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Modern Wealth: The Roadmap to Improved Investor and Advisor Outcomes

Russ Reinhart was quoted in, and contributed to a paper that MMI just published called,  “Modern Wealth: The Roadmap to Improved Investor and Advisor Outcomes”.

A sea change is underway in the advisory industry, where the focus is rapidly shifting from the utilization of
discrete products, accounts, and technology tools—and the improbable notion many investors have they should
somehow beat all benchmarks—to holistic, household-level solutions that improve financial outcomes.

by Money Management Institute (MMI) Learn More

Stress Testing Your Plan: Probability of Success vs Excess

Expected return doesn’t matter. Sure, it’s what everyone talks about, but it doesn’t matter.

OK, expected return does have some importance. It is what we seek to maximize subject to a target risk level when building a portfolio. It also gives you an idea of the returns, on average, you’re likely to receive. But planning on getting the average is a recipe for financial failure as it is planning for just a 50% probability of success. Who wants a coin flip to determine the likelihood of having enough resources to live a fulfilling life? No one. This is why financial plans are built on higher probabilities of success, such as 90%. Let’s unwrap that.

by Ron Madey, CFA® Learn More

Stress Testing Your Plan: Insights and Limits of Historical Returns

Plans are useless, but planning is indispensable.
Dwight D. Eisenhower

You have a financial plan. How do you know it will survive contact with the stock market? Are you taking enough risk to achieve your goals? Are you taking so much risk that a market downturn could impair your financial condition today? Are recent market declines undermining your confidence?

by Ron Madey, CFA® Learn More

The Disillusionment Narrative

Since the beginning of October, the S&P500 has fallen almost 20%. The fall began with the spike in 10-Year Treasury yields in early October. When 10-Year yields breached technically and psychologically important levels, investors changed the lens with which they look at factors affecting the market. Before the spike, the market was trading with an optimistic view, but since the spike, the view has switched to disillusionment.

by Ron Madey, CFA®, Chief Investment Officer Learn More

Growth Conditions Less Robust

While growth conditions deteriorated over the third quarter, they remain favorable.   Our Growth Conditions Index (GCONIX[1]) fell from a strong 60% favorable level at the end of June to 20% favorable as of the end of September.

by Ron Madey, CFA®, Chief Investment Officer Learn More

Interpreting the 10-Year Treasury Yield Spike

On Wednesday (10/3/2018), the 10-Year Treasury yield rose by nearly 12 basis points, the largest one-day rise over the past year.  The 10-Year yield closed the day at 3.18%, the highest level in more than seven years and well above the May 17th high of 3.11%, a level that some market observers did not expect to be breached.  At first equity markets took the rise in stride, but on Thursday 10-year yields continued to rise and equity markets sold off.

So what does this mean and where do we stand?

by Ron Madey, CFA®, Chief Investment Officer Learn More

Overcoming 4 Obstacles to Sustained Advisor Growth

Growth is supposed to be a good thing.

But meeting clients demands, tracking down leads and running a business doesn't leave much time for strategic growth. While every advisory business is different, the obstacles to growth each face fall into distinct categories.

by Russ Reinhart, CFP® Learn More

Value is in the Eye of the Beholder

Behold the S&P500’s historical price earnings ratio as compared to its long-term average over the last 50 years.  By this measure, across all inflation levels, stocks are expensive.  If the PE ratio reverted from its current level of 20.4 to the average of 16.7, stocks would have to fall by 18%. 

by Ron Madey, CFA®, Chief Executive Officer Learn More

Alternative Yield Scenarios and Returns

If yields are the same a year from now as they are today, then at 3.3%, the 7-Year Treasury has the highest expected one-year total return. 

Why?  The yield curve is positively sloped, meaning shorter term maturities have lower yields than longer term maturities. 

by Ron Madey, CFA®, Chief Executive Officer Learn More

The Pace of Fed Tightening

The challenge before the Fed is to normalize interest rates and contain inflation while not precipitating a recession.  Rates remain low relative to inflation and nominal growth, and have been this way since the Great Recession.  At current inflation and growth levels, a “normal” level for the Fed Funds rate is around 3.5% based on historical averages.

by Ron Madey, CFA®, Chief Executive Officer Learn More

Growth Conditions Update

Over the first quarter, growth conditions deteriorated versus the prior quarter, but remain favorable. Our Growth Conditions Index (GCONIX1) fell from 63% favorable at the end of last year to 37% favorable as of the end of March. Three of the four sub-indexes fell, with Macro Policy falling the most. Consumption & Employment rose by 11%.

by Ron Madey, CFA®, Chief Executive Officer Learn More

Assessing Growth Conditions

This article identifies the 20 components that contribute to Wealthcare’s Growth Conditions Index (GCONIX) and demonstrates its effectiveness as a leading and coincident indicator of recessions. By contrast, the stock market has "forecasted" five more recessions than have occurred since 1965. Currently, GCONIX continues to indicate favorable growth conditions, indicating that, for now, the recent declines in the equity market do not portend an imminent recession in the U.S. 

by Ron Madey, CFA®, Chief Investment Officer Learn More

A Headline Grabbing Start to 2016

Markets are off to a shaky start for 2016. Headlines over the weekend said things like, "U.S. Stocks Have Worst 5-Day Start to a Year Ever."
While the journalists know how to write attention-getting headlines, the real question is what does it mean and what should you do, if anything.

by Michael Asker, CEO and Ron Madey, CFA, COO Learn More

The Fed Raised Rates 0.25% Yesterday, OMG!

The last time the Fed hiked interest rates Twitter was not available to the public and the iPhone did not exist. In this brief article I comment on the impact of the rate hike and the expected path of Fed Funds rate now that the tightening cycle has begun.

by Ron Madey, CFA®, Chief Investment Officer Learn More

It's the Goals Management Process, Stupid

Many believe that the wealth management industry is about to experience a profound paradigm shift from performance-based investing to goals-based investing.

by Ron Madey, CFA®, Chief Investment Officer Learn More

Carnage or Correction?

Staying with Principles that Work
Roughly one month ago, the S&P 500 Index was just a few points away from its all-time high. As of today the market has officially breached “correction” status by falling 10% below its high, if only briefly, so far this morning. To say the least, this market behavior is disconcerting and can profoundly influence our emotions. So, we want to remind you of some key principles about how markets work and how we manage money on your behalf to keep you on track to attaining your goals.

by Ron Madey, CFA®, Chief Investment Officer Learn More

Puerto Rico -America's Greece?

On July 9, we published an article on Greece’s financial crisis, which has been brewing for years but reached a climax that threatened Greece’s membership in the Eurozone. One month later, investors’ attention has now turned to another credit crisis precipitated by the recent default by Puerto Rico. Puerto Rico’s bonds had been in junk territory since February 2014.

by Ron Madey, CFA®, Chief Investment Officer and Ken Kideckel, CFA® Portfolio Manager Learn More

Does Greece Matter?

The fate of Greece in the Eurozone has provided ample content for news stories and drama to move markets, but what really is its significance? In this brief perspectives piece, we frame the issues of this Euro-Greco saga and its significance to the Greece, the Eurozone, and investors.

by Ron Madey, CFA®, Chief Investment Officer Learn More

Let's Go for a Hike!

In this piece we review the history of Federal Reserve rate hike episodes and their impact on investment performance. It is better than you may fear.

by Ron Madey, CFA®, Chief Investment Officer Learn More

Risk Tolerance Revisited

In this insightful analysis of risk tolerance, Ron Madey, CFA, CIO challenges traditional understanding of the concept. He demonstrates how Wealthcare’s process captures clients’ risk tolerance in the context of their goals and values, thus helping them keep their resources aligned with what they value most.

by Ron Madey CFA, CIO Learn More

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