One asset class has rebounded to new all-time highs — U.S. small cap stocks.
After a bullish 2017 and hopes of a continued global equity melt up, 2018 has instead reintroduced market volatility. Despite global market volatility, U.S. small cap stocks have rebounded to new all-time highs.
Factors influencing the success of U.S. small cap stocks
“The Return of Volatility.” “Volatility Is Back With A Vengeance.” These are some of the headlines recapping the first quarter of 2018. Many of them
discuss volatility and risk interchangeably, as though they were both the same … but they’re not.
Risk and volatility are different, and we intend to set the record straight. In this issue of Portfolio Matters, we cover the first quarter’s risks and volatility that was (and wasn’t) witnessed in markets, and provide investors some clarity on thinking about the two individually and separately…read more.
Tax season is in full swing, and it can bring some uneasy thoughts. “How much will I get back?” “How much will I owe?” “Am I forgetting anything?” “What can I expect next year?”
In a recent team meeting, one of our firm’s partners shared a question from a client that’s often not heard, “Why is my tax bill so low?!”
This client had been taking significant IRA distributions since the beginning of retirement as they had settled into a routine of travel and other retirement leisure. Of course, IRA distributions are generally going to be taxed as income, and the client became accustomed to paying a steady tax bill each year. In recent years, their travel slowed and their expenses correspondingly decreased, but their regular withdrawals had not.
Janiczek® Wealth Management is pleased to announce we have once again been named among the TOP RANKED WEALTH MANAGERS IN DENVER COLORADO by AdvisoryHQ. This ranking adds to a long list accolades going as far back as 2001 and as recent as 2018, including:
- Financial Times
- Worth Magazine
- Mutual Funds Magazine
- CIPA (best Business/Finance Book of the Year)
What separates the ordinary from the extraordinary? I believe consistently doing the best with what you have with daily choices and actions. In a word: habits!
When you use the power of choice and habit, outside forces play a secondary role. It doesn’t matter how educated you are, what occupation you choose, how much you earn or who you know. What does matter is what you do with what you have today.
Habits Make the Difference
For instance, take Gladys Holm who, as a secretary, earned no more than $15,000 a year throughout her life. Yet she left $18 million dollars to a hospital for heart disease research when she passed away! Gladys had the opportunity to invest in her employers’ stock over her career and she did. She also had the opportunity to invest in other stocks (like all of us do) and she did. She had the opportunity to participate in her employer’s stock option plan and did. Notice the trend… she had many opportunities and took advantage of each one to the degree she could with her modest salary. She became known for driving her fire-engine red Cadillac and delivering teddy bears to children at a local hospital in her Chicago neighborhood.
Lifelong learning. It’s a core belief here at our firm, and we regularly read across a variety of topics. I recently asked the team to share any of their favorite books from the past year, business or otherwise. Below is what we’d offer up as our recommendations from 2017, and if you have any good book recommendations from the last year, please let us know!
While the S&P 500 remained near its all-time high, the recent massive selloff in the technology sector went mostly unnoticed. But for investors who follow the so-called “FANG” stocks (Facebook, Amazon, Netflix, Google) the hit was painful: About $60 billion in value was wiped out in just one afternoon, representing the largest selloff in nearly 2 years.
The wipeout was a function of just how big these companies have become and the position they are in with new tax reform looming. Tech companies are expected to receive little benefit given its already-low average tax rate of 18.5% (below the 20% proposed rate).
This has caused investors to rotate out of the tech stocks and into the financial services sector, which stands to benefit more from a corporate tax rate that would drop from the current 35% to 20%.
Interestingly, the S&P 500 was relatively unaffected while this rotation into financials and out of tech ensued. The index’s volatility actually remained low, as did correlations among the S&P 500’s member stocks.
In other words, the diversity offered by the S&P 500 Index allowed for the index too remain relatively unscathed by the trading within the tech and financial sectors, a key reminder to investors that having proper exposure across the markets continues to be important with the S&P 500 near its all-time high.
We’re moved in! Take a closer look at our new Denver headquarters
The Janiczek team couldn’t be more excited about our brand new headquarters in Denver! It’s our fourth location and eighth expansion/facility-improvement in 27 years! We spent well over a year determining what new features, technologies and designs would best augment our team work and client experience and we could not be more pleased with the results of our team’s hard work. Gensler Architects worked closely with us and our general contractor and many sub-contractors to deliver a wonderful end product that will serve our company for decades ahead.
On September 1, 2017 everything came together as we moved in to our new facility at 7001 E. Belleview Ave, Suite 600, Denver, CO 80237. Its a great new building in a prime location (wonderful urban location right off the highway and rail and it has magnificent views and amenities (including a new Ruth’s Chris Steak House right off the lobby). We will be hosting an open house on Thursday, November 9th, from 3:30 – 6:00. We would love for you to stop by, chat with the team and get a tour of the many features of the layout. Until then, enjoy a few pictures of our new space!
In 2017 thus far, the only thing more dominant than the L.A. Dodgers may be large cap growth investing.
Through July, large cap growth is up over 17%, beating the S&P 500’s impressive 12% return. At the other end of the spectrum, small cap value investors have seen a minuscule 1% return, as seen in the chart below. But there’s something eerily familiar about these year-to-date results …
With the U.S. markets hitting record highs, one would assume more adults would be participating in the stock market when compared to previous years. Since the last financial crisis, we have not experienced an increase of stock market participation. The equity markets continue to march forward and the participation in these gains has not. Per research published by Gallup, a little more than 52% of Americans’ currently have money invested in the stock market. As you can see in the below graph, this matches the lowest ownership rate since 1999. During the high in 2007, nearly 2 out of 3 adults had money invested in the stock market. Did big losses experienced in 2008-09 change Americans’ sense of confidence in the stock market?