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Lauren's Blog

Lauren’s blog covers topics that impact your finances, your family, and your future. Is there a topic you’d like Lauren to tackle? We’d love your suggestions and feedback.

In Your Best Interest: Our Spring 2018 Newsletter

Click here to view the full newsletter, including recent news, important dates, financial tips & tools, and more.


2018 hasn’t been an easy ride so far. Market volatility began to rear its ugly head almostfrom the start, and then stocks went on sale again when the S&P 500 dropped 5.9% over five days—its worst week since January 2016. On the heels of a particularly celebratory 2017 (at least from an investment perspective), the stock market proved it is anything but predictable. For the quarter, the S&P index was down -1.22% and the Dow Jones was down -2.49%. And though the techheavy NASDAQ was up slightly at +2.32%, it was down for the month by -2.88% after gaining an impressive +7.4% in January. Market volatility is back, and it’s likely to be with us for a while. 

Why the change in sentiment? Investors seem to be falling into a familiar pattern: the Trump Administration announces tariffs—this time on Chinese imports— but is not specific on the details. Wary of retaliation against American products sold abroad, traders put a lower value on the large, multinational companies that make up most of the major indexes. 

The last time this happened, the tariffs involved steel and aluminum. This time, the U.S. announced plans to impose tariffs on about $50 Billion worth of Chinese goods, which prompted China to retaliate, slapping its own tariffs on $3 Billion worth of US exports, including fruit, pork, and steel pipes. The threats from both countries have fueled fears of a global trade war.

Meanwhile, in the wake of the Cambridge Analytica scandal, Facebook shares fell almost 10%, from 176.83 down to 159.39. This took the social media giant down from the 5th largestcapitalization company in the S&P 500 index to the 6th (behind Berkshire Hathaway) and dragged the index down even further. And yet there is some good news. What’s remarkable about the selloff over things that may or may not happen is that it came amid some very good news about the U.S. economy. Durable-goods orders jumped 3.1% in February, sales of newly-constructed homes were solid, and Atlanta Fed president Raphael Bostic announced that there were “upside risks” in GDP and employment. Translated, that means that the economy is looking too good to keep interest rates as low as they have been—which means this is a curious time to be selling out and heading for the investment sidelines.

If none of that helps you feel less rattled, I recommend re-reading my blog Wall Street has gone wild! for some additional perspective. And if you’re still not at peace with the market and your place in it, give us a call. As always, we’re here to help. 


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In Your Best Interest: Our Q1 2016 Newsletter

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Market Highlights: Q1 2016

There are two distinct ways to partricipate in the stock market: speculating and investing. Speculators get paid when they sell something to someone else for more than they paid. Speculation involves trading and can deliver dramatic wins and losses. It is a zero sum game because for every buyer there is a seller on the other side of the trade. Investing, on the other hand, is rooted in economic fundamentals and analysis. Investors get paid when companies pay ever-growing dividends that are reinvested and compounded. Investing leverages lower-risk investments to deliver more predictable, consistent returns.

My goal is to invest, grow, and protect your assets. And while speculation is best left to those with a bigger risk appetities, every quarter I must act like a speculator and deliver the current “weather forecast.” But I do so with a caveat. Why? Because in investing, the short-term forecast doesn’t matter. Just like the laws of physics keep the world spinning, the laws of capitalism and economics (and the “miracle of compounding”) reward investors—no matter what the “weather.” The forecast may be wrong about tomorrow’s “big storm,” but surely spring will become summer.

That said, the first quarter of 2016 didn’t include any major storms (even if the seas weren’t entirely calm). The S&P 500 and the Dow Jones Industrial Index eeked out gains of .77% and 1.49% respectively after a late rally. NASDAQ tech stocks, international stocks, and smaller US company indexes all declined slightly, simply because supply is outpacing demand. 

The Federal Reserve’s March report delivered a snapshot of the current economy. It observed many positives: strong job gains and lower unemployment, rising household spending fueled by declines in oil prices, advancing business investminvestments, and slow but steady recovery in the housing sector. On the (slightly) down side, the strong US dollar has weakened exports, and inflation is below the Fed’s 2% target. In reponse, Yellen and the Fed chose to hold off on raising interest rates—a move they hope will encourage the desired upswing in inflation and work force participation.

There was also a variety of non-financial, but signficant global events that may impact the econonomic outlook. President Obama visited Cuba and announced a plan to open trade and tourism with the US. The Presidential campaign veered into the cult of personality, emotion, and violence. Millions of Syrian refugees fled their homes to escape civil war only to be denied refuge and a safe home for their families. Terrorist attacks shook the world again in Ivory Coast, Belgium, Pakistan, Iraq, and Turkey. And orders for the new Tesla 3 are beating all expectations as consumers strive to reduce their carbon footprints.

No quarterly market update would be complete without a forecast, so here it is: Expect longer days, rising temperatires, and a few storms and droughts. Just as predictably, stock prices will fluctuate, speculators will trade, and techonology will amaze us. Enjoy the change in the seasons and be a patient and confident investor!

Questions or concerns? Send me a note. As always, I’m here to help. 

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In Your Best Interest: Our Q4 2015 Newsletter

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Market Highlights: Q4 2015

The Force Awakens” was the theme in 2015—on the big screen and in real life. Just as the characters in Star Wars were forced to face their old rivals, global conflicts increased around the globe and the market reacted. Economic stress in Greece and China, falling oil prices, and terrorist attacks in Paris and San Bernardino, CA, impacted equity markets worldwide.

Of all the stock indexes, only the NASDAQ posted a gain for 2015. The S&P 500 index of large US companies ended with the first down year since 2008 while smaller and riskier US companies lost 5.7%. Developed international companies were down 3.3% despite a strong Q4, commodity-dependent Emerging Markets lost 17% for the year as oil prices reached an 11 year low, and bonds prices fell in the quarter as Treasury yields increased. 

When you look at your year-end statement, you may see that portfolio values trailed the Dow and the S&P 500. The reason? A diversified portfolio includes non-correlated assetsstocks that go up or down at different times—including energy and commodity stocks that fell due to low oil prices. Americans are smiling at the gas pump, but their portfolios are feeling the hit. Bonds investors were also disappointed as higher quality, short-term instruments that often provide defense against lower stock prices delivered less-than-expected yields.

Clearly it’s good to be an investor when you stay disciplined and stay the course. Despite the flat numbers, the three- and seven-year annualized returns of the S&P 500 were 12.7% and 12.4%, respectively, and the MSCI EAFE delivered 2.3% and 4.7% in the same timeframe. And remember, while the price of equities declined in 2015, you did not lose value. To restate Benjamin Graham’s advice to Warren Buffett, “Price is what you pay, value is what you get.”

On another positive note, at the end of December, the Federal Open Market Committee raised interest rates .25% for the first time since 2006. The increase reflects the Fed’s view that the US economy is strengthening, and their decision was based on positive economic data: unemployment ended the year at 5.0%, GDP growth slowed to 2.0%, and inflation remained below the Fed’s 2.0% target.

So what will 2016 hold? The only thing we can predict with any degree of certainty is that the US will have a new President. Bull market or bear market, no one knows. Investors should certainly expect continued volatility in equity prices, but as I’ve said time and again, the market is always headed in one direction: up. Our strategy is a disciplined approach to capital markets—staying diversified, keeping costs low, managing taxes, and rebalancing when needed—and we will continue to work with you to align your investment approach with your life goals, whatever they may be.

There’s no doubt the world is changing at a record pace, and it may feel like your life and goals are changing just as fast. The Force has indeed awakened, but we’re always here to help…no matter what the universe throws our way in the future.


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In Your Best Interest: Our Q3 2015 Quarterly Newsletter

Click here to view the full newsletter, including recent news, important Q4 dates to remember, financial tips & tools, and more.




The best thing about the third quarter of 2015 is that it is over.


By the close of the quarter, most investors experienced a significant decline in their portfolios. August was especially dramatic, delivering a stock market decline of 11% in a span of just seven trading days. During the final week of the quarter, there were net stock mutual fund redemptions of almost $30 billion—the result of investors rushing to the exits in an attempt to thwart further losses.


What happened to crush the optimism we’ve been feeling during the 6-year bull market that followed the Great Recession? Two stories dominated the headlines: the economic collapse in China and the Federal Reserve’s decision not to raise interest rates. China—the world’s second largest economy—saw its overheated stock market bubble burst and its currency devalued. The realization that China’s government isn’t a source for honest economic data cast doubt on China as the key driver of global economic growth. Although US economic indicators remain strong, the Fed opted not to raise interest rates because inflation hadn’t hit the 2% target established back in 2012. The decision to keep interest rates flat was interpreted by many as a sign of domestic economic troubles, adding to the near-panic that was already occurring on Wall Street.


Disciplined investors stay focused on long-term economic growth and avoid reacting to emotions. Even the most informed investors struggle to rise above their emotions when headlines scream and indices drop 10-15% in less than three months. Here are three facts that may help you through the turmoil:

Year-to-date, losses remain relatively low.
Even with the recent volatility, the long-term direction of the market is always up. Unless you are forced to cash out all of your investments today, you’re still positioned for growth. (See my October 1 blog to learn more.)

Bearish markets tend to follow bullish markets.
Predicting short term prices is a fool’s errand. This recent decline is a market correction (defined as a drop of 10% or more). Price declines are like pruning back overgrowth and create a healthier market going forward.

The US economy is strong. 
Consumer income, consumer spending, and housing starts are all up. Household net worth is at an all-time high, household debt has fallen by more than 30% since 2009, and home mortgage rates remain near alltime lows. Inflation has averaged only 2% for the past ten years, and the US dollar remains one of the of the world’s strongest currencies. 

Ultimately, I remain an optimist. Owning equities (stocks in great global companies) means that you participate in the long-term growth of the global economy. Market indexes and equity prices will continue to be volatile, and that volatility may trigger stomach-wrenching concern. As your advisor, my goal is your long-term success. As a committed capitalist, my message continues to be: maintain a balanced perspective, stay calm and disciplined, and reap the rewards that capital markets deliver to participants.US




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All written content on this site is for information purposes only. Opinions expressed herein are solely those of Lauren S. Klein, President, Klein Financial Advisors, Inc. Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness. Read More >