Broker Check

March 26, 2018

| April 07, 2018
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Why am I saving and investing? This is always an important question. There are many reasons people save and invest, including to:Why am I saving and investing? This is always an important question. There are many reasons people save and invest, including to:

• Live the life they want today and the life they want in the future

• Accumulate resources so they’re prepared for any bumps in the road

• Provide an education for their children

• Offer assistance to parents

• Support a young person with a disability

• Do good in the world

• Live comfortably in retirement without anxiety

However, none of these reasons have anything to do with short-term market fluctuations. 

Last week, major U.S. stock indices experienced a selloff, and we saw a downturn in stock markets. The Dow Jones Industrial Average was down 5.7 percent, the Standard & Poor’s 500 index lost 6 percent, and the NASDAQ fell 6.5 percent, reported Barron’s.


Those are big moves for a single week. Seasoned investors recognize this is normal. While others feel compelled to either buy or sell.

It’s not a new phenomenon. In 2002, in an article for CNN Money, Jason Zweig explained the brain’s potentially negative influence on investment decisions, “But in the world of investing, a panicky response to a false alarm – dumping all your stocks just because the Dow is dropping – can be as costly as ignoring real danger. For one thing, it can cause you to flee the market at a low point and miss out when the market bounces back. A moment of panic can also disrupt your long-term investing strategy.”It’s not a new phenomenon. In 2002, in an article for CNN Money, Jason Zweig explained the brain’s potentially negative influence on investment decisions, “But in the world of investing, a panicky response to a false alarm – dumping all your stocks just because the Dow is dropping – can be as costly as ignoring real danger. For one thing, it can cause you to flee the market at a low point and miss out when the market bounces back. A moment of panic can also disrupt your long-term investing strategy.”

The strange calm of 2017 was an anomaly. The decline in the S&P 500 last week was the largest weekly decline since early 2016. The chart above shows the S&P 500’s weekly performance since the beginning of 2017. There have already been five weeks in 2018 that posted bigger declines than the worst weekly decline last year. There have also been four weekly increases that were larger than any weekly increase in 2017. 2018 has clearly been more volatile than 2017.

So, what happened last week? In short:

• The Fed raised rates, as expected. The Federal Reserve raised the Fed funds rate by a quarter of a percent, which may benefit savers and investors, but will make borrowing more expensive.

• Tariffs triggered trade war worries. The Trump administration levied tariffs on China, raising concerns of a global trade war.

• You’re fired! There was additional turnover among senior advisers to President Trump.

• Can they do that? British news reported a data analytics firm has been influencing elections around the world in some unsavory ways.

• Don’t share my data! There was news a social media firm had shared the personal data of thousands with a researcher who shared it with a third-party firm without permission.

• Sigh. Another data breach. An online travel company experienced a data breach that may have exposed the personal information of 880,000 users.

• The economy is chugging along. Last week’s U.S. economic releases were overshadowed by everything else, but many indicated a strengthening economy, reported Barron’s.

That’s a lot to take in over the span of five days. The critical thing is to recognize these short-term events should not change your long-term financial goals or investment strategy. Financial decisions, including buying and selling investments, are important and can be life shaping. They should be grounded by long-term financial goals and foundational principles of investing. They should not be based on the brain’s instinctive fear and greed response. 

Let’s Take a Good News Break

After last week, we could all use some good news. Here are 10 intriguing headlines from the Good News Network:

1. Scientists Believe They Found a Way to Stop Future Hurricanes in Their Tracks

2. Strangers Rally Around 13-Year-old Whose Rock Museum was Robbed

3. Dog that Shoplifted a Book on ‘Abandonment’ is Given the Love It was Asking For

4. Stranger Becomes Honorary Grandma After She Opens Home to Stranded Father in Distress

5. We’re Not Spinning a Yarn Here: Knitting May Boost Health and Happiness

6. Robot Becomes Part of the Community After Easing Daily Burden of Water Collection in Remote Village

7. Instead of Using Trees, Scientists are Making Sustainable Paper Out of Manure

8. World’s First Mass-Produced, 3D-Printed Car is Electric and Costs Under $10K

9. This Pollution-Gobbling City Bench Can Absorb as Many Toxins as 275 Trees

10. Free Clothing Hung on Streets to Help the Homeless Stay Warm

There is a lot of good news in the world. Unfortunately, it doesn’t pack a wallop like bad news does, so we hear less about it. 

Story of the week

Store clerks found a $1 million lottery ticket

Store clerks in Salina, Kansas did something that many people would never do. They found an unsigned lottery ticket on the floor worth $1 million and returned it to the rightful owner. The owner’s brother was supposed to go into the store and check the lottery tickets, but he unknowingly dropped the winning ticket on the floor because he wanted to make it back home in time for March Madness. It goes to show you just how important basketball is in Kansas.

Weekly Focus – Think About It 

"A wise man makes his own decisions; an ignorant man follows the public opinion."
                                                                                                                                   ~ Grantland Rice, journalist

“Talent + Motivation + Optimism = Success

Talent + Motivation + Pessimism = Failure”
                                                                                                                                   ~ Martin Seligman, Psychologist               

Links & Disclaimers

RJFS and SPC do not offer or provide legal or tax advice. Tax services and analysis are provided by the related firm, S&M through a separate engagement letter with clients. Portions of this newsletter were prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with RJFS, SPC or S&M.  The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  This information is not intended as a solicitation of an offer to buy, hold or sell any security referred to herein.  There is no assurance any of the trends mentioned will continue in the future.  Any opinions are those of the author and not necessarily those of RJFS.  Any expression of opinion is as of this date and is subject to change without notice. 

Opinions expressed are not intended as investment advice or to predict future performance.  Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.  Past performance does not guarantee future results.  Investing involves risk, including loss of principal.  Consult your financial professional before making any investment decision.  Stock investing involves risk including loss of principal.  Diversification and asset allocation do not ensure a profit or guarantee against loss.  The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.  The Dow Jones Industrial Average (DJIA), commonly known as "The Dow" is an index used to measure the daily stock price movements of 30 large, publicly owned U.S. companies.  The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system.  Please note, direct investment in any index is not possible.

Links are being provided for information purposes only.  RJFS, SPC and S&M are not affiliated with and do not endorse, authorize or sponsor any of the listed websites or their respective sponsors, and they are not responsible for the content of any website, or the collection or use of information regarding any website's users and/or members.

https://www.barrons.com/articles/why-did-dow-drop-1-400-pick-your-poison-1521852744

https://www.scientificamerican.com/article/what-is-loss-aversion/

http://money.cnn.com/2002/09/25/pf/investing/agenda_brain_short/index.htm

https://www.consumerreports.org/interest-rate/fed-rate-hike-your-money/

https://www.cnn.com/2018/03/22/politics/donald-trump-china-tariffs-trade-war/index.html

https://www.brookings.edu/research/tracking-turnover-in-the-trump-administration/

https://www.ft.com/content/e4e95b6c-2dac-11e8-9b4b-bc4b9f08f381

https://www.marketwatch.com/story/this-data-breach-affected-880000-people-and-it-has-nothing-to-do-with-facebook-2018-03-24

https://www.cnet.com/news/how-to-stop-sharing-facebook-data-after-cambridge-analytica-mess/

http://www.barrons.com/mdc/public/page/9_3063-economicCalendar.html?mod=BOL_Nav_MAR_other

https://www.goodnewsnetwork.org/scientists-believe-they-found-a-way-to-stop-future-hurricanes-in-their-tracks/

https://www.goodnewsnetwork.org/strangers-rally-around-13-year-old-whose-rock-museum-was-robbed/

https://www.goodnewsnetwork.org/dog-shoplifts-book-on-abandonment/

https://www.goodnewsnetwork.org/stranger-becomes-honorary-grandma-after-she-opens-home-to-stranded-father-in-distress/

https://www.goodnewsnetwork.org/were-not-spinning-a-yarn-here-knitting-may-boost-health-and-happiness/

https://www.goodnewsnetwork.org/robot-becomes-part-of-the-community-after-easing-daily-burden-of-water-collection-in-remote-village/

https://www.goodnewsnetwork.org/instead-of-using-trees-scientists-are-making-sustainable-paper-out-of-manure/

https://www.goodnewsnetwork.org/worlds-first-mass-produced-3d-printed-car-is-electric-and-costs-under-10k/

https://www.goodnewsnetwork.org/this-pollution-gobbling-city-bench-absorbs-as-much-co2-as-275-trees/

https://www.goodnewsnetwork.org/free-clothing-hung-on-streets-to-help-the-homeless/

https://www.brainyquote.com/quotes/benoit_mandelbrot_301439

http://www.wibw.com/content/news/Salina-store-clerks-found-a-1-million-lottery-ticket---then-tracked-down-its-owner-477413563.html?utm_source=fark&utm_medium=website&utm_content=link&ICID=ref_fark

RJ Approval # C18-015268

 

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