WrapManager's Wealth Management Blog

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Dorsey Wright Releases Manager Insights for Q2 2018 Review

Posted by WrapManager's Investment Policy Committee

August 9, 2018

U.S. equities continued to rise during the second quarter. Both large cap stocks (S&P 500) and small cap stocks (Russell 2000) finished the quarter in positive territory. The same can’t be said for International stocks though. There have been quite a few head winds for international equities, and that caused both developed and emerging markets stocks to perform poorly this quarter.

Heading in to the start of the year, the U.S. Dollar was in an established downtrend and that was really helping push international equity prices higher. That changed in late April, and the U.S. Dollar spent May and June in a strong rally that really had a negative impact on foreign equities. Both developed markets (EAFE) and emerging markets finished down for the quarter. We are also seeing a big rotation our of Latin America, which is one of the areas that was such a strong performer last year. While this is unfolding you should expect the character of our international holdings to change and be reallocated in areas that are holding up better. A declining U.S. Dollar isn’t a prerequisite for international stocks to do well, but when there is a sharp reversal like we saw this quarter it takes everyone time to adapt to the changes.

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Dorsey, Wright & Associates Money Manager Commentary

The Investment Benefit of Women-Led Businesses

August 8, 2018
A recent study of 22,000 publicly traded companies found a correlation between profitability and women in leadership roles. Specifically, when companies increased leadership positions for women from 0% to 30%, profitability increased by 15%. In the private technology sector, it was found that women-led companies were not only more efficient, but also brought in a 35% higher return on investment.[1]  But statistics also show that the business world has yet to fully bridge the benefits of women in leadership roles with actual participation and investment. Recent data showed that less than 2% of all venture capital goes to female founders and fewer than 8% of investors are women. And even though American, women-owned businesses represent 28% of American enterprises – while employing 7.7 million people[1] – in the publicly-traded sphere women only hold 5% of CEO positions at S&P 500 companies.[2] [+] Read More

Nuveen Reports Fundamentals Helping Stock Prices Push Higher

August 2, 2018
U.S. Indices Are Mixed, While Corporate Earnings Draw Headlines Investors focused last week on a moderate easing of trade tensions and a solid second quarter gross domestic product report. Corporate earnings also drew headlines, particularly troubled results that ravaged Facebook’s stock price. U.S. indices were mixed, although the S&P 500 Index posted a fourth weekly gain, rising 0.6%. The energy, industrials and financial sectors were the best-performing areas, while technology and consumer discretionary came under pressure. Highlights  Strong economic growth and stellar corporate earnings continue to provide reasons for investors to bid stock prices higher. Trade tensions eased a bit last week, but uncertainty over policy is keeping financial markets in check. We expect the equity market to maintain its current trading range until trade tensions ease. [+] Read More

Writing Your Will – Ensuring Your Wishes are Known and Followed

August 1, 2018
Our estate planning hats are on this week, and we have two fundamental but essential questions for readers: (1) Do you have a will? and (2) If you do, have you updated it in the last year? If the answer to either of those questions is no, we have five reasons it should be yes: Don’t Let State Laws Determine Who Gets Your Assets – when a person passes, and it is determined that he/she did not have a written will, then state laws will usually determine how the person’s property will be distributed. Though the state will generally opt to distribute property amongst family and close relatives, the fact that the state is making the decisions is problem enough. You work hard for the assets you accumulate over a lifetime. It should be up to you how those assets are distributed. [+] Read More

BlackRock Reports on China's Currency, Domestic GDP Data, and the Fed's View of the Economy

July 26, 2018
Should China's Currency Worry Markets? A slide in the Chinese yuan is sparking fears of a sharper devaluation that could rattle global markets. Are the worries justified? We see the yuan depreciating moderately in response to slower growth, financial deleveraging and escalating trade tensions. We expect China to rely mostly on fiscal and monetary tools, rather than the currency, to manage any growth slowdown in the second half. The Chinese currency posted its biggest monthly fall against the U.S. dollar on record in June - just as the trade tussle between China and the U.S. heated up. The yuan has slid 4% so far this year, with the fall accelerating since mid-June when U.S. President Donald Trump announced a 25% tariff on $50 billion of Chinese imports. See the blue line in the chart above. We do not see China resorting to a 2015-style devaluation to cushion the blow. Back then, a lack of market confidence in China’s policy framework contributed to capital flight (see the green bars), spooking global markets. Today, China has stricter capital controls in place – and improved coordination between policymakers. We believe this should give the government confidence to allow the yuan to gradually slide lower. [+] Read More

4 Healthy Financial Habits Everyone Should Have

July 25, 2018
Oftentimes when it comes to investing, there are habits/tasks we know we should do, and habits/tasks that we’d maybe prefer to do. Saving 20% of every paycheck and keeping cool during volatile markets are examples of things we should do. Splurging on a trip to Europe and selling stocks to “wait out” the downside volatility might be examples of things we’d prefer to do. For many savers and investors, there is a constant tension between these two, even though we know that the clearest path to long-term success is saving more, spending less, and investing prudently. Much like losing weight, the formula for success is fundamentally simple – but the execution and follow-through can be painstakingly hard.   The fundamental question, then, is: what can we do to shift our behavior? What can we do to form better, lasting habits that lead to long-term financial success? [+] Read More

Is it Better to Save for Retirement or Pay Off Student Loans? – Doug’s Quiz Corner

July 20, 2018
Determining Priorities When Saving for Retirement and Paying Off Student Debt Consider this Scenario: Your friend Stanley has recently completed college and has just started a new job. Stanley has $40,000 in student loans to pay off at an interest rate of 7%. Stanley’s starting salary at his new job is $50,000 per year. Additionally, his employer offers a 401(k) match of 2% of salary. Stanley understands the importance of saving for retirement and would like to save as much as possible toward his future. Stanley also understands that he is $40,000 in debt and he would like to pay off his student loans as quickly as possible. He isn’t certain how he should prioritize his budget though, and he’s heard a lot of conflicting advice. When he asks you, what would you recommend: Should he focus on paying off his student debt before investing for his retirement? Or should he save as much as he can toward retirement before paying off his student loan debt? What is the probably the best way to prioritize investing versus paying off student loan debt? [+] Read More

Main Management's Q2 2018 Market Recap

July 19, 2018
Volatility Softening; Rate Hikes The second quarter of 2018 saw a marked decline in volatility from the first quarter. The prevailing feeling in the US equity markets was decidedly more positive. On the whole, the economic picture in the United States improved from the first quarter. Inflation is nearing the Fed’s target of 2% for the Core Personal Consumption Expenditures reading. The manufacturing PMI readings in the U.S. show that the sector continues to expand. The labor market also remains very tight but wage growth remains below 3%. The unemployment rate fell to 3.8% in May, the lowest level in 18 years and the non-farm payrolls have averaged a gain of 207,000 jobs so far this year. On the back of this strong data, estimates for second quarter GDP range from 3-5%, up strongly from the 2.2% estimated for the first quarter. The data is indicating that first quarter was likely more of an anomaly than a trend. The Federal Open Market Committee raised rates for a 7th time in June and conveyed a more hawkish view which indicates that 2 more rate hikes are likely in store for the rest of 2018. [+] Read More

Understanding the Basics of ESG Investing

July 18, 2018
For readers who are unfamiliar with – and maybe curious about – the concept of ESG (Environmental, Social, and Governance) investing, look no further. In this post, we’ll answer basic questions about what ESG investing is, how it came about, the pros and cons, and why it may or may not be right for you. [+] Read More

J.P. Morgan Shares Market Insights for Q3 2018

July 12, 2018
J.P. Morgan Releases the 3Q 2018 Guide to the Markets JP Morgan's Guide to the Markets for the third quarter of 2018 is now available for review. Comprised of 64 in-depth pages of charts that examine a variety of financial and economic topics, the guide illustrates:  Sources of earnings per share growth Economic growth and the composition of GDP  Fixed income yields and returns Global economic and earnings growth Global commercial real estate, and  Local investing and global opportunities   [+] Read More