Tax Alert: Your Weekly Update - Where To Find Your Tax Forms

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Weekly Market Recap

This week saw the markets broadly continue to gain. The Fed saw the US economy generally improving in its Beige Book report. Internationally, China which has been soft, saw strong export growth for March. That could hint at some stabilization in the economy after recent softness. Inflation appeared to increase slightly in major European economies.

A reminder this week on why we believe diversified and low cost Exchange Traded Funds (ETFs) tracking broad indexes are an appropriate building block of your portfolio. The first point to note, as research by JP Morgan has shown, is that the median stock performance can often lag the index. This may seem surprising, however, a small number of stocks can make very large gains each year. So it's easy for someone holding a concentrated stock positions to miss them. By holding a diversified portfolio you are able to capture gains wherever they occur within the index you are tracking.

Secondly, the composition of a well-constructed index evolves over time to reflect the broader economy. For example, companies like Facebook and Google (now called Alphabet) are relatively recent additions to the US stock market, which a buy and hold individual stock investor may not own. Also, consider that when the Dow Jones index began railroad stocks made up more than half the index and now they are a far smaller part of the stock market. By tracking an appropriate index you ensure that your stock holdings are kept up to date and represent a relatively current reflection of the investment options.

Notes:
Federal Reserve Beige Book:
https://www.federalreserve.gov/monetarypolicy/beigebook/files/Beigebook_20160413.pdf
Chinese exports:
http://www.bloomberg.com/news/articles/2016-04-13/china-s-exports-rebounded-in-march-boosting-growth-outlook
JP Morgan on concentrated stock positions:
https://www.chase.com/content/dam/privatebanking/en/mobile/documents/eotm/eotm_2014_09_02_agonyescstasy.pdf

Disclaimer:
The views expressed are for informational purposes only and are not intended to serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities by FutureAdvisor. All expressions of opinion are subject to change without notice in reaction to shifting market, economic political conditions, and as subsequent conditions vary. The investment strategies mentioned are not personalized to your financial circumstances or investment objectives, and differences in account size, the timing of transactions and market conditions prevailing at the time of investment may lead to different results. This material may contain "forward-looking statements": information that is not purely historical in nature. Clients may lose money. Past performance is not indicative of future results. Investments in securities involve the risk of loss. Any tax strategies discussed should not be interpreted as tax advice and do not represent in any manner that the tax consequences detailed will be obtained. Clients should consult with their personal tax advisors regarding the tax consequences of investing.

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