Financial Floyd Blogspot

This week GDP numbers for the first quarter came out and the numbers came out higher than expected ( Annualized rate of 3.2 versus an expectation of 2.5%). MarketWatch published an article on Friday and a couple of good takeaways worth mentioning are: 1. GDP Growth was driven by inventory building and trade 2. State and Local Government spending jumped 3.9% 3. Fed rate cut might be in question This growth rate hasn't been seen since 2015, but despite the rosy headline, the devil was in the details. Because of the pending trade sanctions, companies pulled forward future purchases in 2018 to ensure that they had enough product coming into 2019, hence muting our typical trade deficit.  The Government shutdown also played a significant part because of the compensatory payments that needed to be made to Government employees.  The economy has been doing well this year (S&P500 up over 10% YTD), and with other countries turning the corner (China in particular) in t...

Good Morning, Entrepreneurship is a hard road, and accessing capital always seems to be a barrier for most. Forbes published an article this week about how to access capital and fundraise effectively. While this article pertains more to business owners, investors who are looking to get into private equity should also take time to read this article.  As always a link to the article is in this blog, but a couple of points I found interesting were: 1. Working capital is crucial to have on hand 2. Online equity crowdfunding platforms are a way to access capital outside of family/friends, the SBA, or a traditional bank loan 3. Having an effective social media presence is crucial (maximizing LinkedIn, Blogging, etc.) This article did a great job of providing the steps, but from experience, it comes down to doing the research, homework, and coming prepared. A business plan might not always be needed, but at a minimum, a presentation should be available. People want to know how well you u...

Good Morning, Have you ever wondered who is paying for financial advice? CNBC recently published an article about who is paying for this advice and a couple of days later Investment News released an article about a new type of service being offered by a major Brokerage firm. The CNBC article highlighted the following points: 1. Most American's reject financial advice 2. 4 out of 10 workers guessed the  amount needed for retirement based on a study done by Transamerica Center for Retirement Studies 3. Based on a CNBC survey, those making more than $150k a year were most likely to seek the help of a financial professional or money management app 4. People making less than $50k a year were most likely to not manage their financial future While this might sound very dreary, the Investment News article made an announcement about Charles Schwab now offers service that a client can receive investment management and financial planning advice for a monthly fee of $30 (including a ...

Good Evening, This article by Shaker Investments provides a rare glimpse of why it is hard for practitioners to select mutual fund managers. Shaker Investments wrote a good piece on why it is so hard to actually pick funds. In the blog, the author mentions that an economic cycle is usually 10 years, but we have been in a 10-year bull run which throws off traditional analytical methods. The author mentions that it is best to have a solid understanding of how the fund investments, which I completely agree with. Everything looks good trending up, but looks can be deceiving. If you are in an ETF or Mutual Fund, maybe it is a good time to become acquainted with the holdings/strategy of those funds.

Good Morning,   This week Business Insider published an article about the Yield Curve inverting and what it means. For those that have ever wondered what this means the main takeaways were:   1. When the Yield Curve inverted on March 22nd it was the first time since 2007 (no coincidence that this was before the Global Financial Crisis)   2. Inversion means that short term rates are longer than long (in this case the three-month rate is higher than the 10-year rate), and it is a signal of a looming recession (1 to 3 years in advance, others have used about 30 months)   3. The article noted that this time it is more about asset bubbles (sound familiar?)   While I'm not a doomsday person, we have been in a robust period for a long time (stock market highs, lower volatility, record low unemployment, etc.). Over the past six months, we have experienced a strong correction during the fourth quarter which has lead to a strong first quarter. On Frida...

Good Morning, History doesn’t repeat itself, but it does rhyme. This weekend MarketWatch produced an article based on an interview with Jeremy Grantham (co-founder of GMO) by CNBC. Unfortunately, he did not leave readers(or viewers) with a rosy picture in this article but he dropped some gems worth noting: 1. Future return expectations for the next 20 years will be around 2-3%, instead of the 6%+ in the past couple of decades 2. Based on his estimations the current market is overvalued 3. He doesn’t see the developed market's returns rising much more this year due to Central Bank influence This article was short, but digging deeper into the first point about expected returns is constantly overlooked. A lower rate of return requires a higher savings rate in order to have a larger nest egg at retirement. Most investment professionals use the historical 6%, but based on our current GDP growth rates and current bond yields seems 3% more appropriate. His notion of the ma...

Good Afternoon, March is Woman's History Month, and MarketWatch put out an article about the disparities in the advice given to women versus men. This is a great article that not only touches upon the differences and how to take control of the situation. Some key takeaways from the article are: 1. Advisors tone down the risk for women 2. Women believed to have less experience by Financial Advisors 3. Flaws in the information gathering step hinders the execution of the investment plan 4. Types of questions asked to women tend to be more personal and financial The article highlights ways to solve these issue which are:  1. Seek out more Financial Advisors before committing to one 2. Take charge of the conversations 3. Have a healthy level of skepticism 4. Ask for a woman Financial Advisor These steps lessen the inherent bias of financial advisors, but the first step should be to educate yourself first. That should be the answer for any gender because without sufficient inf...