Stock, Bond and Money Markets: An Early Year Update

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By Maurice Stouse
Financial Advisor and Branch Manager

The stock market had a bruising December posting its worst performance since 1931. The bond market saw yields retreat after climbing all year long. And the money market saw yields continue to move upward as higher Federal Reserve rates made their way in to money market funds. Many individual investors are assessing or reassessing their investments and thinking about what, if anything to do next.

Many investors have seen long term success through sticking with three guides in their efforts: 1) Low cost portfolio construction (ensuring that internal fees are not a drag on their long-term performance, 2) consistent rebalancing between stocks, bonds and cash, and 3) tax efficiency in their approach.

Low cost portfolio construction means having a look at all costs of investing: Any upfront charges or commissions, management and expense ratios, advisory fees, trading costs and any back-end charges. With so much choice today, investors might see better performance by focusing on low cost portfolio construction. Asset allocation often proves to be very important in long term performance. Equally important is making sure that as part of your portfolio outperforms or underperforms, you periodically- once a year as an example- ensure that you are maintaining the same percentage mix of stocks, bonds and cash. Tax efficiency was most recently exercised by many investors who saw one advantage from the equity market decline by selling any positions they had at a lost in order to pair those against any capital gains and potentially lower their taxes for the year.

Despite these three keys, many investors are still wondering about what to do at this point. Many hear stay the course or perhaps to examine one’s downside threshold and to sell if the pain or worry has become too great. Timing is difficult, as the old adage of “they don’t ring a bell at the top and they don’t ring a bell at the bottom,” is as true today as ever. In the long run investors look at the stock market as an opportunity to participate in the growth and profits of American industry. Many see it as a way for their money to work hard for them. The risks of course are greater and investors should examine further the kind of stocks they are comfortable with. Stocks can be value oriented with consistent dividends, balance sheets and earnings. Stocks might be growth oriented, faster growth yet less value regarding dividends and longevity of the company. Lastly would be speculation, where dividends and value are low however potential is high and loss potential is high. Perhaps it is a company that is quite innovative or inventive? Plan today to review your portfolio in line with your goals, time frame and risk tolerance.

Maurice Stouse is a Financial Advisor and the branch manager of the First Florida Wealth Group and Raymond James and he resides in Grayton Beach. He has been in financial services for over 30 years. His main office is located at First Florida Bank, 2000 98 Palms Blvd, Destin, FL 32451. Branch offices in Niceville, Mary Esther, Miramar Beach, Freeport and Panama City. Phone 850.654.8124. Raymond James advisors do not offer tax advice. Please see your tax professionals. Email: Maurice.stouse@raymondjames.com.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC, and are not insured by bank insurance, the FDIC or any other government agency, are not deposits or obligations of the bank, are not guaranteed by the bank, and are subject to risks, including the possible loss of principal. Investment Advisory Services are offered through Raymond James Financial Services Advisors, Inc. First Florida Wealth Group and First Florida Bank are not registered broker/dealers and are independent of Raymond James Financial Services.
Views expressed are the current opinion of the author and are subject to change without notice. Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Past performance is not indicative of future results. There is no assurance these trends will continue or that forecasts will occur. Investing always involves risks and you may incur a profit or a loss. No investment strategy can guarantee success.
Holding stocks for the long term does not insure a profitable outcome. Commodities and currencies investing are generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising. Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated.