Kane Financial Update – Schwab, Year End Planning, & Market Update
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Good morning, we hope this email finds you well and you are having a wonderful autumn season. We wanted to send along some updates now that the transition from TD to Charles Schwab has been completed. This transition did not affect clients on the Aspire 403(b) platform.
Client accounts on the TD Ameritrade platform were successfully moved to Charles Schwab over Labor Day weekend. The transition went smoothly and we have only noticed a few differences in the platforms that clients should be aware of:
Year End Planning
With the end of the year fast approaching, here are some financial planning considerations:
Markets & Economy
While the markets have experienced a difficult few months following summer, the S&P 500 remains in positive territory for the year. Here is the Year-to-Date performance of several closely followed indexes and asset classes:
Dow Jones – Large US Value Companies – (0.06%)
S&P 500 – Large US Companies – 11.47%
Nasdaq – Large US Growth Companies – 24.05%
Russell 2000 – Small/Mid US Companies – (3.40%)
MSCI EAFE – Large International Companies – 4.78%
Barclays Bond Index – Aggregate US Bonds – (3.13%)
Gold – 9.63%
Silver – (3.05%)
Bitcoin – 80.67%
*source Kwanti & Yahoo Finance
One of the reasons equity (stock) markets are always volatile in the short-term they are driven by investor emotions.
In times of optimism investors tend to allocate money into equities anticipating a good economy and high rates of return. In times of pessimism and uncertainty, investors tend to move to cash and/or flock to safe assets such as treasury bonds.
The long-term returns of equities are tied to corporate earnings. To illustrate that point, here is the S&P 500 earnings (orange line) compared to its growth (blue line) over the past 20 years:
Here is the S&P 500 earnings (orange line) compared to its growth (blue line) since 1926:
As difficult as it can be to filter out all of the short-term noise, it’s important to continue keeping that long-term perspective and stay invested. Long-term, equities will rise and reward patient investors.
Another Warren Buffett quote that backs this up: “In the short-run, the market is a voting machine, but in the long-run, the market is a weighing machine.” The market “weighs” corporate earnings and that is what drives its performance.
If you have any questions, please do not hesitate to contact the office. We hope you find this information helpful and you have a wonderful rest of the autumn and holiday season!
Clint & Renee