Published: Wed, 21 Oct 2020 15:59:41 +0000
Market Blog Now that we have your attention with that eye-grabbing title, there’s definitely something to the idea that stocks perform better the year after a sitting president wins reelection. “Think about it—usually when a president wins reelection, it means … Continue reading →
Published: Wed, 21 Oct 2020 14:59:01 +0000
Daily Insights Markets opened slightly lower. US equities are flat this morning following Tuesday’s solid session. Optimism over stimulus talk progress prevails, even though Senate approval may be a big hurdle to completing a deal. Improving earnings results so far … Continue reading →
Published: Tue, 20 Oct 2020 15:59:08 +0000
Market Blog The 10-year US Treasury yield, at 0.77% as of October 19, is still near historical lows set earlier this year. Historically, 10-year Treasury performance for the next 10 years has tended to track the Treasury yield at the … Continue reading →
Published: Tue, 20 Oct 2020 14:58:30 +0000
Daily Insights US equities look to rebound from Monday’s selloff. The S&P 500 Index opened higher this morning after lack of progress on stimulus talks contributed to broad-based losses Monday. Investors may start looking ahead to a post-election stimulus package, … Continue reading →
Published: Mon, 19 Oct 2020 14:58:15 +0000
Daily Insights Stocks opened higher. Reports over the weekend suggested the White House may be able strike a stimulus deal with the US House Democrats before the election, but the odds are still long, and early 2021 appears more likely. … Continue reading →
Published: Fri, 16 Oct 2020 20:00:21 +0000
Market Blog Index Performance S&P 500 Index: 0.2% Dow Jones Industrial Average: 0.1% Nasdaq Composite: 0.8% US and International Equities Markets generally finished higher this week, the third straight weekly gain for the S&P 500 Index and capped off by … Continue reading →
Published: Fri, 16 Oct 2020 15:58:23 +0000
Market Blog There are many charts that caught our attention this week, and today we share the top 5 charts we’re watching. The S&P 500 Index recently had a four-week losing streak and fell nearly 10% along the way, while … Continue reading →
Published: Fri, 16 Oct 2020 14:59:55 +0000
Daily Insights Markets opened higher. US equities opened higher, bucking the trend from Thursday’s mixed trading. The bulls are taking the lead this morning, brushing aside the resurgence of COVID-19 cases in Europe. House Speaker Nancy Pelosi and US Treasury … Continue reading →
Published: Thu, 15 Oct 2020 15:56:57 +0000
Economic Blog We continue to monitor real-time COVID-19 and economic data to provide insight into how the pandemic is affecting economies around the world. Traditional economic data sometimes can be too slow to pick up the changes that are occurring. … Continue reading →
Published: Thu, 15 Oct 2020 14:58:33 +0000
Daily Insights Stocks opened sharply lower. Stocks opened sharply lower in the face of dimming hopes of a pre-election stimulus package, rising jobless claims, and surging COVID-19 cases, particularly in Europe. Concerns that renewed restrictions would slow Europe’s economic recovery and … Continue reading →
Published: Wed, 14 Oct 2020 15:58:51 +0000
Market Blog With Election Day just under a month away and voting already taking place in many states, it is still anyone’s guess who will win on November 3. With all of the noise surrounding the election, we prefer to … Continue reading →
Published: Wed, 14 Oct 2020 14:58:17 +0000
Daily Insights Markets mixed overnight. S&P 500 Index opened little changed after taking a breather yesterday amid noisy headlines around fiscal stimulus and vaccine trials. Asian markets finished mixed with South Korea, China, and Australia trading lower, while European stocks … Continue reading →
Published: Tue, 13 Oct 2020 17:27:16 +0000
Market Blog The 10-year Treasury yield has stayed in a narrow range since April 2020, helped by a supportive Federal Reserve and ongoing concerns about the COVID-19 pandemic. As shown in LPL’s Chart of the Day, the 10-year Treasury yield … Continue reading →
Published: Tue, 13 Oct 2020 14:58:09 +0000
Daily Insights Stocks open slightly lower as earnings season begins. Once launched by Alcoa, the unofficial start to earnings season now begins with several financial firms reporting. The S&P 500 Index opened slightly weaker Tuesday morning following four straight up … Continue reading →
Published: Mon, 12 Oct 2020 14:58:42 +0000
Daily Insights Stocks add to last week’s solid gains. While most attribute the recent bump up in stocks to stimulus and position jockeying ahead of Election Day, earnings season has quietly snuck up on us and will be a big … Continue reading →
Published: Fri, 09 Oct 2020 20:03:07 +0000
Market Blog Index Performance S&P 500 Index: 3.7% Dow Jones Industrial Average: 3.3 % Nasdaq Composite: 4.6% US and International Equities The S&P 500 Index posted its best week in more than three months, boosted by renewed stimulus talks and … Continue reading →
Published: Fri, 09 Oct 2020 15:58:14 +0000
Market Blog In the recent LPL Market Signals video, LPL Financial Chief Market Strategist Ryan Detrick, Equity Strategist Jeff Buchbinder and Asset Allocation Strategist Barry Gilbert discussed the upcoming election, looking at it from all different angles, and more, including: … Continue reading →
Published: Fri, 09 Oct 2020 14:58:48 +0000
Daily Insights Markets move higher. US equity markets opened in the green following Thursday’s positive session. Renewed stimulus talks, with targeted business-aid hopes, are influencing today’s action. Asian markets were mixed, with China’s stock market higher after their holiday, while … Continue reading →
Published: Thu, 08 Oct 2020 15:59:41 +0000
Economics Blog Stimulus talks in Washington, DC, are getting a lot of attention from investors—and for good reason. The midpoint of the two offers—roughly $1.6 trillion from the White House and $2.2 trillion from US House Democrats—is about 9% of … Continue reading →
Published: Thu, 08 Oct 2020 14:58:15 +0000
Daily Insights Stocks opened higher. Sentiment is getting a lift this morning from speculation that piecemeal stimulus, if not more, may be forthcoming as Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi are slated to talk again today. Markets also … Continue reading →
Published: Wed, 07 Oct 2020 16:59:13 +0000
Market Blog In the recent LPL Market Signals video, LPL Financial Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder discussed recent market volatility, the president contracting COVID-19, and more, including: COVID-19 in the White House The latest on … Continue reading →
Published: Wed, 07 Oct 2020 14:58:10 +0000
Daily Insights S&P 500 opens higher on better stimulus tone. Markets moved to a risk-off stance Tuesday after President Donald Trump halted stimulus negotiations. The S&P 500 Index finished the day down 1.4%, but the broad US index moved higher … Continue reading →
Published: Wed, 07 Oct 2020 14:58:04 +0000
Market Blog Stocks fared well during the third quarter despite September’s weakness, with the S&P 500 Index returning about 9%. The quarterly gain brought the return through the first nine months of the year to 5.6%. Here we peel back … Continue reading →
Published: Tue, 06 Oct 2020 16:01:18 +0000
Market Blog The third quarter was characterized by the carry-over of economic momentum from the second quarter, as states continued to lift restrictions to reopen their economies. Perhaps it was no surprise that some of the hardest hit and most … Continue reading →
Published: Tue, 06 Oct 2020 15:05:32 +0000
Daily Insights S&P 500 opens near flat following Monday rally. The MSCI Asia Pacific Index climbed overnight, although China’s markets were closed for a holiday. Most major European indexes are showing modest gains midday. Federal Reserve Chair Jerome Powell will … Continue reading →
Published: Tue, 06 Oct 2020 14:09:49 +0000
Market Blog Index Performance View expanded table. View expanded table. View expanded table. US and International Equities The S&P 500 Index gave back some gains in September after a strong five-month run, with most sectors finishing in the red. The … Continue reading →
Published: Mon, 05 Oct 2020 15:07:36 +0000
Daily Insights Stocks open solidly higher on President Trump’s improving health. Today the S&P 500 Index will try to start another winning streak coming off its first positive week in the last five. Reports that President Donald Trump may leave … Continue reading →
Published: Mon, 05 Oct 2020 15:01:51 +0000
Market Blog As concern over the upcoming election continues to build, one of the questions we’re getting is whether investors should sell ahead of the election for fear the party they don’t want to win takes over the White House. … Continue reading →
Published: Fri, 02 Oct 2020 20:04:54 +0000
Market Blog Index Performance S&P 500 Index: 1.8% Dow Jones Industrial Average: 1.9% Nasdaq Composite: 1.5% US and International Equities As news concerning President Trump affected Friday’s markets, the S&P 500 Index still managed to end the week higher. Energy has … Continue reading →
Published: Fri, 02 Oct 2020 17:57:59 +0000
Market Blog First and foremost, we wish President Donald Trump and First Lady Melania Trump a swift and full recovery. This October surprise raises the already high level of political uncertainty markets are dealing with as Election Day approaches. As … Continue reading →
Published: Fri, 02 Oct 2020 15:01:51 +0000
Daily Insights President Donald Trump and First Lady Melania Trump test positive for COVID-19. First, we wish the President and the First Lady a swift and full recovery. This October surprise raises the already high level of political uncertainty that … Continue reading →
Published: Thu, 01 Oct 2020 18:08:17 +0000
Economic Blog With the election drawing near, politicians, pundits, and especially voters will be paying even closer attention to the state of the US economy. It’s been a wild ride since the outbreak of COVID-19 around the world, and with … Continue reading →
Published: Thu, 01 Oct 2020 16:23:08 +0000
Market Blog “October: This is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August, and February.” Mark Twain After a historic 60% rally, stocks pulled back … Continue reading →
Published: Thu, 01 Oct 2020 15:00:15 +0000
Daily Insights Stimulus hopes give stocks a lift. Stocks ended a down month with solid gains on Wednesday, the fourth gain in five sessions. Markets are looking to add to those gains this morning to kick off October (and the … Continue reading →
Published: Wed, 30 Sep 2020 17:58:27 +0000
Market Blog In the recent LPL Market Signals video, LPL Financial Chief Market Strategist Ryan Detrick and Equity Strategist Jeff Buchbinder discussed recent equity weakness and why it isn’t a major warning, along with COVID-19 worries and more, including: Recent … Continue reading →
Published: Wed, 30 Sep 2020 16:32:12 +0000
The first presidential debate is now in the books, with two more (maybe) ahead and a vice presidential debate on October 7. The debate was raucus, occasionally uncouth, and more than a little surreal for viewers at home. But did … Continue reading →
Published: Wed, 30 Sep 2020 15:05:55 +0000
Daily Insights Stocks opened higher. US equities reversed earlier losses following a contentious US presidential debate Tuesday night that raised more questions of a potentially contested election. On the flipside, House Speaker Nancy Pelosi noted positive discussions with US Treasury … Continue reading →
Published: Tue, 29 Sep 2020 16:00:03 +0000
Market Blog An old Wall Street adage says bond markets are smarter than equity markets, so when stocks encounter volatility, investors often look to the bond market for clues about the potential severity of equity market weakness. The option-adjusted spread … Continue reading →
Published: Tue, 29 Sep 2020 14:58:36 +0000
Daily Insights S&P 500 Index opens near flat after gains in four out of the last five sessions. US stocks saw broad gains Monday with a cyclical tilt as value stocks, led by energy and financials, kept pace with growth; … Continue reading →
Published: Tue, 29 Sep 2020 13:58:16 +0000
Market Blog The first presidential debate is tonight, September 29, with millions of people expected to tune in to see how each candidate handles the pressure. With tensions heightened amid an election that may be much closer than the polls … Continue reading →
A stock represents a share of ownership in a business. When you hold one or more shares of stock in a company, you actually own a piece of that company. Your percentage of ownership will depend on how many shares you hold in relation to the total number of shares issued by the company. Investors who purchase stock are known as the company's stockholders or shareholders. The price of shares reflects the public's level of interest in owning the shares. If a lot of investors want to buy shares, they bid against one another, driving up the market price of the stock. If interest is low, competing bids are few and far between, and the price of shares is likely to fall. You may hold the stock in the form of a stock certificate, which identifies you as the owner of the stock and the number of shares you own. Alternatively, shares may be held in an account with a brokerage firm.
Your percentage of ownership in a company represents your share of the risks taken and profits generated by the company. If the company does well, your share of the total earnings will be proportionate to how much of the company's stock you own. The flip side, of course, is that your share of any loss will be similarly proportionate to your percentage of ownership, though you are not personally financially responsible for any share of the liabilities of the company in which you hold an equity interest. Beyond that, depending on the company and the types of shares you have, stock ownership may carry other benefits. Specifically, you may be entitled to dividend payments (which you can generally receive either in cash or additional shares), capital gains payouts, voting rights, and other corporate privileges. For example, common stockholders have the right to vote for candidates for the board of directors and on other important issues.
From the standpoint of the company, issuing and selling stock enables it to raise capital needed to expand, conduct research, modernize, pay off creditors, and meet other corporate expenses. When you give a company capital by buying its shares, you acquire equity in that company. Just as your equity in a home represents the portion that you actually own relative to the amount you owe on the mortgage, equity in a company represents your ownership stake. That's why stocks are sometimes referred to as equities.
Many investors never venture beyond the world of cash alternatives--bank accounts, CDs, money market accounts, and Treasury bills. They take comfort in knowing that these investment vehicles provide relative safety coupled with liquidity that allows them to access their money easily if they need it. However, while these investments are relatively low risk, they generally yield minimal returns; some may not even keep pace with inflation. At some point, most investors want the potential for greater returns, which is where stocks enter the picture. A variety of factors motivate people to invest in stocks. Many view equity investments as an opportunity to accumulate wealth or to prevent inflation from eventually reducing the purchasing power of their money. They generally take a long-term view, hoping their stocks will appreciate in value over time. They may also be interested in the dividends that some stocks pay, which shareholders may accept in cash or (in some cases) reinvest in additional shares of the company. Dividends and any increases or drops in the stock's price combine to produce the stock's total return. Investors with a gambler mentality may be attracted by the thrill of playing the market. They may trade actively, sometimes buying and selling the same issue within a few days or a few hours. These day traders try to take advantage of small, intra-day price movements in volatile stocks or indexes.
Investors who purchase stock hope to make money in one of two ways--through dividend payments and/or capital gains.
Some investors buy stocks because they seek regular income from dividends. Dividends represent distributions of corporate earnings to shareholders. The company's board of directors decides whether to distribute a dividend to shareholders; payment of a dividend is by no means mandatory. Dividends, if distributed, are usually paid out to investors in cash. However, a company may also pay dividends in the form of additional stock, known as stock dividends, or in property (this is rare). Some companies allow investors to buy stock through an automatic dividend reinvestment plan. A brokerage commission may or may not apply. Qualifying dividends received by an individual shareholder from domestic corporations (and qualified foreign corporations) are taxed at long-term capital gains tax rates, making dividends more attractive to many investors. As of January 1, 2013, those rates range from 0% for individuals in the 10% and 15% marginal income tax brackets to 20% for individuals in the highest marginal tax bracket of 39.6%. In addition, a 3.8% Medicare contribution tax applies to the investment income (including qualified dividends) of individuals with income that exceeds $200,000 ($250,000 for married couples filing jointly). Not all stock dividends qualify for capital gains tax treatment. Dividends that are ineligible will be taxed at ordinary income tax rates. These include:
Further, dividends paid on hybrid preferred stock (i.e., stock that is reported as debt) are also ineligible for capital gains tax treatment.
Capital gains represent increases in stock prices. Investors looking for capital gains hope to buy a company's stock at a low price and sell it when the price has risen. Stock prices can increase for many reasons, including company profitability, a good economic environment, or rumors of a takeover. Conversely, stock prices may decline for many reasons, including poor earnings reports, poor management, lawsuits, faulty or out-of-date products, competition, bad publicity, or an overall poor economy. Prices also can be affected simply by the investment community's view of the stock market as a whole. Capital gains from selling stock result in taxable income; however, such gains, if long term, will generally be taxed at a lower rate than ordinary income tax rates, as was discussed above in connection with dividends. Also, in any given year, any capital loss you sustain can be used at tax time to offset capital gains. Finally, if unused capital losses remain, they can be used to offset up to $3,000 ($1,500 if married filing separately) of ordinary income for that year or can be carried forward to future years. Caution: Capital losses cannot be used to offset dividend income taxed at long-term capital gains rates.
The decision to invest in stocks is a personal one that should depend on your individual situation. Before taking this step, and before selecting specific types of stocks to add to your portfolio, there are some issues you should take into account.
One of the main factors to consider before buying stock is your attitude toward risk. How much financial risk, if any, are you willing to accept? If the thought of even a small amount of risk makes you anxious, you probably would be considered risk averse, in which case stocks might not be an appropriate investment for you. If you can handle some risk, you still need to tailor the stock portion of your portfolio to your particular level of risk tolerance. Though past performance is no guarantee of future results, stocks as a whole have historically offered relatively high potential reward over the long term compared to most other types of investments. As a result, stocks generally have a higher level of risk compared to other investments. You can lose a portion of your investment in stocks--or even your entire investment. Among the factors that affect the level of risk you face with stocks are:
Different kinds of stocks carry different degrees and types of risk and are therefore suited to different types of investors. For example, if you are fairly conservative and prefer minimal risk, you might think about stable, relatively safe blue-chip stocks. If you are very aggressive, however, you may want to consider riskier investments like aggressive growth and microcap stocks. Although an investor can screen for potential risks before making an investment, it is virtually impossible to plan for every conceivable contingency that could affect a business. For this reason, stock investors must be prepared for some degree of risk.
How much of a profit do you hope to make on your stock investments? If you seek the potential for better returns than cash alternatives and most fixed-income securities such as bonds or notes can offer, and you don't want the management responsibility of real estate or partnerships, you should probably at least investigate investing in stocks. Their potential for higher returns than many other investments means that stocks as a whole have a better chance at staying ahead of inflation, thus preserving your money's purchasing power over the long term. If you are certain that you want to pursue the highest returns possible, the stocks that you should consider are very different from those suitable for an investor who would be happy with modest returns. Of course, you should always weigh your desired return against the amount of risk you are willing to assume, because the potential for higher returns also means greater potential for loss. It can be challenging to strike the right balance.
First and foremost, your finances will determine whether you are in a position to invest in stocks and, if so, what types of stocks are appropriate for you. If even a small loss would have a meaningful impact on your finances, stocks may not be a viable option for you. If you have relatively limited resources, the types of stocks you choose and the amounts you invest will probably differ from those of an investor with substantial assets. Also, make sure you consider your finances in relation to your income and other personal circumstances. For example, if you have $200,000 available to invest but also have a child who will be attending college within a couple of years, the choices you make about stocks probably won't be the same as those of someone who has the same amount of investable assets but no significant near-term financial obligations.
Stocks are typically a long-term investment. The reason is that stocks can be volatile. If you're counting on a stock's price going up, it may take several years of ups and downs to reach your desired selling point--if indeed it ever does. But there is another reason. The sale of stock held for one year or less results in short-term capital gain or loss, and short-term capital gains are taxed at ordinary income tax rates. By comparison, the sale of stock held more than one year results in long-term capital gains, and long-term capital gains generally are taxed at lower rates than ordinary income. For example, if you are in the 28 percent tax bracket for ordinary income, your long-term capital gains are generally taxed at 15 percent.
Your investment choices will naturally be affected by the various factors discussed previously: your attitude toward risk, your desired return, and your financial and personal circumstances. Other factors may come into play as well, but these are the most common ones. Based on these very important considerations, you and your financial professional will be able to choose investments that match your situation. Different stocks may have very different strengths and weaknesses in terms of how they attempt to achieve a return. For example, you may want short-term gains, long-term capital appreciation (growth in value), steady income, or some combination.
No one, not even the most esteemed expert, can forecast with any certainty what the stock market will do from day to day or from year to year. It's not for a lack of trying, however. It seems there are always a number of conflicting theories floating around that attempt to predict or explain the market. You may have your own theories as to how the market works or will perform in the future. If so, such beliefs will likely influence your decisions about which stocks to invest in or whether to invest in stocks at all. In addition, your research into specific companies may guide you toward certain stocks and steer you away from others.
As you probably know, hundreds of millions of shares of stock trade daily on the stock market. The stock market is a general term referring to the organized trading of stocks and other securities through various exchanges, including the over-the-counter market. Stocks are generally bought through intermediaries, known as securities brokers and dealers. Investors can also purchase a group of stocks indirectly by owning shares of a mutual fund or an exchange-traded fund (ETF).
Most stocks are traded on various stock exchanges. Two major U.S. exchanges are the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX). The Nasdaq is an equally important U.S. exchange, although there is no trading floor—the stocks are bought and sold over a broker-dealer computer network. In most cases, when you buy or sell stock, you go through a broker rather than deal directly with the issuer of the stock. This is true for most transactions, including initial public offerings (IPOs) and secondary offerings. In exchange for brokerage services, you ordinarily have to pay your broker (including discount brokers) a commission based on the dollar value of a particular transaction or the number of shares purchased. Many brokerage firms also offer so-called wrap fee programs, which are all-inclusive accounts whose fee structure includes commissions and investment advisory services.
In addition to the major exchanges, you can buy and sell stocks on the over-the-counter (OTC) market. Stocks that trade on the OTC market are generally those of smaller companies that don't trade on the NYSE and the AMEX because they don't meet the listing requirements of those exchanges. In recent years, however, many companies that qualify for listing have chosen to remain with OTC trading because they prefer this system to the centralized approach of the major exchanges.
An IPO occurs when a corporation decides to go public by offering shares of its stock to the general public for the very first time. Only the first issue of stock made available to the public is considered an IPO; subsequent issues by a public corporation are called public secondary offerings.
There are several ways that investors can evaluate the financial health of a company, as well as its prospects for the future. These methods may include an examination of factors specific to the individual company, or they may pertain to the industry as a whole.
The stock market is enormous; there are many different types of stocks from which you can choose. This should come as no surprise, given the number of companies worldwide that sell stock to the public. The types of stocks that you ultimately pick should depend on your individual circumstances. In narrowing the field to appropriate stocks for your portfolio, your financial professional can be immensely helpful. Very broadly speaking, stocks can be divided into two general categories--common stock and preferred stock. In many cases, a single company will make both kinds of stock available to investors. Each has its own particular strengths and weaknesses. Stocks can be further broken down into voting stock and nonvoting stock. Beyond that, there are stocks for investors of all types. For the more conservative investor who wants to keep risk to a minimum, there are blue chip stocks and conservative, income-oriented stocks. For the very aggressive investor who sits at the other end of the spectrum and is more interested in the potential for greater returns, there are aggressive growth stocks, microcap stocks, and emerging market stocks, among others. If you fall somewhere in between these two extremes, you may find a fit with midcap stocks, value stocks, and growth stocks. If you closely follow current economic conditions, cyclical stocks may be an appropriate option, just as international stocks may be a good match for an investor who stays attuned to foreign markets and is willing to accept the added risks of foreign investing.
There are several strategies you can adopt to get the most out of your stock investments. These range from very basic strategies appropriate for a novice, to more complex strategies that a sophisticated investor might be inclined to use. Some of the most common strategies available to you include buy low/sell high, buy and hold, and dollar cost averaging.
Contact a VyStar Investment Services Financial Advisor today by phone (904) 908-2495 or email VISMarketing@vystarcu.org.
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