1. We find little evidence of excess in the economy that usually results in a recession, and this gives us reason to think the next recession is still some time away.
2. The investment markets are re-pricing for a slowdown in economic growth, but absent a recession, the bull market is likely to resume.
3. Non-U.S. stocks and value stocks offer some attractive opportunities given their respective cycles.
January High-5 from Janiczek
A monthly recap of articles designed to inform and inspire on a variety of topics related to investing and wealth management.
In this edition:
- 2019 Outlook / 2018 Top Takeaways and Market Review
- Investing in Volatile Markets
- Wealth & Health in 2019
- More Freedom in 2019
- All for One, One for All
The Gift of More Freedom
What’s the use of achieving a high level of financial security and independence if you do not utilize this advantage to enjoy more freedom? Give yourself and your loved ones the gift of more freedom in 2019. Simply learn to utilize two tools we created to continually liberate yourself and enjoy higher and higher levels of freedom.
In doing so, you can exercise more control over your life. First, resolve to become Free FROM nagging situations that are holding you back. Then, resolve to participate in activities and pursue goals that are important to you and that you are now Free TO pursue with vigor.
Two of the fundamental ways we help you (or can help you) flourish is to free you from the complexities of prudently investing and managing wealth. But, we are very aware that this state of flourish can be diminished if you are held back by other weaknesses, complexities or energy drains. That’s why we created a tool to help you engage in a continuous process of liberating (freeing) yourself from whatever else may be holding you back.
We also recognize that it’s not enough to only help you liberate yourself. We know it’s equally important for our clients to have exciting life enhancement goals they are pursuing with such freedom in order to fully flourish. In short, a “liberated from” needs to convert into a “liberated to,” in order to fully benefit by the transformation. That’s why we also created a tool to help you articulate the things you want to be free to do.
Joseph Janiczek, founding partner of Janiczek Wealth Management, recently wrote the following article about a project underway with Dr. Jeffrey Gladden, an interventional cardiologist and founder of APEX.
Within their respective disciplines, Mr. Janiczek (Wealth) and Dr. Gladden (Health) both advocate integrative, evidence-based programs tailored to the individual. Both recognize disciplined, pro-active resource management promotes performance optimization. Each pursues methods to help minimize risk, foster confidence, and support personal life goals.
However, even more remarkable than such parallels is the potential of wealth and health added together. -Cathy Wegner
The Wealth + Health + Longevity Breakthrough
Jeffrey Gladden, MD, a world-class longevity expert and founder of APEX, and I have discovered that it is quite beneficial to comprehensively look at wealth, health and longevity in an integrated way.
The Stages of Financial Freedom with Longevity animated illustration below shows the profound impact longevity has on wealth and the new possibility of reclaiming health and extending longevity that is now possible as a result of breakthroughs in medicine.
Exhibit 1: The Stages of Financial Freedom® with Longevity
Working together, we discovered two breakthroughs are possible, when looking at this dynamic together, that can be quite additive to proactive wealth management and optimum health management:
- The possibility of reclaimed health and expanded longevity brings an ideal financial mindset into play that can help you think, act and stay in peak financial form.
- The possibility of reclaimed wealth vibrancy brings an ideal resourcefulness mindset into play that can help you think, act to stay in peak health/fitness form.
- Ten years after the 2008 market meltdown, U.S. equities are up over 200% and posting fresh new all-time highs.
- Higher interest rates during the quarter presented some headwind for bond investors, but bonds can still generate decent returns within a long-term trend of higher interest rates.
- The underlying economy boasts plenty of strength, with economic growth during the rest of 2018 expected to remain above 3%.
The Art and Science of Getting and Staying “On a Roll”
I love adapting engineering and physics concepts to solve common financial problems many people, even financially savvy people, encounter all the time. That’s why I’m so excited about my latest invention, the Wealth Allocation Wheel.
The challenge, in simple terms, is “staying on a roll.” There is an art and science to staying on a roll with your wealth. This means having enough inertia with your wealth to successfully navigate the Stages of Financial Freedom (see Illustration 1). The clear aim I have written about extensively is how to achieve controlled growth while avoiding short or long periods of stagnation or depletion.
Brady Siegrist, CFP, Managing Director of Wealth Management at Janiczek Wealth Management explains how the color-coded Wealth Optimization Dashboard, a key exclusive feature of Janiczek’s patented system, can help all clients, regardless of their net worth, business knowledge, age or investment savvy.
We monitor and measure things everyday. We glance at our speedometer to confirm we are not exceeding the speed limit. Thermometers tell us if we are running a fever or if our outside plants are in danger of freezing. A scale lets us know if an envelope requires extra postage. Think of all the diagnostic tests that report plusses and minuses of our physical well-being. How, then, do we measure our financial well-being? Why does financial strength matter?
Strength = Durability
Contrary to what some may assume, the number of digits it takes to record a person’s net worth is not an indicator of his or her financial strength. Size does not determine financial strength. Rather, durability is the measure of strength.
Carole McKeown has regularly rolled out new features of our service packages for 18+ years on the Janiczek® team. In this post, she highlights the features of J-Vault. J-Vault is an application that provides our clients with secure access to all their financial information from any device–desktop, tablet and even your smartphone!
We are aware some advisory firms serving high net worth individuals charge as much as $25,000 a year for an advanced online system that aggregates all of a client’s financial information. At Janiczek® Wealth Management such an application, J-Vault, comes standard with our services. We rolled out our J-Vault application, on a pilot basis, to several clients over the last year. We are excited to announce we will offer the J-Vault application to all clients over the next year.
Secure Current Financial Snapshot
Imagine…a highly secure location from which you can obtain a current financial snapshot on your smartphone. Yes! A complete balance sheet with liquid accounts updated with the prior day’s closing prices; a balance sheet so precise it has your latest checking account, credit card, and mortgage balances. And, of course, all investment accounts, retirement accounts and even private investments are included. A nice snapshot of where you are and that’s not all.
Long-term strategies may challenge investors to stay focused. The fight against short-term thinking is getting harder as we accomplish so many things with increasing ease and speed.
There is more computing power in an iPhone than what NASA had during the first landing on the moon. Remember when Netflix mailed DVDs to your home? Now we can stream just about anything to our smartphones. And what would you have said ten years ago if I had told you the President of the United States’ main communication tool in 2018 would be Twitter?
But speed doesn’t change everything.
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.