today…
Managers Look Ahead To Era Of Rate Declines
BY MURRAY COLEMAN
INVESTOR’S BUSINESS DAILY
Posted 10/6/2006
“The interim period while we’re not raising or lowering rates is a time to build ETF watch lists,” said John Kvale, a Dallas- based adviser. “If it’s a soft landing for the economy, then our belief is that we’ll gravitate much more toward higher-quality stock funds.” He’s moving clients away from small-cap ETFs. The funds he favors now include S&P 500 tracker SPDRs. (SPY) “We’re holding off right now on investing in more sector-specific ETFs,” Kvale said.
Fast Forward to the Growth of ETF’s
From Ishares/Black Rock and Visual Capitalist
As long as there is demand, Wall Street will Build!
Next up, beginnings of Danger!
Have a Great “ETF Creation” 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
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Posted in Investing/Financial Planning, Market Comments
Tagged Black Rock, ETF, Ishares, S&P 500, Spider, SPY, Visual Capitalist