Investment Newsletter for the End of May, 2018

When I was thinking about what to write this month, I was certain the market was down. I have been hearing trade tariff this and that, the market has been swinging up and down, and clients have been calling about the turmoil. Well, the emotion is not correct. It comes from fear. The market was actually very decent this month.

The Dow was up 252 points, about 1%. Very Large Cap Index.

The S&P 500 Index was up 35 points, about 1.3%. Large Cap Index.

The Nasdaq Index was up 376 points, about 5.3%. Technology Index.

The Russell 2000 Value Index was up 78 points, about 1.4%. Small Cap Value Index.

A few observations are appropriate here.

Fear is magnified by the news cycles. It sucks up everybody. It has a side effect of toxic stupidity. The real answer to long term profits is discipline to a system. Unless you can predict the news cycle, do not try to time the short market swings. If you can predict future news events, please give a call so we can start a company together. We will not invite anyone else.

All four indexes are up two months in a row. Your portfolios are all well up also. The large cap indexes have not recovered all of the beginning of the year decline but have made a very significant dent. The Russell 2000 Value Index and Nasdaq have recovered everything and then some. I have slanted your portfolios towards small cap value. The Russell 2000 Value Index is the appropriate measure to compare against. Remember, the Dow is convenient and fast to look at but THE DOW IS NOT THE MARKET. The Dow is a small slice of the market.

In general, small cap (size) stocks will do better than large stocks and value will do better than growth. It is logical. When you are smaller than Intel, you have more room in front of you to grow. Intel has a much harder time getting bigger. As for value, everyone loves a bargain. Of course, the higher profit is not risk free. You have bigger swings. We all know that swings can last years (both upswings and down swings). To control risk, I use mutual funds and a bond allocation. 

As always, I thank you for your business and trust. Please call me if you have any questions.


Investment Fee Schedule

Rate Assets Under Management
1.44% Below $125,000
1.00% Between $125,000 and $750,000
.85% Between $750,000 and $1,250,000
.80% Between $1,250,000 and $1,750,000
.75% Between $1,750,000 and $2,500,000
.70% Between $2,500,000 and $3,250,000
.65% Between $3,250,000 and $4,250,000
.60% Above $4,250,000

A single rate is applied to the whole account. Compared to my old fee structure, under the new fee structure the cost for a $1 million account would be $500 lower per year and the cost for a $1.5 million account would be $1,500 lower per year. I will still waive personal tax return fees for accounts over $1 million. All services stay the same. I am just lowering my upper end fees. For accounts that are above $5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.

E-Book Download

Questions for the comments

Did my newsletter make sense? Do you agree or disagree with what I said?

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