Investor Series – Price
October 5, 2018
Mark Shone Celebrates 30 Years In the Industry!
October 11, 2018

2018 Third Quarter Market Commentary

If you believe that the trend is your friend, then perhaps the U.S. stock market is in for an excellent fourth quarter. U.S. equity markets suffered small losses in the first quarter, followed by decent single-digit gains in the second quarter.  Now that the third quarter is in the books, a somewhat larger gain has put U.S. stocks in solid positive territory for the year.

The ACWI (all country world index) was up 4.28% for the quarter which is a solid return. International stocks, although up .76%  for the quarter, are still in negative territory for the year by a measure of -3.76% as measured by MSCI EAFE.

While at first glance it looks like stock markets are just moving in lock step in the US, if you take a deeper look you will find that growth type companies (largely technology) have led the way and are outperforming their value counterparts (financials etc) by a wide margin. It isn’t unusual to have these gaps from time to time but the leadership of growth and value companies does change over time. It is with this in mind that your portfolios are diversified and own both types of companies. This will tend to smooth out the investor’s experience over the long haul.

In the bond markets, coupon rates on 10-year Treasury bonds have continued an incremental rise to a 3.06% annual coupon rate, while the yields on 30-year government bond yields have risen slightly to 3.21%.  Short-term yields are catching up; 3-month Treasury bills are now paying investors 2.20%, and one-year Treasuries yield 2.56% on a flattening yield curve.  Typically, bond investors demand to be paid much more to hold longer-term paper, due to the always-present uncertainties in interest rate movements and other factors.

Five-year municipal bonds are yielding, on average, 2.23% a year, while 30-year munis are yielding 3.26% on average.

What’s going on? The American economy is continuing to expand with GDP at the highest level in years and corporate earning at record levels over time. It is widely understood that growth of stock prices follow growth of earnings but not always in lockstep.

Market Predictions:

These aren’t your normal market predictions of how the U.S. or International stock will perform over the next week, month, quarter or even year. These are the types of market movements you have to weather in order to achieve your long term objectives.

  1. Stock markets on average have had a 10% inter-year drop every year since 1926. It is about as predictable as the sun coming up yet everyone will be “surprised” the next time.
  2. Your average stock market return will not come in a straight line and in fact very rarely are your calendar returns equal or close to your long term average. Returns are lumpy and not predictable.
  3. You will be challenged emotionally to maintain your position in stocks or to not chase the returns of the part of the markets that has worked best over the last quarter or year.

The approach we take with clients is to match the allocation of portfolios to the goals they are trying to achieve. We don’t predict markets but we make reasonable calculated adjustments to protect client assets and take advantage of the inevitable market movements.

As always we value and appreciate the trust you have placed with us over the years and we will continue to commit all of our resources with the goal of providing great client experiences and great client outcomes.

 

Mark Shone

Shone Asset Management

 

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Mark Shone CFPMark Shone, CFP
President

Phone: 925.472.0874
Mobile: 925-209-3771
Fax: 925-472-0884
E-mail: mshone@shoneassetmgmt.com

Mark Shone, CFP®, founder of Shone Asset Management LLC, is responsible for all aspects of Financial Planning and Asset Management at Shone Asset Management and works directly with clients of the firm. He has been in the business since 1988 and founded the firm in 2005 as a fee only financial planning and asset management business. Prior to founding Shone Asset Management, he was a Managing Director and Neuberger Berman and Lehman Brothers. Mark has a degree in Finance from California State University, Sacramento, competed his certificate in taxation at UCLA and completed a course of study at the Wharton School.

Mark enjoys helping families and clients map out the financial life they want to create and helping them by making smart decisions over time. He has extensive experience speaking on and guiding clients through topics such as retirement planning, preparing for the cost of education, investment allocation strategies, estate planning topics, insurance and behavioral finance. He is committed to helping clients maximize their full wealth potential.

In his spare time Mark enjoys golfing, is an avid sports fan and is a drummer for the band Stagefrite which plays cover songs from the 80’s to today.

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Gail Markham

Director of Client Service

Gail has worked in the Financial Services industry since 1983; as a Bank Manager, and as an Investment Advisor as well as Compliance Manager for major Wall Street firms.  She is a graduate of the University of the Pacific.

Gail is a long time resident of the East Bay.  She lives in Walnut Creek with Will, her husband of 26 years.  She has two children, Jack & Kelly who are college students.

Gail enjoys golf, hiking, traveling, gardening, wine and college basketball.

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Griffin Daniel Sheehy

I came on board with Shone Asset Management in 2016 and as Financial Associate, I provide support in the areas of investment planning, financial planning, and portfolio management. I am a graduate of Cal Poly San Luis Obispo’s Orfalea College of Business where I earned a Bachelor of Science of Quantitative Economics concentrated in Financial Management. Post-graduation, I went straight to work for Waddell & Reed, which is a large advisory firm that specializes in financial and investment planning. I started there in an assistant-type role until earning my Series 7 and Series 66 licenses and at that time promptly transitioned into an Advisor Associate role. Having those licenses allowed me to not only engage in full support on the client servicing side, but in the financial and investment planning process as well. This is where I learned just how critical developing, implementing, and constantly reviewing a solid all around plan is to the success of one’s financial goals. While in college, I interned at Northwestern Mutual in Sacramento where I earned my Insurance License and was educated in the value of managing the risk of unforeseen events in life. I also interned at a small commodities market research firm based in Petaluma, California called Streetwise Reports.

I am married and in my free time I enjoy outdoor activities with my beautiful wife like taking beach trips and hiking. I also enjoy playing sports in local leagues for baseball and basketball.