Financial Planning Insights

The Stock Market Does Not Equal The Economy

The economic data coming out these last few weeks have been spectacular.  Whether it be employment, manufacturing, or consumer spending, the economy really seems to be on a roll.  Before you buy some stocks as an early Christmas present, it is important to remember that the economy is not the stock market.

The Predictive Power (Or Lack Thereof) Of Stock Market Indicators

There is really no indicator that we know of that can predict stock market performance.  If there ever were, it would very quickly be arbitraged away since markets tend to be fairly efficient.  Merrill Lynch uses a metric they call the “Sell Side Indicator” to determine future stock performance.

Pay Me My Fair Share- Profits vs. Wages

One of the big themes we have seen over the past several years is capital over labor.  Corporations have seen an explosion in income while paying their workers some of the lowest wages in history. Here is a chart that shows labor as a percentage of GDP (blue) versus corporate profits as a percentage of GDP (red).

Why Are Interest Rates So Important?

In the investment world, much of the talk over the past few weeks seems to be revolving around the spike in interest rates and what that means for the global financial markets. 

Market Pundits Often Get It Wrong

With the US markets breaching their all-time highs, I have had more clients ask me when the correction is coming.  We’ve been through two crashes in the last 13 years, and the investor psyche is fragile.

Challenging Conventional Wisdom on Your House as an Investment

Every now and then I will have a client tell me how their home has been their best investment (well, not as much recently!).  We have data we can review to see how this has really been a myth in most cases.