The Gift of a “Little Nudge”
Investor Insights, February 23rd, 2018
Five Things You Should Know
- Equity Markets – were positive in this shortened trading week with the S&P 500 up 0.60% and international stocks (EAFE) up 0.43%
- Fixed Income Markets – were mixed with investment grade bonds (AGG) down -0.05% and high yield bonds (JNK) up 0.19%
- Earnings Season Update – With 90% of the companies in the S&P 500 having reported their results for Q4, 74% have reported positive earnings-per-share surprises and 78% have reported positive sales surprises, which if stands would mark the highest percentage since Q3 of 2008. The S&P 500 blended earnings growth rate for the quarter now stands at 14.8% which would also mark a new high since the Q3 2011 rate of 16.8%.
- Fed Minutes – This week the Fed released the minutes from their Jan. 31st meeting, the last one chaired by Janet Yellen before her successor Jerome Powell takes over. While there were no surprises, many of the committee members indicated they have revised their economic growth forecasts upward from those in the December meeting and thus providing greater conviction for further gradual increases in the federal funds rate in 2018. While market reactions have been mixed since the release with yields trending higher, it is important to note that the Fed’s improving outlook on the U.S. economy should be a long-term positive. As noted by Fed Governor Randal Quarles “The U.S. appears to be performing very well and, certainly, is in the best shape that it has been in since the crisis and, by many metrics, since well before the crisis.”
- Key Insight – Poorly defined goals lead many investors to ongoing frustration as they can never feel closer to achieving the life they want, while others with the gift of vivid dreams and goals are often prone to increased fear during times they feel like those dreams may be slipping away. Neither reality is conducive for being patient. And other than its related virtue “discipline”, there is no other key tenet in investing that is any more critical to one successfully achieving their goals than patience.
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