Tape Talk | Investing, Business, Wealth, and Your Money

On this week's episode of Tape Talk, Quint and Daniel discuss some financial moves to consider as the clock winds down on 2019.

Headlines

Before getting into the meat and potatoes, Quint and Daniel review the latest headlines in the trade war with China. Then, they question whether the new developments even matter any more? Headlines that might have moved the market in the past now barely cause the market to blink as traders settle into headlines exhaustion over the back-and-forth trade war stories.

End of Year Planning

One of the most critical pieces of your end of the year task list is ensuring you've updated your financial plan, assuming you have one. Quint breaks down the importance of a financial plan for investors to use as a roadmap as well as what you might be missing out if you have yet to do one.

Tax Moves for 2019

If you want to save money on your taxes for 2019 the time is starting to run out. Quint and Daniel discuss two important strategies investors might utilize to save a few extra dollars. First, consider tax-loss harvesting if you happen to have investments that are trading under your purchase price. These can work to reduce your tax burden or allow you to trim some profitable positions with little tax impact. Second, consider using qualified charitable distributions for your RMD to reap some potentially significant tax benefits if you are already charitably minded anyhow.

 

In this week's episode of Tape Talk, Quint and Daniel review what's going on with the trade wars which have slipped out of recent headlines.

Quiet Headlines

While the headlines have been somewhat quiet this week that doesn't mean there is nothing going on in the market. We've seen earnings from some big bellwether which investors will use to assess the fallout from the recent trade wars and any potential economic slowdown.

In The Trenches

Quint and Daniel talk to Quint Pottinger of Affinity Farms to discuss how the trade war, as well as China's purchase of agricultural goods, is playing out in the trenches. You might be surprised to hear that the headlines are not all smoke and mirrors as farmers are actually seeing increased prices with China returning to US markets for products.

Earnings In Focus

Quint discusses three key companies that he's watching here for an indication of the health of the economy going forward. Unlike the popular FAANG stocks which encompass a technology-heavy lean these three stocks represent areas of the market that may give helpful clues about the broader economy overall.

This week Quint takes a break from economics and finance to sit down with entrepreneur and small business owner Trainer Joe. With a background in collegiate sports, Joe Olliges was always interested in helping folks to achieve their fitness goals. It wasn't until he took the leap of faith to create his unique brand Trainer Joe that he began to turn his passion into a business. You won't want to miss this in-depth look into the business of fitness and weight loss. 

In this week's episode of Tape Talk, Quint and Daniel discuss the different ways investors should think about and view risk in their financial plan.

Headlines

This week's headline focus is back to China and trade. News broke during the week that China might be willing to make a deal, sort of. The problem with this news is that it's quite ambiguous. The market, however, didn't care and chose to rally on the potential for tensions to ease.

Tolerance is Key

Your risk tolerance is an important aspect of your financial plan. Your level of tolerance is dictated by what your portfolio can stand while still achieving the financial goals you set out.

Temperament is Important Too

Looking at your risk tolerance alone is dangerous though as it's also important to understand your temperament for risk. It's this metric that is better known as your "sleeping comfort" or what level of volatility you can handle and still sleep well at night. After all, it doesn't matter if your portfolio can handle the ups and downs in the market if your stomach cannot!!

As the stock market begins to show some subtle signs of weakness in the short-term, Quint and Daniel discuss what matters here and what news they're looking at to assess where things go from here.

Liquidity Event?

The tightening in overnight lending from a couple of weeks ago has continued to persist. It seems that a rare "glitch" in the system has shifted to an ongoing trend. Quint and Daniel discuss what they're watching in this often-overlooked market to be on alert for something that might evolve into something more serious. 

The Race to $0 Commissions

Over the past week, online brokers have all acquiesced to the pressure from low-cost (or $0 cost) startups and subsequently all lower their commissions to $0. Schwab made the first move and was quickly followed by TD Ameritrade and E*Trade. While this means that customers and clients of these firms will benefit on the commission front, it does pose the question of where these companies will attempt to make up this lost revenue. 

Hunting for Value?

Quint and Daniel discuss the difference between value hunting and bottom fishing. With segments and sectors of the market at or near highs, there is a strong desire by some to find something that is a "value." However, while this can be a valid investment strategy it can also come back to bite and investors who haven't done their homework. 

On this week's episode of Tape Talk, Quint and Daniel review the Federal Reserve's recent rate cut, drama in overnight lending markets, and the firm's recent equity position rebalancing.

Headlines

The FOMC met this week and, as expected, lowered interest rates by 0.25%. The market's reaction was fairly muted as this move was pretty well baked in to both equity and bond prices. Further, Fed Chair Powell didn't do anything in the Fed's post-decision press conference to shake investors confidence for the future.

Overnight lending, however, is in the spotlight this week as the cost to borrow cash in the "repo market" spiked multiple times throughout the week. This particular market is critical for the healthy functioning banking system to move liquidity where it is needed. While the developments here are noteworthy and somewhat concerning, they don't necessarily indicate a definite disaster on the horizon and, therefore, the market has hardly reacted so far.

Art of Rebalancing

With major US stock indices essentially at highs, Quint reviews Joule Financial's decision to rebalance its equity positions in an effort to take profits on what has been doing well and allocate some funds to areas that may have become underweight. 

On this week's episode of Tape Talk, Quint and Daniel discuss eight steps you can take in the months ahead to increase your odds of financial success as the year closes out.

Headlines

Hong Kong headlines have quieted down and Trump tweets arrows at the Fed this week. However, the market hasn't been stumbled by much as far as news goes this week. In fact, the market spent most of the week marching back towards highs like it was drawn by a siren's song.

8 Steps to Success Now

1. Rebalance
2. Review bond bunds
3. Tax manage your sells
4. Send your RMD to charity
5. Establish a SEP IRA, or another tax-saving account
6. Pay off your bad debt, then all debt
7. Check your diversification
8. Know your "Required Rate of Return"

On this week's episode of Tape Talk, Quint and Daniel explore the moves higher this week across a variety of markets. Stocks, bonds, and gold, nearly every asset had its time in the spotlight this week.

Good News

Much of the week's moves were based on investors interpreting the headlines as good news. Focus turned from the recent protests in Hong Kong to the good economic indications come from data in the US, employment reports were decent, and the Fed is still indicating a move to a more accommodative policy at its September meeting. Combine these headlines with the US and China looking towards their next trade talks in October and investors found little to be negative about this week.

Watch Your Bond Funds

While many assets are up recently, it's important to remember what that means. Investors would do well to keep in mind that bond prices and bond yields move inversely of one another. This means that with yields near historic lows, investors are seeing the value of their bond funds near all-time highs. While "set it and forget it" is a method employed by some, those that keep a vigilant eye on their portfolios may consider how much farther bond funds can rally if rates are already under 2% across the board.

Understand Your Plan

Your required rate of return is an important thing to know. This is the return you need to achieve to meet your goals. However, it's also important to know how that rate works into your plan. If you're looking in the rearview mirror here you've benefited from multiple assets classes rallying over recent years. Now may be the time to discuss with your advisor what a pullback in some of these assets may do to your expected rate of return compared to your required rate of return. Unless you are confident that all these assets can continue marching higher indefinitely it's worth considering how the future may look different from the past and incorporating that into your plan.

On this week's episode of Tape Talk, Quint and Daniel review what's been a quiet week in the market so far and dive into the much-hyped yield curve action.

Bulls Return

US stocks stabilized over the week after the previous weeks volatile sell-offs. Much of this calmer action seems to be attributed to the fact that economic data keeps coming in rather positive while headlines around the trade war escalation also seem to have slowed, for now.

FOMC Minutes

During the recording of this week's show, the FOMC meeting minutes from the most recent rate cut were released, which proved to be a non-event. While the Fed reiterated its stance that the recent rate cut may not be part of a new trend, markets seemed to find hope that the board overall was mixed on how deeply to cut rates this go around.

How Rates Work

While the Federal Reserve is heavily influencing liquidity and short-term rates in this environment, it's really the ten-year rates that people are focusing on. In fact, the 10-year yield was the catalyst for the most recent inversion on the yield curve. Quint examines what this means for investors and what the Fed can really control here versus what the market is in the driver's seat on.

What To Do Here

For investors, it all comes down to controlling what you can. This means having a financial plan, knowing your rate of return, and living within responsible spending habits to achieve your plan. Quint and Daniel wrap things up this week by examing the small things investors can do that will be important building blocks for their long-term financial success.

On this week's episode of Tape Talk, Quint and Daniel discuss the recent yield curve inversion and what that means to the market. 

Inverted What?!?

The headlines and watercooler talk this week is all about the recent inverted yield curve across the 2-year and 10-year Treasuries.  However, all the fantastic headlines tend to leave out why this matters to investors and what it really means. Quint and Daniel spend some time explaining the yield curve and why there is so much focus on inversion here. 

Main Street Interest Rates

It's all fine and good to know what's going on in Treasury yields but how is this trickling down into real-life economics of consumers who are affected by interest rates daily. What might be surprising to some is the vast divergence in the effect of the recent Treasury rate retreat on actual consumer rates. While mortgages are down some, many other rates have held steady or even rose!

Recession on the Horizon?

So if the yield curve is a recession indicator, does that mean we're on a direct road to this adverse economic event? Quint reviews what else is going on in the economy here to question whether we really need to be concerned at this point.

Your Required Rate of Return, It's the Foundation!

The one thing that is certain is markets will move both up and down. Sometimes they'll move calmly and other times more violently. Through these ups and downs, it's critical for investors to know precisely what they need from the market to achieve their goals. Understanding their required rate of return gives investors a metric by which to judge whether volatility is having a real-world impact on their current goals or is simply static to ignore.