Weekly Market Recap In the US this week, vehicle sales rebounded strongly in April. This can be a useful indicator of overall US spending. Manufacturing activity surveys in the US and Europe were muted, but still implied growth. Oil prices fell slightly, in part due to data that pointed to very high oil inventories in the US.
A reminder this week on why we hold both stocks and bonds in portfolios. At first it may seem surprising, because over long periods of history, such as a decade or more, stocks have typically outperformed bonds in most countries. Yet, high quality bonds, such as those issued by the governments of leading economies, can prove relatively stable in providing returns to investors. This can be true even during events such as recessions, when stocks can falter.
Combining stock and bonds in a portfolio can enable a portfolio that captures most of the returns from the stock market, but shares some of the stability that high quality bonds can offer. One key lesson from financial theory is that such portfolio can potentially do better than the basic sum of its parts because sometimes when stocks do poorly, bonds can do better, and vice versa. Essentially, since stocks and bonds move in different directions, which has happened frequently in the past, combining them in a portfolio is particularly helpful.
This can matter for you as an investor. A portfolio with well-designed asset class diversification has historically shown smoother performance than one with only stocks. This lower volatility may make it easier to stay the course with an investment strategy, especially during bad economic events, relative to a portfolio that is dominated by a single asset class, such as stocks in isolation.
Notes: US Auto Sales:
http://www.wsj.com/articles/fiat-chryslers-u-s-auto-sales-rise-1462278637
Petroleum Status Report:
https://www.eia.gov/petroleum/supply/weekly/pdf/highlights.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. Your Portfolio Summary | $9,412.76 * Your Total Assets | Ways To Improve Your Portfolio | 0 Accounts with Actions | Your portfolio has no recommended actions right now. We'll watch over your investments and alert you with an email when there are actions for you to complete. Sign in to see detailed steps  | | Sign in to see your full dashboard | * All amounts are as of the sent date of this email | 
No comments:
Post a Comment