Watch the videoof Steve’s Reading by clicking on the following linkhttps://youtu.be/nvoj4uAwDKgor the image above.
Certified Financial Poetry
Since taxes are on our minds because Tuesday is the deadline for getting your income tax filed and since the stock market has been jostled around due to talk and tweets about tariffs these days, I am reminded of the outcome of one country’s undertaking dealing with this subject…
Today’s Certified Financial Poem is titled…
Tariffs, Taxes and War
By Steve Wolff – The Certified Financial Poet
Tariffs are nothing new,
Here’s a history lesson for you.
The American Revolution was fought,
Due to taxes the British brought.
In 1765,
the Stamp Act was derived.
And with that law set in stone,
The seeds of revolution had grown.
Taxes supporting Brits’ forces?
Their guns and ammo and horses?
From Boston to Philly they said,
These guys are nuts in the head.
Soon the Townshend Act came to be,
Taxing paper, glass, paint and tea.
That was in addition to the Sugar act,
Make no mistake, that’s a fact.
“No way,” the Colonists said,
This feeling, it quickly spread.
“These taxes are an abomination,
And we have no representation.”
But it was the Tea Act of ’73,
that was truly the real key.
The Colonies said, “No more,”
And hatched a plan from the Eastern Shore.
Let’s disguise ourselves at night,
We’re ready for an all out fight.
Board their ships and cause commotion,
Then throw their tea out in the ocean.
The Brits reacted with scurrilous rage,
But the Colonists mood they poorly gauged.
They passed the Coercive Acts bill of ’74.
And set the wheels in motion for the revolutionary war.
The act said no more governing yourselves,
Put that idea back on your shelves.
Hey Boston, your now part of the Crown,
And seriously, we don’t care if you drown.
“IT’S WAR,” said the Bostonian in its largest font
And we’re ready to fight if that’s what they want.
Your tariffs and laws, we know we don’t need ‘em.
It’s now time now for us to fight for our freedom.
Newton said that for every single action,
There’s an opposite and equal counter reaction.
That’s why a tariff can be a sticky thing,
Cause you never know what the outcome will bring.
By the way, there’s a fun song about this topic that I found called “The Boston Tea Party Song” that’s a parody of the Pharrell Williams song called “Happy.”
Here’s the link….
I hope you enjoyed today’s poem and will share it with others.
You can find more of my Certified Financial Poetry by going to WWMFinancial.com.
And remember poetry fans, “Always take the road less travelled.”
Steve Wolff is a Financial Advisor and Managing Partner at WWM Financial in Carlsbad California. Steve can be reached at 760-692-5190 or Steve@WWMFinancial.com.
So here’s an understatement…there is some real volatility affecting the stock market these days.
In the last couple of months, the broader stock market is down around 12 or 13 percent from the highs. And from the beginning of the year the markets are down around 3 or 4 percent.
Some of the reasons for the decline? There’s technology stocks being overvalued, social media stocks getting pummeled for privacy concerns, and interest rates moving higher. But we believe the biggest reason for the recent stock market move is the tariffs that President Trump is putting on foreign goods. And exacerbating that is the indiscriminate selling of stocks, especially through Exchange Traded Funds, many of which have the large tech stocks as big holdings.
Will the tariffs be the reason the market will fall significantly from here?
Before we answer that, let’s take a look at what’s happening.
Trump says that other countries, especially China are already putting large tariffs on U.S. goods, and have been for many years. If you don’t know, a tariff is just another word for a tax. Trump is saying that those tariffs on U.S. products are creating an uneven playing field that puts the U.S. at a disadvantage. And to be honest, he is correct.
HIS solution is to put tariffs on foreign goods, especially those coming from China. This is causing China to up the ante with more tariffs on U.S. goods.
Let’s be clear, trade wars are never a good thing. Stock market investors and traders get very nervous when they start talking trade wars. Will this cause additional major erosion to the stock market going forward?
Certainly anything is possible, but the big cross current here is that we believe earnings for the first quarter, which will start being reported in the next couple of weeks, will come in pretty strong. Most of the economic metrics we have seen recently still show a strong economy. So unless corporate earnings are much worse than we think they will be, or the economic numbers start sliding, we believe the downside for the broader market is somewhat limited.
If you are a stock picker, there are some very good companies that are starting to look fairly inexpensive.
We do want buyers to beware that if indiscriminate selling continues, in other words panic starts taking over, it can take the market down significantly. But for the long-term investor, we believe the risk/reward is starting to look more favorable again.
For more market, investing and financial planning videos, please check out our website at wwmfinancial.com. And as our sister company, Savvy Women Wealth Management says, Savvy Up!!
Steve Wolff is a Managing Partner at WWM Financial in Carlsbad California. Steve can be reached at 760-692-5190 or Steve@WWMFinancial.com.
This is Steve Wolff, the Certified Financial Poet. I heard this great little kids song called, “Planning Ahead” by the Lolliwinks.
Ok, so my taste in music is a little unorthodox, but hey, so is financial poetry. But the song gave me the idea for today’s poetic masterpiece titled:
Forget Johnny Rivers,
Just make a plan Stan
Retirement planning is just so boring,
There are other things you could do
Facebook, shopping, golf, TV
Just to name a few.
For some, playing cards is lots of fun,
A lot of people play bridge
But make a plan for the rest of your life?
You spend more time staring into the fridge.
A financial plan for your retirement years?
You devote more time planning vacations
But a plan to make sure you don’t go broke,
You’d prefer surgical heart ablations.
You spend more time watching infomercials,
Than planning the rest of your life.
It’s obviously more important,
To get Snuggies, a Bowflex and a Ginzu knife.
Having money to cover your lifespan?
Your thought is you’ll just play the lottery,
Of course, if that scheme doesn’t work,
It’s your choice to live life in poverty.
Take time to think hard on your future,
You’re probably going to be ‘round
Don’t listen to old Johnny Rivers,
And end up on the poor side of town.
Course there’s always another solution,
So your finances won’t fall apart,
You can always make your ends meet,
As a greeter at your local Wal Mart.
I hope you liked today’s certified financial poem and will share it with others. You can find more of Certified Financial Poetry and some other great financial videos on our blog at wwmfinancial.com.
You really need to hear the “Planning Ahead” Lolliwinks song, so I’ve provided a link in the video description below.
Thanks for tuning in and remember, “Always take the road less travelled.”
At WWM Financial’s Q1 Brunch at The Canyons in Carlsbad, Ca.
In case you were not able to attend Brunch this is a recording of Susan Taylor of Scripps Health discussing Gadgets, Gizmos and Good Health. Click on the image directly above to listen to the recording.
Listen to Susan Taylor of Scripps Health talk about all the technological advances that they’re testing in clinical trials or have already been approved by the FDA to improve your health. A gadget can be sparkly and monitor the number of steps you take each day. It may look like it’s doing a lot of things, but we Scripps won’t use it unless they see results that confirm these gadgets and gizmos actually improve your health. Susan discusses a multitude of devices that are being used for diabetes, cancer, heart disease and sleep. Some of this technology is implanted in the body. The patient never feels it, but it allows doctors to monitor patients no matter where they are anywhere in the world. The intent of this of technology is to promote better health, and help people live longer, healthier and more productive lives, at a lower cost. Some of this technology is in fact, life-saving.
If you would like to watch the video of Steve reading “Hello, Good Buy” click on the image above.
Hello, Good Buy
By Steve Wolff
The market goes down and you start to cry,
Hey don’t cha know it creates a good buy?
You liked it much higher and now it has fallen,
So strap on your boots and stop all your bawlin’.
The best time to buy is when stocks get too cheap,
This isn’t brain science, it’s not a great leap.
Which do you like, eighteen or eight?
For me I like lower, it’s the discounted rate.
Yet time after time the response is the same,
“My stocks are all falling, get me out of this game”,
It’s time to think different, your thoughts must be clear,
It’s brains over hearts, to get over the fear.
Ok, I know, there are times you should sell,
But those times should always be thought out well.
Using logic not fear, is the way it should be,
Grey matter, after all, is truly the key
With respect to the Beatles and their song long ago,
They said, “you say high,” and then “I say low,”
You follow with “why?” and I say, “you should know,”
Buy lower is how you make the most dough.
You’ve finally grasped it, you’re seeing the light,
The lesson, buy low, is getting it right,
I look in your eyes with my face all aglow,
As you say good buy, and I say hello.
Disclaimer: Always be sure to contact your financial advisor for advice on your personal portfolio.
WWM Financial is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where WWM Financial and its representatives are properly licensed or exempt from licensure. Investing involves risk and possible loss of principal capital. No advice may be rendered by WWM Financial unless a client service agreement is in place.
Steve Wolff is a Financial Advisor and Managing Partner at WWM Financial in Carlsbad California.
Today’s financial planning tip is Investing in Stocks.
If you would like to watch the video click on the image above.
Turn on the TV nowadays, or surf the Internet, and you’re certain to run into someone talking about making a fortune from owning one specific stock or another. Even the 6 o’clock news generally recaps the day’s trading activity, including what stocks went up or down, and what the S&P 500 or Dow Jones Industrial Average closed at for the day. Ever wonder what exactly is a stock, and what it means to own shares in a company? Many people today invest in stocks without even knowing what they’re investing in, or what the fundamentals are for a specific company. This video lays out the basics of investing in stocks, along with a few tips on what to do, and better yet, what not to do.
Stocks represent an ownership position in a company. More specifically, corporations issue shares of stock to raise capital to fund their growth, which is used for R&D, new projects, product development, supply-chain expansion, acquisitions, or many other business-related activities. Investors can purchase these shares of stock, which are listed on a stock exchange or exchanges, through a broker by opening up a brokerage account. Stock is generally purchased from another investor who wants to sell her shares. In other words, most stock trades involve a buyer and a seller, although it is possible to purchase shares directly from the issuing company. Owning shares of stock in a corporation entitles the owner to vote in shareholder meetings, receive dividends paid out of company profits, and (potentially) share in the appreciation of the company’s share price. Not all corporations pay dividends, but many of the larger, more mature companies do pay dividends, typically quarterly. Stocks are sometimes referred to as equity or equities.
OK, with that out of the way, why would someone want to own shares of stock? Simply put, to make money by participating in the capital growth of the company through appreciation of the share price, and to earn the dividends being paid out to shareholders. Over the long-term, stocks have provided higher returns than bonds or cash, but this superior performance comes with higher risk and volatility. In the short-term, some stocks can be very volatile, meaning their share price can rise or fall quickly and sometimes unexpectedly. Owning an individual stock also subjects the shareholder to unsystematic or company-specific risk. Unlike systematic risk, which can be thought of as the risk associated with the entire market, unsystematic risk can be reduced through diversification. Investors wanting to reduce their unsystematic or company-specific risk can buy additional stocks within the same industry, but can also buy stocks spanning many industries. For example, an investor owning Ford but wishing to diversify his holdings might also buy shares of GM, BMW, and Toyota, for example, to broaden his exposure within the auto sector. To diversify even further, this investor might also want to own stocks of a few retailers, health care providers, utilities, banks, technology companies, energy producers or distributors, and some consumer products firms.
Broadly diversifying a portfolio can help reduce downside risk and volatility, but it does tend to dilute the impact of the investor’s “best ideas”. In other words, if an investor has 3 or 4 “great stock ideas” which she believes in with high conviction, just buying those stocks would result in a very concentrated portfolio with high risk and volatility. If the investor’s “best ideas” work out, that concentrated portfolio might grow more rapidly than, say, a well-diversified stock portfolio spanning all 11 sectors of the US economy. But if those “best ideas” don’t work out as the investor anticipated, that concentrated portfolio might drop precipitously in value over even a relatively short period of time. Owning stocks is not for the weak of heart. If a company goes out of business, the company’s shareholders can lose everything. In other words, shares of stock in companies filing bankruptcy and liquidating assets generally go to zero. Common stockholders don’t get paid in a bankruptcy liquidation until creditors, bondholders, and preferred shareholders have all been paid.
To adequately diversify a stock portfolio, it generally takes upwards of 50 different stocks, and it might be necessary to own several hundred different stocks, depending on which market or markets the investor is trying to diversify across (e.g., US large-cap, entire US, developed world, entire world). This is why many investors, particularly beginning and hands-off type investors, choose to employ mutual funds or exchange-traded funds (ETFs) rather than trying to assemble a diversified portfolio themselves. It’s important to realize, however, that purchasing a single mutual fund or ETF doesn’t necessarily fully diversify an investment portfolio. You can learn more about that in my Mutual Funds and ETFs video. And bear in mind there are several different asset classes, such as US large-cap stocks, foreign developed country stocks, or emerging market stocks, as well as different investing styles, such as value or growth. That’s not to mention modern strategies like growth at a reasonable price, or GARP, alternative investments, theme-oriented investing, or factor-based investing.
Before I wrap this up, let me offer a few other suggestions derived from many years of observing and participating in the stock market. First, do your homework, don’t just invest in a stock because you heard about it on the Internet or at the gym or from Cramer on CNBC. You need a solid stock selection or filtering approach and a buy/sell process. Fundamental analysis takes into account a company’s fundamentals, such as their revenues, earnings, return on equity, profit margins, and growth metrics, as well as the company’s management team, competitive positioning, brand strength, supply chain, and cost of doing business. Technical analysis analyzes a company’s stock chart, and considers things like support levels, resistance levels, short and long-term trends, trading range, and recognizable repeatable patterns. Although a lot of stock information is available online for free, many firms provide detailed stock information and analysis on a subscription basis, such as Standard & Poor’s, Value Line, Argus Research, Morningstar, and Zack’s.
Once you’ve done an analysis and decided to purchase a stock, make sure you know ahead of time the price level at which you’ll sell the stock to lock in your gains if the share price were to rise, or the price at which you’ll sell if the stock price starts to drop. Limit and stop-loss orders can be used to automate your buy-sell targets. And most importantly, don’t get emotional about a stock holding. Many investors make the mistake of waiting for a losing stock position to return to its original price before they’ll even consider selling. That can be a big mistake! Once you’ve bought a stock, think of it like a sunk cost. What’s done is done. If the stock price drops 25% in the first month, re-evaluate whether you want to continue holding it at this new price, independent of your original purchase price. If, based on your research and knowledge, there are better investment opportunities now, don’t hang on just to avoid a loss because you don’t want to admit to yourself or someone else you made a mistake. On the other hand, if your conviction is still strong, and nothing fundamental has changed – other than the 25% drop in share price – you might decide to continue holding the stock because you believe the current share price is too low and will eventually go up.
Finally, don’t chase returns. In other words, if a stock has gone up 69% over the past 8 months, that doesn’t mean it’ll automatically go up another 69% over the next 8 months. In fact, many times stocks that run up significantly in price over a relatively short time period may “mean revert”, meaning come back down to earth and have sub-par performance over the ensuing time-period. Last year’s winners are sometimes this year’s losers. It doesn’t always happen that way, but this “law of averages” concept does come into play frequently with stock investments. Part of the challenge is sorting out companies whose stock may run up for many years in a row from those who may have had a good quarter or year or couple of years, but then revert to a lower-growth, or sometimes negative-growth, trajectory. And be aware of a wise old axiom of investing that goes something like this: “It’s not (necessarily) market-timing that produces wealth, it’s time in the market.” Which is another way of saying, to take advantage of the excellent long-term returns produced by stocks, investors need to actuallybe in the stock market a good portion of the time in order to let the markets work their magic. This is an important concept to remember.
Now, assuming you’ve done your homework and you’re willing to take the risk, go out and buy some stocks!
Nothing in this video should be considered a recommendation or endorsement of specific stocks or techniques. Investors should conduct their own research before buying or selling any stock or stock fund.
Scott McClatchey is a CERTIFIED FINANCIAL PLANNER™, CFP® with WWM Financial in Carlsbad, California. Scott can be reached at 760-692-5190 or Scott@WWMFinancial.com.
