According to the Wall Street Journal’s Dan Strumpf, interest-rate jitters are taking their toll on one of the stock market’s big success stories in recent years: high-dividend stocks. Double digit losses have now replaced double-digit gains of recent years. Investors plowed $48.4 billion into mutual and exchange-traded funds tracking utilities and REITs from 2010 through 2014, according to Morningstar Inc., but now, many large institutions are moving away. Learn the risks. In the Q & A segment, Neil MacNeal, whose stock split strategy has been recognized by Mark Hulbert at MarketWatch, and has doubled the Wilshire 5000 since 2000, returns to Mastering Money to talk splits with the A-Team.
Will the Fed raise? If so, what happens? Who are the winners and who are the losers? Deutsche Bank performed in depth research analyzing the history of Fed rate hikes and the consequences going back fifty years. Here’s a preview: over the past 35 years the market is most often up sharply—about 14 percent—heading into the rate hike, fairly flat in the 250 days after (average gain of 2.6 percent) then back to normal once 500 days have passed. Steve and Sinclair review the many reasons why this time "is different" according to Deutsche Bank. In the Q & A the A Team reviews a Gallup/Wells Fargo poll of investors--44% say they will "make a change" if the Fed raises. Also, 8 stocks one trader says to avoid, and record outflows at Franklin Templeton.
Steve and Sinclair review five Fed meetings in history that had a major impact on the economy and markets, from Fed chairman Marriner Eccles in the 1930s, to Paul Volker in the late 70s, to Greenspan and Bernanke. Will the September 17th meeting be historic? We'll see. In segment 3, CFP® Murray Titterington with IQ Wealth reviews his planning process.
Steve and Sinclair update the markets, then national gold expert Nick Grovich joins Mastering Money in segments 2 and 3. In segment 4, Steve talks about Required Minimum Distributions (RMDs) and when it may be advisable to delay the first distribution.
9-11 will always be a day to remember. Not sure why Congress is fine with giving the world's largest sponsor of terror $150 billion dollars to go on a shopping spree. Especially since they have vowed to wipe Israel off the map in 25 years or less. Steve and Sinclair review the incisive market insights of Sam Stovall, an analyst with the S & P Capital IQ research team. In the Q & A, Steve breaks down how to achieve an extra $2,000 a month for life, using 75% less capital, while maintaining access to your money and not disinheriting your heirs. (Invest the other 25% for capital gain, or create an increase in an estate by up to 30% to 50%)
…Before 2005, the expense ratio of all previously issued ETFs averaged 0.4 percent, according to Morningstar. Since 2005, the average expense of new funds has jumped to over 0.6 percent, and some new exchange-traded products are charging over 1.0 percent in fees annually. Then there is a thing called “Tracking Error”: ETF managers are supposed to keep their funds’ investment performance in line with the indexes they track. That mission is not as easy as it sounds. There are many ways an ETF can stray from its intended index. That tracking error can be a cost to investors. Throughout the trading day, the spread between underlying securities and the ETF can be signifcant. For example, on August 24 when the market opened down 5.3%, the Vanguard Dividend Appreciation fund VIG, was down a whopping 38% for more than an hour. Steve and Sinclair breakdown some of the pros and cons of ETFs. In the Q & A, Steve reviews a more effective approach to reducing risks on the bond side of the portfolio.
…Heading into the opening bell on Monday, Aug. 24, it was clear that U.S. stocks were going to see some heavy selling. The Standard & Poor’s 500 had ended the prior week on a four-day slide, and markets in Europe and Asia were plunging. What no one expected—and what many experts claimed couldn’t happen—was that prices for many of the largest exchange-traded funds fell far more sharply than the stocks they owned.
Chris Dieterich,writing for Barron’s points out that ETFs are supposed to—and generally do—trade in lockstep with the stocks they own, with very little tracking error. Yet when the S&P 500 fell as much as 5.3% in the opening minutes of trading, ETFs like IVV, fell as much as 26%, some 20 percentage points below its fair value. The $18 billion Vanguard Dividend Appreciation ETF , SYMBOL VIG, and the $12 billion SPDR S&P Dividend SDY, plunged 38% apiece, while the PowerShares S&P 500 ETF, SPLV, fell as much as 46% before clawing back an hour after markets opened. Steve and Sinclair dig into what happened and why. Steve then answers questions on how to both protect your capital and grow it, while securing lifetime income that has no correlation to markets falling--at lower cost.
The Wall Street Journal reports that new home construction still has not made it back to 1990s levels, let alone the mid 2000s. Reports on new home construction show stability but the carnival days of big subdivisions on cheap land 50 miles away from downtown with no down payment, are a thing of the past. Millennials want to live where the action is (downtown) and aren't forming households the way previous generations did. Land costs in desirable areas are high, and construction labor is expensive, as half of the construction work force from 2007 has moved on to other forms of work. Steve and Sinclair break down some interesting stats affecting daily news reports behind the scenes. In the Q & A, real estate attorney Stephanie Wilson, a partner with the law firm Stoops, Denious, Wilson, and Murray discuss your rights as a home buyer of new construction, and how to go about curing deficiencies.
China's stock market may have another 50% leg down according to major traders and chartists. China now buys about an eighth of the world’s oil, a quarter of its gold, almost a third of its cotton and up to half of all the major base metals. The fear that China’s appetite for commodities, from copper to coal, is falling after a decade of breakneck growth has sent prices tumbling and help sent stock markets into turmoil in trying to adjust. Get some facts on what's really happening in China and how it is impacting the world, from oil to stocks to gold. In the Q & A segment, Steve reviews 3 important questions investors have about annuities, such as "Does the insurance company keep my money when I die?" (hint: not if you choose the right annuity)
Sam Stovall of S & P Capital IQ points out while many investors may think the worst is over, September September is the only month in history in which the S&P 500 fell more frequently than it rose. What's more, in the 11 times that the S&P 500 fell by more than 5 percent in August, it declined in 80 percent of the subsequent Septembers, and fell an average of nearly 4 percent. And why might this month be true to form and true to history? End-of-quarter mutual fund window dressing, a projected 4 percent decline in third quarter S&P 500 operating earnings per share, and the renewed possibility that the Federal Reserve may begin its rate tightening cycle at its upcoming mid-September Federal Open Market Committee meeting. Oh yeah, and China. Steve and Sinclair review Mr. Stovall's insights. In the Q & A, Steve breaks down how to achieve an extra $2,000 a month for life, using 75% less capital, while maintaining access to your money and not disinheriting your heirs. (Invest the other 25% for capital gain, or create an increase in an estate by up to 30% to 50%)