Published: Fri, 24 Sep 2021 20:06:23 +0000
Market Blog Friday, September 24, 2021 Index Performance View enlarged chart. U.S. and International Equities Major U.S. Markets Finished higher while International Markets Selloff The major markets finished the week higher, with the Dow Jones Industrials leading the averages. Moreover, … Continue reading →
Published: Fri, 24 Sep 2021 15:58:04 +0000
Economic Blog Friday, September 24, 2021 On Thursday, September 23, the Conference Board released its August 2021 report detailing the latest reading for the Leading Economic Index (LEI), a composite of ten data series that tend to lead changes … Continue reading →
Published: Thu, 23 Sep 2021 15:58:34 +0000
Economic Blog Thursday, September 23, 2021 The Federal Reserve (Fed) ended its two-day Federal Open Market Committee (FOMC) meeting yesterday and, as expected, there were no changes to current interest rate or bond purchasing policies. However, the Fed continues to … Continue reading →
Published: Wed, 22 Sep 2021 16:25:30 +0000
Market Blog Wednesday, September 22, 2021 Few had even heard of distressed Chinese property development giant Evergrande a week ago and now it’s the biggest headline for markets. This week in the latest LPL Market Signals podcast, Ryan Detrick and … Continue reading →
Published: Tue, 21 Sep 2021 15:58:52 +0000
Market Blog Tuesday, September 21, 2021 Well that was fun while it lasted. Yesterday, the S&P 500 closed below its 50-day moving average for the second consecutive day, breaking a streak that had held for the duration of 2021 and … Continue reading →
Published: Fri, 17 Sep 2021 20:02:16 +0000
Market Blog Friday, September 17, 2021 Index Performance View enlarged chart. U.S. and International Equities Major Markets Finish Lower Amid Delta and Earnings Growth Concerns The major markets finished lower for a second straight week. Friday’s quadruple witching where individual … Continue reading →
Published: Fri, 17 Sep 2021 15:58:13 +0000
Market Blog Friday, September 17, 2021 Chinese property developer Evergrande’s liquidity crisis has sparked fear and massive selling in Chinese property stocks over the past several weeks. The big question is could this be the first domino to fall, sparking … Continue reading →
Published: Thu, 16 Sep 2021 15:58:05 +0000
Economic Blog Thursday, September 16, 2021 U.S. consumers shocked economists in August with their willingness to spend in the face of recent jitters over the economic outlook. This morning, the U.S. Census Bureau released August retail sales data showing overall … Continue reading →
Published: Wed, 15 Sep 2021 15:58:22 +0000
Market Blog Wednesday, September 15, 2021 With summer (un)officially over, investment-grade corporate bond sales are ramping up again. Despite a four-day week last week, thirty-eight investment-grade companies sold $60.5 billion in the first two sessions, breaking a record for the … Continue reading →
Published: Tue, 14 Sep 2021 17:41:57 +0000
Economic Blog Tuesday, September 14, 2021 After a crazy summer of nosebleed inflation readings, we may finally be starting to see signs of transitory inflation. The Bureau of Labor Statistics released the August Consumer Price Index (CPI) data this morning, … Continue reading →
Published: Fri, 10 Sep 2021 19:59:12 +0000
Market Blog Friday, September 10, 2021 Index Performance U.S. and International Equities Major Indices Show Modest Weekly Declines as Delta Worries Mount All major markets finished lower as the investor concerns over the Delta variant, Federal Reserve (Fed) tapering, … Continue reading →
Published: Fri, 10 Sep 2021 15:58:02 +0000
Market Blog Friday, September 10, 2021 Fun Fact Friday: The Dow Jones Transportation Average is actually the oldest US stock market index in existence, even older than the more-popular Dow Jones Industrial Average. Charles Dow developed the index, originally called … Continue reading →
Published: Thu, 09 Sep 2021 16:16:03 +0000
Economic Blog Thursday, September 9, 2021 According to LPL Research’s analysis of the Federal Reserve’s (Fed) recently released Beige Book, business sentiment on Main Street has declined in recent months as the economy navigates the latest wave of COVID-19, but … Continue reading →
Published: Wed, 08 Sep 2021 15:58:03 +0000
Market Blog Wednesday, September 8, 2021 This week in the latest LPL Market Signals podcast, Ryan Detrick and Lawrence Gillum discussed global central bank policy, recently weakening economic data, and where stocks and bonds could go the remainder of this … Continue reading →
Published: Tue, 07 Sep 2021 15:58:58 +0000
Market Blog Tuesday, September 7, 2021 The Covid-19 pandemic was an unprecedented shock to a large majority of global economies. But the economic damage was met with an extraordinary global monetary response with the Federal Reserve (Fed), European Central Bank … Continue reading →
Published: Fri, 03 Sep 2021 18:19:55 +0000
Market Blog Friday, September 3, 2021 Index Performance (as of 12:50 PM ET) View enlarged chart. U.S. and International Equities Emerging Markets Rebound The major markets finished mostly higher building on last week’s gains. Emerging markets, as represented by the … Continue reading →
Published: Fri, 03 Sep 2021 15:58:53 +0000
Economic Blog Friday, September 3, 2021 It seems to be two steps forward, one step back for the U.S. labor market. The U.S. Bureau of Labor Statistics released its August employment report this morning, revealing that the domestic economy added … Continue reading →
Published: Thu, 02 Sep 2021 15:58:30 +0000
Market Blog Thursday, September 2, 2021 The Institute for Supply Management’s reading on U.S. manufacturing surprisingly accelerated in August, coming in at 59.9 versus July’s 59.5 and economists’ consensus expectation of 58.5. The solid reading does show the resiliency of … Continue reading →
Published: Wed, 01 Sep 2021 19:00:08 +0000
Market Blog Wednesday, September 1, 2021 Index Performance View enlarged chart. U.S. and International Equities All of the U.S. major market indexes finished August higher despite concerns about the COVID-19 Delta variant, with the S&P 500 Index making it seven … Continue reading →
Published: Wed, 01 Sep 2021 15:58:37 +0000
Market Blog Wednesday, September 1, 2021 Financial headlines continue to warn of the potential for broader financial stresses as usage of some short-term lending programs have surged to record levels recently. The size of the moves has some analysts warning … Continue reading →
Published: Tue, 31 Aug 2021 15:58:00 +0000
Market Blog Tuesday, August 31, 2021 The incredible bull market continues, with the S&P 500 Index up to a record 53 new all-time highs before August is over, topping the previous record from 1964. View enlarged chart. “Although this bull … Continue reading →
Published: Fri, 27 Aug 2021 20:05:10 +0000
Market Blog Friday, August 27, 2021 Index Performance View enlarged chart. U.S. and International Equities Major Markets Rebound The major markets finished higher after last week’s selloff, as an already strong week was capped off with a broad-based rally on … Continue reading →
Published: Fri, 27 Aug 2021 16:00:39 +0000
Economic Blog Friday, August 27, 2021 How is the recent increase in COVID-19 cases in the United States linked to the spread of the Delta variant affecting the U.S. consumer’s behavior? We look at some consumer confidence focused high-frequency data … Continue reading →
Published: Thu, 26 Aug 2021 16:00:28 +0000
Market Blog Thursday, August 26, 2021 Phones certainly aren’t just for making calls anymore, but how many see the power in the palm of their hand as an enduring weapon in the battle against inflation? Through our phones and devices, … Continue reading →
Published: Wed, 25 Aug 2021 16:00:12 +0000
Market Blog Wednesday, August 25, 2021 The S&P 500 Index made yet another new all-time high yesterday, the 50th on the year. “The all-time record for any one year is 77 S&P 500 new all-time highs back in 1995,” explained … Continue reading →
Published: Tue, 24 Aug 2021 16:00:50 +0000
Market Blog Tuesday, August 24, 2021 Since 1978, the Federal Reserve Bank of Kansas City has played host to central bankers, policymakers, academics and economists from around the world at its annual economic policy symposium in Jackson Hole, Wyoming, which … Continue reading →
Published: Fri, 20 Aug 2021 20:22:25 +0000
Market Blog Friday, August 20, 2021 Index Performance View enlarged chart. U.S. and International Equities Major Markets Pullback The major markets this week finished lower as value sectors reversed course from last week’s gains. The strength in cyclicals the prior … Continue reading →
Published: Fri, 20 Aug 2021 16:00:57 +0000
Economic Blog Friday, August 20, 2021 With increased concerns about the Delta variant, high inflation, and recent misses on economic data, it can be easy to forget that we’re still in the middle of a robust economic recovery and leading … Continue reading →
Published: Thu, 19 Aug 2021 16:58:18 +0000
Market Blog Thursday, August 19, 2021 In this week’s LPL Market Signals podcast the strategists discussed the latest increase in cases of COVID-19 from the Delta variant. The uptick has their attention economically, although inventory replenishment and pent-up consumer demand … Continue reading →
Published: Thu, 19 Aug 2021 15:58:48 +0000
Economic Blog Thursday, August 19, 2021 Much has been written on the prospects for sustained inflation over the next few years. While some are calling for inflation to be a problem, we are firmly outside that camp. We believe there … Continue reading →
Published: Wed, 18 Aug 2021 15:58:12 +0000
Economic Blog Thursday, August 18, 2021 Retail sales fell 1.1% in July as consumer spending likely experienced some drag from the spread of the Delta variant late in the month. The drop was larger than Bloomberg’s consensus forecast of a … Continue reading →
Published: Tue, 17 Aug 2021 15:58:40 +0000
Market Blog Tuesday, August 17, 2021 As mentioned in the most recent Muni Market Monitor, high yield muni funds have accumulated $24 million of net inflows year to date, representing ~20% of total inflows to the total municipal category. With … Continue reading →
Published: Fri, 13 Aug 2021 20:02:37 +0000
Market Blog Friday, August 13, 2021 Index Performance View enlarged chart. U.S. and International Equities Major Markets Mostly Higher The major markets this week finished mostly higher as value sectors materials, industrials, and financials led the S&P 500 Index to … Continue reading →
Published: Thu, 12 Aug 2021 19:58:47 +0000
Market Blog Thursday, August 12, 2021 “Friday the 13th is still better than Monday the whatever.” No known person to cite, but LPL Research can’t disagree. Tomorrow, August 13, will be the first Friday the 13th since November 2020. For … Continue reading →
Published: Thu, 12 Aug 2021 16:58:21 +0000
Economic Blog Thursday, August 12, 2021 The term stagflation has been increasingly circulating in the financial media as inflation readings have risen sharply in recent months. The term is often associated with the 1970s which saw runaway inflation—largely driven by … Continue reading →
Published: Thu, 12 Aug 2021 15:58:51 +0000
Market Blog Thursday, August 12, 2021 Why Are Yields So Low? This week in the LPL Market Signals podcast, Ryan Detrick is joined by Marc Zabicki and Lawrence Gillum, where the team discusses one of the big questions lately: how … Continue reading →
Published: Wed, 11 Aug 2021 15:58:20 +0000
Economic Blog Wednesday, August 11, 2021 The U.S. Bureau of Labor Statistics released its July inflation report showing that the headline Consumer Price Index (CPI) rose 0.5% month-over-month and 5.4% year-over-year. The core CPI, which strips out the volatile food … Continue reading →
Published: Tue, 10 Aug 2021 15:58:11 +0000
Market Blog Tuesday, August 10, 2021 The Chairperson of the Federal Reserve (Fed) is appointed by the President of the United States and serves a four-year term. The current Chairperson, Jerome Powell, has held that position since 2018 so his … Continue reading →
Published: Fri, 06 Aug 2021 20:01:39 +0000
Market Blog Friday, August 6, 2021 Index Performance View enlarged chart. U.S. and International Equities Markets Finish Marginally Higher The major markets reversed course from last week, finishing the week higher. Overseas markets produced gains, as emerging market equities (MSCI … Continue reading →
Published: Fri, 06 Aug 2021 15:58:20 +0000
Economic Blog Friday, August 6, 2021 Investors finally got the strong pop in payrolls many have been calling for, breaking from the string of recent lukewarm jobs reports and weakening data from other segments of the economy that have been … 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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