THE MARKETS MADE a nice recovery of much (but not all) of the losses from a horrific Q4’18, a period where the stock market saw its worst quarter since the Great Depression. The narrow breadth seen in the markets for nearly the past two years—where indexes were dominated by a handful of stocks—gave way to a cascade of selling in Q4. As we entered Q1’19, with economic indicators weakening and the inversion of the yield curve, the Federal Reserve pivoted to a neutral stance on rates, indicating no more hikes in 2019. This is likely due to significant weakness in the housing and auto sectors—both of which are very rate sensitive and have been struggling over the past year. Read More
CHEERS TO A TEN-YEAR BULL MARKET…NOT REALLY
A decade ago this month, the major U.S. stock markets reached their lowest point during the financial crisis of 2009. S&P 500 low was marked at 666 as the economy was a complete disaster and investors scurried for the exits. As with all market cycles, fear ultimately subsided, and the birth of a new bull market began…or did it? Read More
—Brant Jones, CFP®
Health Savings Accounts: The Triple Tax Treat
What is a Health Savings Account?
A Health Savings Account (HSA) can best be described as a personal savings account where the money can be used only for qualified medical expenses. This investment account, created by the Medicare Act in 2003, provides people with a convenient way to save for any unexpected future medical costs they might encounter. Notice that I said investment account. That means contributions do not need to be kept in cash; they can be invested into the stock market and thus have potential organic appreciation. Read More
—Brant Jones, CFP®
AS THE MARKETS closed out 2018, volatility returned with a vengeance. From their highs in late September, all averages fell more than 20%. The cause was a combination of a hawkish and aggressive Federal Reserve, trade war tensions, and political unrest here in the US. Below, courtesy of Bloomberg, is a rundown of how the major averages fared in 2018:
On average, these indexes were down approximately 12% for 2018. The performance of global markets was even worse for 2018—with major markets including the DAX in Germany, down 21.94%; Euro Stoxx 50, down 18.20%; and China, down a whopping 30%. Even safe havens such as gold and other commodities like oil were down sharply. For example, oil lost 44% in the final 2½ months of the year. There was no place to hide this steep decline, which culminated in the Dow’s 653-point drop on Christmas Eve. Read More
Markets have now given back all of their gains for the year with the S&P 500 down a bit less than 1% year to date, the Dow Jones Industrials average down 0.3%, the Russell 2000 down 7%, and as of this writing the Nasdaq falling into negative territory as well. The declines may seem modest, but It was just over two months ago that the S&P 500 hit all all-time high with economic growth having accelerated over the summer. Reflecting a more defensive posture taken by investors in recent weeks, Utilities and Healthcare are the two top-performing sectors through the middle of December up 10.8% and 9.1%, respectively. Not surprisingly, more cyclical sectors such as Materials and Financials are bringing up the rear. Read More
I came across a great piece written by Ben Carlson, CFA, that could not have come at a better time. The article, from Carlson’s A Wealth of Common Sense blog, considers retirement at the peak of the stock market. Say you’ve worked your entire life to build your nest egg and finally you decide to call it quits in the workforce. With some unfortunate timing, the market plunges into a bear market and you lose a significant portion of your retirement savings. What now? Carlson does a great job outlining three different historical scenarios in which an individual retired at the market peak with the equivalent of $1 million. Continue Reading
—Brant Jones, CFP
Thompson Davis was proud to participate in “Alzheimer’s Day in RVA,” presented by the Rick Sharp Alzheimer’s Foundation at the Science Museum of Virginia last week. The firm was among numerous ambassadors supporting the cause with a table at the event. Read More
Stocks might climb a wall of worry, but that wall has gotten a lot higher lately and stocks have been taking it on the chin. Since the S&P 500 hit an all-time high in early October, the list of concerns seemed to grow exponentially. As of this writing, we know the outcome of most of the midterm elections, but in the runup to them, uncertainty over which party would end up controlling the government cast a dark cloud over the market as October progressed. Midterms may be out of the way, but the ongoing trade rift with China remains problematic for markets. Tariffs are set to go from 10% to 25% in January, and rumors swirl almost daily about the possibility of still more tariffs against China, even including tariffs on ALL Chinese imports. Also, in early October comments by Federal Reserve Chief Jerome Powell in an interview were taken as hawkish and seen as a portraying an intransigence, i.e. no longer data driven, regarding the forward path of interest rate policy. This episode cast the Federal Reserve as a villain in its pursuit to normalize policy. Read More
Claiming Social Security: Important Things to Consider
Social Security is largely a pay-as-you go program which, for many, provides a steady stream of income during their retirement years. Did you know that the age at which you begin taking benefits affects the amount you will be receiving on a monthly basis? Each individual has different needs and circumstances, but everyone should consider the following items before making a withdrawal decision. Read More
U.S. EQUITIES CONTINUED their winning ways in the third quarter. The S&P 500 posted its best return since the end of 2013 with a gain of more than 7%. That performance put the S&P 500 up 10.6% through the first nine months of the year. U.S. large-cap stocks were the strongest among asset classes with a 7.7% return in Q3, while U.S. small cap stocks trailed with a 3.6% return. Read More
RETIREMENT STRATEGY – LOOKING AT THE WHOLE PICTURE
When thinking about retirement, Social Security is one of the first things that comes to mind, but Social Security is only one of many potential sources of income for the average retiree. It is helpful to understand the various income sources as a basis for proper retirement planning and to ask yourself some questions when putting together a retirement plan. Read More
- Brant Jones, CFP®
“Buy American” sums up the story of the markets thus far in 2018. Markets around the world were strong last year on the back of a synchronous global economic recovery. It was difficult to find an index that was not up on the year. Emerging market stocks, for example, posted a gain of nearly 40%, and almost every country within the EM index was up. Economic activity has diverged this year, with the United States accelerating (Q2 GDP growth was 4.2%, up from 2.2% in Q1) and other areas having a more challenging time, most notably those very same emerging markets that were so strong last year. Read More
Our SVP and research analyst David Campbell was on Bloomberg TV yesterday discussing FedEx earnings report. David's comments begin at the 16:30 mark.
Thompson Davis & Co. is proud to announce that our research analyst Adam Thalhimer has been recognized by Thompson Reuters in its 2018 Industry Analyst Awards survey. In the Construction Materials category, Thalhimer ranked as the #1 stock picker. In the Construction & Engineering category, Thalhimer ranked as the #1 earnings estimator and the #3 stock picker. Read More
THOMPSON DAVIS & CO. is pleased to welcome Jack Kasprzak to the firm as Chief Investment Officer and an active portfolio manager. He will assist in the oversight of existing portfolio strategies, generate new investment ideas for those strategies, and help the firm develop new investment products.
The firm also is proud to announce that Brant Jones has earned his Certified Financial Planner (CFP) status. Awarded by the CFP Board of Standards, the designation means individuals have successfully completed rigorous certification requirements, including extensive exams in the areas of financial planning, taxes, insurance, estate planning, and retirement. Read More
AS WE MENTIONED in our last market commentary, we expected volatility to return to the equity markets given the long period of benign volatility in 2017. Trade war fears as well as rate hikes ramped up in February 2018 after a strong stock market performance in January. As the Trump administration laid out its plans for tariffs on China, the markets saw their first greater-than-10% pullback since July 2015. Thus far the correction has been a bit over 12%, but recently the market seems to be stabilizing after retesting the lows from February (see chart below). The correction puts most markets back to Sept-October 2017 levels, giving back more than six months of gains. Read More
FEW INVESTORS EXPECTED gains in 2017 with a new and unexpected president, near-record low volatility, geopolitical tensions, massive natural disasters, political infighting in Washington, and a tighter monetary policy. The market in 2017 was dominated by a narrow group of companies that comprised most of the gains in the market cap–weighted indexes. As I mentioned in earlier commentaries, value stocks lagged significantly in 2017. As we closed out 2017, with the Fed adding one more rate hike, value stocks started to narrow the gap and the breadth of the markets improved. We expect more of this as we move through 2018. Historically, value stocks outperform during Fed rate hike periods and with valuations stretched in growth stocks, a rotation into the value space seems likely. As of this writing, we are in the longest period in S&P 500 history without a 3%+ correction, with no downward move of that size since November 4, 2016. Read More
“FEAR OF MISSING OUT,” or FOMO, happens on an everyday basis whether you know it or not. We feel anxiety if others are enjoying a product or experience, or making money, while we are unable to participate. This is social anxiety at its core and an all-too-common trait in humans. This is how we are wired. Many of us must fill the void, the itch, in order to feel satisfaction and ensure ourselves this was worth the money and wait. We live in an interconnected world where information is disseminated at a rapid pace.
This social behavior plays an integral part not only in our everyday lives but also in the stock market. What’s the latest hot stock? Mr. Advisor, everyone I’ve talked to is buying this stock or idea—why aren’t we? Advisors field these sorts of questions daily. Half the battle is talking the client off the ledge from deviating from the plan and to remain disciplined. I would like to share an instance where the behavior described above was on a collision course with an investment idea that took the stock market by storm only to come to an abrupt halt. Read More
THOMPSON DAVIS & CO. recently made a series of hires to enhance its research, sales, compliance, and operations efforts.
Director of Research and publishing analyst Adam Thalhimer came onboard in October 2016, covering Engineering & Construction and Building Materials names. He started his investment career with UBS PaineWebber in New Jersey before joining Scott & Stringfellow as a mutual fund analyst. Adam moved to the equity research department of BB&T Capital Markets, covering Engineering & Construction as well as Environmental Services and Building Materials during his 13 years there. By 2016, he led a three-person team covering two dozen names and was consistently ranked as a top analyst at the firm. Read More