The Weekly Wealth of Knowledge is your download of this week's most important topics related to financial planning, the markets, and our community. October kicks off "breast cancer awareness" month, where we will be providing you content on how to get involved to support the continued battle against this horrible disease. This will include ways to give, get involved with advocacy, as well as ensure you are educated on how to carry the torch, not just in October, but throughout the year!
In this issue:
• Important Tax Deadline Looming (3 min read)
• Could The Worst Be Behind Us? (2 min read)
• Women & Inflation (3 min read)
BONUS: Upcoming Cybersecurity Webinar - Register Today!
Important Tax Deadline Looming
Are you ready for tax time? For most, your sights are on next year, but for those who filed a 2021 extension, the deadline is rapidly approaching. Below is all you need to know about getting your 2021 taxes filed and other important information you will not want to overlook.
Could The Worst Be Behind Us?
This has clearly been a challenging year for households. Stocks and bonds are both down significantly. Elevated food and gas prices continue to stretch budgets, and higher interest rates have increased borrowing costs. But we continue to see signs that the worst may be behind us. Gas prices are falling. Inflation pressures stemming from supply chain disruptions are easing. And the Federal Reserve (Fed) has taken these price increases seriously and is doing its job by raising short-term interest rates. While the Fed may still gradually increase rates throughout this year, it has already done a lot even as asset prices have come under increasing pressure.
As the third quarter comes to an end, it’s admittedly difficult to be optimistic about stock and bond markets right now. The most recent quarter saw both stocks and bond prices fall in tandem again. The negative returns for both markets were the third consecutive quarterly declines for stocks and bonds. Of the 187 quarters since 1976, there has never been a period that has seen negative quarterly returns for both stocks and bonds three quarters in a row. Said another way, this is the longest period since 1976 that bonds haven’t played the traditional role in portfolios by offsetting losses in the stock market.
So why own bonds at all? The value proposition for core bonds is that they tend to provide liquidity, diversification, and positive total returns to portfolios. Unfortunately, none of those values is 100% certain all the time. Like all markets, fixed income investing involves risks and, at times, negative returns. However, despite the historically poor start to the year, we think the value proposition for core bonds has actually improved recently. Investing is a forward-looking exercise and with the move higher in yields that has already taken place this year, we believe now could be as good as it’s been in quite some time for core bonds. Starting yields on most fixed income asset classes are hovering around the highest yields we’ve seen in over a decade. So we don’t think now is the time to abandon your existing allocation to bonds and in fact, it could be worth a look for those investors underinvested in bonds.
We acknowledge how difficult it is to stay invested during these bouts of market volatility. But markets have already priced in a lot of bad news, and we think we are closer to the end of this negative cycle than the beginning. Potential catalysts for a rebound in the near-term include third quarter earnings season, midterm elections, tailwinds from a seasonally strong fourth quarter historically, and the Fed possibly signaling a pause in rate hikes by year-end. While there may be continued volatility in the near-term, we believe the surest path forward remains to stay true to your existing financial plan.
Women & Inflation
Everyone has been impacted by the inflationary environment we have been dealing with for the better part of 2022. Depending on what you do, where you live and your family dynamic, it can have varying effects on different individuals. This week we look how the current environment impacts women specifically and how at times, it's even harder on them. As always, if you have any questions, do not hesitate to reach out.
Cybersecurity Webinar - Aware & Prepared
Scammers target people of all demographics and often succeed because they catch people off guard. Good security habits and being aware of threats may help lessen the odds of becoming a victim and we are here to help. Join us on October 20th at 6:00 P.M. Be prepared to learn all you can do now, as we partner with MFS Investment Management for this exclusive webinar to prevent your cybersecurity from being compromised in the future.
The opinions voiced in this material are for general information only and are not intended to provide specific financial or tax advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
LPL Financial is not affiliated with MFS.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of October 4, 2022.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
For a list of descriptions of the indexes and economic terms referenced, please visit our website at lplresearch.com/definitions.