Quarterly Market Review: Second Quarter 2019
First 6 Months of 2019 In Review
The markets had a very strong first half, breaking records for the major indices. The S&P500 had a gain of 18%, its best first half since 1997. The Dow rose 14% during the first six months of the year, its best first half since 1999. There are many reasons given for such market strength including resuming talks with China regarding tariffs and the Federal Reserve's comments regarding the possibility of reducing interest rates as early as July 2019.
While the markets have performed extremely well during the first half of 2019, these gains would be offset by the losses incurred during the last quarter of 2018 when the S&P500 Index lost 16% in value with extremely high volatility.
As an example, a $100,000.00 investment in the S&P500 on October 1, 2018 would have a value of $99,120.00 at the end of the first half of 2019 for a loss of $880.00. This example assumes that an investor would ride out a 16% loss during the last quarter of 2018. That would create a significant amount of stress for most investors, especially if they are retired or planning to retire soon.
Our Managed Account Program
While the S&P500 Index lost 16% in value during the last quarter of 2018, our management account program dropped in value an average of 0.68% (seven tenths of one percent) net of fees. The S&P500 Index gained 18% during the first half of 2019 while our investment program had an average gain of 6.1% net of fees. Our program avoided most of the last quarter of 2018 decline by moving all the positions to cash near the top of the market on October 5, 2018.
Following you will find a $100,000.00 invested in the S&P500 and our managed account program from October 1, 2018 to June 30, 2019.
October 1, 2018 $100,000.00
June 30, 2019 Balance $ 99,120.00
FGM Management Program:
October 1, 2018 $100,000.00
June 30, 2019 $105,379.00
Our returns were produced with volatility, stress, or drama. Please call us if you have any questions.
Growth of $100,000 10/1/2018 to 6/30/2019
Sources: S&P Dow Jones Indices LLC. Bloomberg.
Nothing in this document should be construed as a solicitation, offer, or recommendation to buy or sell any security. Investment advisory services are only provided to clients pursuant to a written agreement. Neither Financial Growth Management, Inc. nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. The investments or strategies presented do not take into account the investment objectives or financial needs of particular investors. It is important that you consider this information in the context of your personal risk tolerance, time horizon, liquidity needs, and investment goals.
Comparisons to indices are provided for illustrative purposes only. It is not possible to invest directly in an index; exposure to an asset class represented by an index is available through investable instruments based on that index. The S&P® 500 Index is regarded as a gauge of the large cap U.S. equities market; the index includes 500 leading companies in leading industries of the U.S. economy, which are publicly held on either the NYSE or NASDAQ, and covers 75% of U.S. equities. The Russell 3000® Index measures the performance of the largest 3,000 U.S. companies, representing approximately 98% of the investable U.S. equity market. The Russell 3000® Total Market Index is a total return index, which assumes that all cash distributions are reinvested, in addition to tracking the price movements.
The inception date of the Income Builder Program is March 31, 2003. The performance figures presented for the Income Builder Program are actual returns, net of management fees of 0.5% quarterly, and assume reinvestment of dividends and other distributions. Client performance may be higher or lower depending on the particular funds and custodian used. Annual Return figures for the Income Builder Program for 2003 reflect performance beginning March 31, 2003; figures for a partial year reflect returns for the year to the date of the report.
The Peer Group Benchmark for the Income Builder Program is the Lipper High Yield Bond Index, a widely recognized index of the largest mutual funds that invest primarily in high yield bonds; performance is presented net of the funds’ fees and expenses. Benchmark 2 is the Bloomberg Barclays U.S. Aggregate Bond Index, a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. Drawdowns for the Income Builder Program are based on quarterly pricing. Investment return and principal value will fluctuate so that the value may be worth more or less than the original value.
Past performance does not guarantee future results. It should not be assumed that recommendations made in the future will be profitable or will equal the performance listed in this report. Our views expressed herein are subject to change and should not be construed as a recommendation or offer to buy or sell any security or invest in any sector, and are not designed or intended as basis or determination for making any investment decision for any security or sector. Our discussions should not be construed as an indication that an investment in a security has been or will be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of any security discussed herein.
All investing involves risk, including the possible loss of principal.
Equity securities offer long-term growth potential, but may be very volatile and may provide less current income than other investments.
Investing in foreign securities presents risks not associated with investing in domestic investments. These may include currency fluctuation, political or economic instability, and different accounting standards. This may result in greater share price volatility.
The prices of small and mid-cap equity securities are generally more volatile than those of large company stocks.
Investments that are concentrated in a sector or industry may be subject to a higher degree of market risk than investments that are more diversified.
Investments in fixed-income securities are subject to market, interest rate, credit, and other risks. Bond prices fluctuate inversely to changes in interest rates. Credit risk is the risk that an issuer will default on payments of interest and/or principal. Fixed income securities are subject to market risk, if sold prior to maturity. Fixed income investments may be worth less than their original cost upon redemption or maturity.
Investing in real estate includes risks such as credit risk, interest fluctuation and the impact of economic conditions.
Officers of Financial Growth Management, Inc. or one or more of its affiliates (other than research analysts) may have a financial interest in securities of the issuer(s) or in related investments.
Past performance is not indicative of future results.
This report and the accompanying statistical information was prepared by or obtained from sources that Financial Growth Management, Inc. believes to be reliable, but its accuracy is not guaranteed. The report herein is not a complete analysis of every material fact in respect to any company, industry, or security. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Any market prices are only indications of market values and are subject to change. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request.
NOT FDIC INSURED | NO BANK GUARANTEE | MAY LOSE VALUE