|
Ben Offit Joins Top Advisors on
Build, Scale, Sell Panel
|
|
Hosted by the Financial Planning Association of Maryland
Ben Offit, CFP® and Principal at Offit Advisors, will speak about the building and development of his firm. David L. Berman, CFP® CLU®, ChFC®, will share his experience fine tuning, partnering, and creating value for Berman Financial Group, which he founded over twenty years ago and has grown into Berman McAleer. Bill Kelly worked in accounting, tax and financial planning for more than 40 years and co-founded The Kelly Group in 1997. Now retired, Bill will speak to exit planning and selling a financial practice.
The discussion will be led by Erik Sauer of On3Strategies.
All are welcome. You do not need to be an FPA MD member to participate.
|
|
|
|
- In the first quarter of 2021, the number of 401(k) and IRA millionaires hit an all-time record high. - CNBC, May 20, 2021
- After the beginning of the pandemic, about 12.6 million U.S. households got a new pet. The largest national provider of veterinarians services, Banfield Pet Hospital, saw a half-million more visits in 2020 than in 2019. According to the Bureau of Labor Statistics, veterinary positions are projected to grow 16% by 2029, nearly four times the average of most other occupations. -KOIN, May 11, 2021
- The English astronomer Edmund Halley prepared the first detailed mortality table in 1693. Life and death could now be studied statistically, and the life insurance industry was born. - Mathshistory.st-andrews.ac.uk
- The United Nations estimates there were about 95,000 centenarians – people in their 100s – in 1990. By 2015 there were 450,000 and the number is soaring worldwide as life spans continue to grow. Projections suggest there will be 3.7 million centenarians across the globe in 2050 and 25 million by 2100. - The New York Times, April 28, 2021
- Flaring, the burning off of natural gas at oil production sites, declined to 142 billion cubic meters (bcm), compared to 150 bcm in 2019. However, the world still flared enough gas to power sub-Saharan Africa. - Axios Generate, April 29, 2021
|
|
|
What the heck are NFTs and SPACs?
The speculative investment fad du jour
Hello loyal readership! There is excitement in the air. Warmer weather, cicadas, more and more people getting vaccinated, and the world is starting to feel normal again! Personally, I am enjoying going to and playing sporting events again, enjoying restaurants without worry, and hopefully I can go to a music concert soon! And as always with the markets, it has been a fascinating start to the year. When it comes to market buzz, a lot of people have been talking about some recent investment speculative fads that we have not seen before. A lot of this is driven by so much money flooding our system due to low interest rates, businesses with PPP dollars and private loans, individuals with stimulus checks etc. Some people are investing in things like real estate, stocks, private equity and many of these things are doing really well, but also a lot of money is flooding into less traditional and more speculative assets like SPACs, NFTs, and stocks like Gamestop and AMC. If you hadn’t really heard of these things before, you are not alone. NFTs stand for Non-Fungible Tokens and really came out of nowhere. Non-Fungible means unique and original and it represents something that is documented digitally on the blockchain. For example, forget an original 1930’s Babe Ruth baseball card, today you can be the original owner of an online video of LeBron James dunking a basketball (something which he has done thousands of times)–in which he recently sold one of these for $200,000! Or Kings of Leon, a rock band sold one of their original albums for $2M! Despite anyone being able to go online and see this same video or listen to this same album, someone out there who bought this knows they are the “original” owner of these things. My personal belief is that this is a fad and speculative bubble, and that this will be similar to the investments made in the art world. There are millions of pieces of art out there and 99% of it is worth nearly nothing, but 1% of pieces of art is worth a fortune. I believe we will see the same thing with NFTs – most will be worthless, but some will retain large value. Another big speculative fad investment trend has been SPACs –which stands for Special Purpose Acquisition Company. These have actually been around a long time – someone sets up a company that does nothing and owns nothing but raises money, and then buys companies with it and then goes public. There is nothing wrong with this, but many are celebrity-driven or athlete-driven, and someone famous starts raising money and says, oh by the way, I will take a 20% cut of the money on this just for raising the money. There is very little downside to the celebrity, as they can make a lot of money from this, but a lot of newer or inexperienced investors may feel like they are getting involved in something special, that it may be an easy way to get wealthy, but this also will be more like a casino and most people will make nothing. So, if you hear someone talking about these at the next cocktail party you attend, feel free to listen to them and nod, but laugh a little bit inside and know that if you are NOT participating in these, you are more likely going to do better in the long term. I know it is not as exciting, but as we have said many times in these articles, the winners will be those who own a diversified portfolio of different asset classes, and have a plan for the long term, not the newest speculative fad. Don’t listen to the fad investment advice, but stay for the cocktails! Cheers.
|
|
|
A Mixed May, but Economic and Market Progress Continued
Highlights
- The S&P 500 and Dow Jones Industrial Average both posted new all-time highs early in May. While choppy from that point on, both indices posted positive returns for the month as the NASDAQ Composite declined.
- For the year to date, the leadership of small-cap, mid-cap and value stocks remained intact. After growth made some progress in April, value resoundingly resumed leadership from a style perspective in May.
- The 10-year U.S. Treasury yield was more-or-less range bound during the month and it ended May at 1.58%, compared to April’s close of 1.65%.
- Bonds were able to post gains for a second straight month with rates declining. However, high-yield bonds, munis and TIPS remain the only pockets of the bond market with positive results year to date.
- The U.S. economy is still solidly recovering, but several economic data points showed the pace of growth has slowed. This is to be expected following such a strong rebound from the pandemic lows.
- Vaccines are becoming more widely available and COVID-19 cases have declined dramatically. We expect ongoing economic improvements and progress against the pandemic as we move into the summer months.
EQUITY MARKETS
The S&P 500 and Dow Jones Industrial Average recorded new all-time highs in May. The Russell 2000 Index, which has been one of the strongest areas of the market this year, gained only modestly during the month, and was still off its record level from March. The NASDAQ Composite and growth indices declined during the month.
Volatility dropped initially in May, but then rose to its highest closing level since March. At one point during the month, the VIX Index closed at 27.59 – a more than two-month high. However, it dropped from that point and closed May below 17. We believe investors should be prepared for ongoing periods of volatility over the next several months with stocks near all-time highs and after such a strong start to 2021.
Style truly mattered in May, and it was a key driver of returns. Large-cap growth did stage a bit of a comeback in April, but that proved to be short-lived as value stocks led the way. Although there will be times when growth rallies, we still believe that the value/growth disparity that reached a peak last year will likely continue to shift in 2021 with value improving on a relative basis. We continue to use our disciplined approach of seeking out what we believe are high-quality companies with improving business conditions at what we believe are good prices. The market’s shift to value stocks has benefited our focus on quality companies so far this year.
The numbers for May were as follows: The S&P 500 gained 0.70%, the Dow Jones Industrial Average advanced 2.21%, the Russell 3000 inched higher by 0.46%, the NASDAQ Composite declined by -1.44%, and the Russell 2000 Index, a measure of small-cap stocks, advanced only 0.21%, but it still leads so far this year. For the year to date, returns in the same order were as follows: 12.62%, 13.76%, 12.34%, 6.98%, and 15.30%, respectively.
We continue to monitor the trend that began to develop in the latter part of 2020 with small and mid-caps outperforming large-caps (as well as value outperforming growth). We believe that this dynamic is likely to continue given the well-above-trend growth expected in the U.S. economy this year and next.
Looking closer at style, the headline Russell 1000 Index only gained 0.47% in May. The Russell 1000 Growth Index dropped by -1.38% for the month, while the Russell 1000 Value Index gained 2.33%. For the year to date, the returns were 6.32% and 18.41%, respectively. Value has clearly dominated growth so far in 2021, and after a modest relative pause in April, that trend resumed in May. Even more dramatically in the small-cap universe, the Russell 2000 Growth index fell -2.86% for the month and only shows a year-to-date gain of 4.10%. By comparison, the Russell 2000 Value index advanced 3.11% in May and has posted a gain of 27.47% year to date.
International markets have clearly lagged the U.S. so far in 2021, but May proved to be a month in which they showed better relative results. The MSCI Emerging Markets Index gained 2.32% in May and the MSCI ACWI ex USA Index, a broad measure of international equities, gained 3.13%. For the year to date, those two indices show gains of 7.26% and 9.87%, respectively. Following the trend of recent years, U.S. stocks have continued to outperform their international counterparts, but international market results in May helped close that gap modestly.
Fixed Income
The yield on the 10-year U.S. Treasury had risen sharply at the beginning of the year. After closing 2020 at 0.93%, the yield surged to 1.74% to close out March. The yield came off that level in April and continued to decline in May. The yield closed the month of April at 1.65% and declined to 1.58% by the end of last month. Most bond sectors struggled in the first quarter, particularly the most interest-rate sensitive bonds, but they got a reprieve in April that also continued in May. High-yield bonds have been the clear winner in fixed income so far this year, but other pockets of the bond market outperformed in May. The ongoing and massive support from the Federal Reserve is generally keeping a lid on interest rates (particularly on the front end of the yield curve) but we did anticipate some steepening of the yield curve would occur in 2021. The steepening that has happened includes moves that have not been made in a steady manner. Some back and forth in interest rates should be expected.
Fixed income returns were as follows for May: the Bloomberg Barclays U.S. Aggregate Bond Index gained 0.33%, the Bloomberg Barclays U.S. Credit Index advanced 0.72%, the Bloomberg Barclays U.S. Corporate High Yield Index rose 0.30% and the Bloomberg Barclays Municipal Index gained 0.30%. For the year to date, those index returns in the same order were as follows: -2.29%, -2.74%, 2.25%, and 0.78%, respectively. Treasuries also enjoyed gains for the month, but are still down year to date. The general Bloomberg Barclays U.S. Treasury Index advanced 0.34% for the month, but has declined -3.20% year to date. Treasury Inflation Protected Securities (TIPS) have been one of the stronger pockets of the bond market recently as inflation concerns and expectations have increased. For the month, the Bloomberg Barclays U.S. Treasury TIPS Index gained 1.21%. Over the last three months it is up 2.43%, which has put it in positive year-to-date territory gaining 1.12%. We continue to maintain our long-standing position favoring credit versus pure rate exposure in this interest rate environment.
Source: Clark Capital
|
|
|
Securities offered through Kestra Investment Services, LLC (Kestra IS), Member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Offit Advisors is not affiliated with Kestra IS or Kestra AS. Offit Advisory Services, LLC is a tax firm but neither Kestra IS nor Kestra AS provide legal or tax advice and are not Certified Public Accounting firms.For more information on the Five Star Wealth Manager and the research/selection methodology go to: www.fivestarprofessional.com. Investor Disclosures: https://bit.ly/KF-Disclosures
|
|
|
|
|
|
