Traditions Wealth Advisors
Christian Roberts/Financial Research Intern
August 17, 2017
North Korea’s sabre rattling is causing political and economic concern across the world. The DJIA is down .59% and the S&P 500 is down .93%, and a lot of that is a result of North Korea threatening to attack Guam and Trump’s threats to the isolated dictatorship. The fear is apparent in the stock market, but that fear is probably causing a temporary decline in the market.
The 7-year old poster above my desk in the office reads at the top “Which will you believe: today’s news or 85 years of performance?” The accompanying chart shows how the stock market has always appreciated in value, even in the wake of recessions from 1926 to 2010.
The impact of geopolitics on the market are almost impossible to predict. Every situation has different market conditions, but one constant thing connects them, and that is the recovery of the markets. The markets will recover, but the economic conditions dictate how long it takes for that to happen.
Figure 1, generated from data by Crossing Wall Street, shows how the S&P 500 has responded to significant historical events ranging from market crashes to war, with different reactions for each. Most of these events triggered a sell-off in the markets, which is to be expected with any shock, but what differed dramatically was their recovery.
Shocks to the market, especially when they are geopolitical, do not tend to last very long. The 9/11 attacks took less than two months to return to September 10 levels. JFK’s assassination was not the biggest issue in the market on the day that it occurred, either. The Cuban Missile crisis caused the market to fall only 1% for the week, and it quickly shot up 3.5% when tensions calmed. While these events certainly hurt the market, their impact is usually not as bad as the fear makes it out to be.
The 1973 oil embargo/Nixon resignation, the Cole bombing/September 11 attacks, and Bear Stearns/Lehman Brothers are important outliers to talk about. The United States was in the midst of a recession in 1973 that was caused by the collapse of the Bretton Woods monetary system and 1973 oil embargo. Stagflation (high inflation and unemployment) made the economy even worse, and Nixon’s resignation triggered a sell-off in the market. His resignation came at the tail end of the recession, and less than a year later the economy was recovering.
The inclusion of 9/11 on this list appears contradictory to what I said earlier, but I mentioned these two events because the economy had declined at the 250-day mark after these events happened. That’s because the economy was in a recession after the Dot-com bubble collapse, and the recession occurred before, during, and after these two events. Their 20-day recovery is encouraging, and their 250-day decline should not be discouraging because it was the result of other events not related to the terror attacks.
The Bear Stearns/Lehman Brothers collapse was a during a sharp decline and sharp recovery period for the economy, and both have negative 250 day returns because they occurred at the beginning of the financial crisis.
These three situations show that the events that took place during these times were not the cause of poor recovery. The poor recovery is the result of other factors. The Dot-com and housing bubbles were disastrous in the 2000s, and any embargo is going to cause economic headaches, but the notable historical events that happened had little impact on the market.
So, what does this mean for the current North Korean situation? The fear of any attack is going to cause more of an impact on the market. In this day and age, we have access to more press and news, so the rhetoric from both sides is seen by everyone. Despite the fear, the chances of a nuclear war with North Korea appear to be very low. An attack on Guam would be suicidal for the regime, and the empty threats can leverage aid for the starving country. There does not seem to be any substance to the fear that the situation is causing. In fact, the Dow’s fall has had more to do with Disney’s disappointing earnings report than North Korea. That’s right, Mickey Mouse is hurting the Dow more than Kim Jong-Un.
The Cuban Missile Crisis saw 3.5% returns in one week in the wake of the crisis, and the market could react similarly in this case. Warren Buffet took advantage of this in 1963 when the vegetable oil scandal and JFK assassination caused American Express stock to sink, which prompted him to buy 5% of the company for $20 million. That same 5% is now worth almost $1 billion. Bonds can also yield returns. Investors tend to flock towards safe investments like Treasury Bonds and Gold. Gold is approaching its highest price for the year, and Treasury Bonds were up as well. These are safe havens that investors flock to in times of uncertainty, but money could rush out of them once the panic subsides.
Which will you believe: today’s news or 92 years of performance?
Sleep Like a Superstar
Have you ever wondered how successful people get it all done? Apparently, they don’t stint on their sleep in order to find extra hours in the day. But they do seem to get up earlier than the rest of us, giving some credence to Ben Franklin’s saying: Early to bed and early to rise makes a man healthy, wealthy and wise.
Forbes magazine looked at the sleep habits of 21 people that most of us would consider successful—including Franklin himself, who routinely went to bed at 10:00 PM and awoke promptly at 5:00 AM. The word “routinely” is important; virtually everyone on the list was consistent about bedtime and awakening time. Some sleep seven hours like Franklin, including Winston Churchill (3:00 AM to 8:00 AM), Bill Gates (midnight to 7:00 AM), Apple CEO Tim Cook (9:30 PM to 4:30 AM), Huffington Post founder Arianna Huffington (10:00 PM to 5:00 AM), Twitter co-founder Jack Dorsey (10:30 PM to 5:30 AM), and Amazon.com founder Jeff Bezos (10:00 PM to 5:00 AM).
People who sleep six hours a night include U.S. President Barack Obama (1:00 AM to 7:00 AM), Yahoo! President Marissa Mayer (midnight to 6:00 AM, but sometimes up by 4:00 AM), AOL CEO Tim Armstrong (11:00 PM to 5:00 AM), Newton Investment Management CEO Helena Morrissey (11:00 PM to 5:00 AM), and Tesla Motors CEO Elon Musk (1:00 AM to 7:00 AM).
Others sleep or slept only five hours, among them Richard Branson (midnight to 5:00 AM), PepsiCo CEO Indra Nooyi (11:00 PM to 4:00 AM), and inventor Thomas Edison (11:00 PM to 4:00 AM).
If you sleep eight hours a night, you’re still in good company. That list includes Virgin Money CEO Jayne-Anne Gadhia (10:30 PM to 6:30 AM), MediaCom UK CEO Karen Blacklett (11:30 PM to 7:30 AM), software-as-a-service company Mor founder Rand Fishkin (1:00 AM to 9:00 AM), digital networking guru Neil Patel (11:00 PM to 7:00 AM); Ellen DeGeneres (11:00 PM to 7:00 AM) and Buffer Software co-founder Leo Widrich (1:00 AM to 9:00 AM).
With a handful of exceptions, few of these successful people are staying up late to catch the Late Show, Saturday Night Live or the end of the NFL Monday Night Football game on the East Coast. And few are sleeping past the delivery of the morning paper—which means they’re getting a jump on the rest of the world.
9 Simple Ways to Slash Your Grocery Bill
Dec 4, 2015 / By Kristin Colella
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TheStreet: A reminder on such things as shop with a list, don’t shop hungry, take advantage of coupons, buy in season, and five more shopping disciplines that will save you money.
Do you feel like those weekly grocery store visits are sucking your wallet dry? If you’re like many Americans, you might be overspending every time you go to the checkout counter. While it’s important to enjoy fresh, healthy meals each week, you’re probably loading up your cart with a lot of things you really don’t need, or overpaying on items you could have gotten for a cheaper price.
Thankfully, there are simple ways to slash your next grocery bill—all it takes is some planning and self-discipline. Here are nine ideas to get you started.
1. Check your pantry and fridge firstHave you ever purchased a new jar of mayo or bag of pretzels at the grocery store, only to return home and discover that you already bought the item on a previous shopping trip? To avoid purchasing duplicate items that may be hiding in your kitchen, be sure to check your pantry, fridge, and freezer before doing your grocery shopping each week. (Tip: It’s easier to keep track of what you have by keeping these areas neat and organized.)
Taking inventory of the food that’s already in your home can also help spark meal ideas for the coming week and eliminate the need to load up your fridge with too many extra items.
“Use the groceries you already have as a basis for a few meals and you’ll spend less at the grocery store by default,” says Holly Johnson, contributing editor and frugality expert at The Simple Dollar. “You don’t have to buy what you don’t need. And sometimes, knowing what you have already is half the battle.”
If you’re looking for meal ideas, the website www.Supercook.com allows you to type in ingredients you already have in your kitchen, then suggests recipes that you can whip up with those items.
2. Shop with a listIt’s a common story: You walk into a grocery store intending to only buy a few items, then wind up leaving with a cartload of food. Splurging on impulse purchases can really add up, so it’s a good idea to exercise some discipline when you shop. One way to help you stay focused is by jotting down the food you need to buy before leaving your house.
“Make a list and stick to it—don’t be tempted by in-store marketing,” says Julie Ritten, founder of Ritten Financial in Southfield, Mich. “They will try to entice you to buy something you really don’t need or want; it just looks good for that moment.”
3. Don’t shop hungryWhen your stomach is growling, surrounding yourself with aisles upon aisles of tasty food is a recipe for disaster.
“Don’t shop hungry—go shopping after you eat,” says Ritten. “Not only will you not be tempted to buy twice as much food, you’ll burn your meal off by walking and not plopping yourself down on the couch.”
4. Buy local and seasonal foods“One of the best ways to save money at the supermarket is to buy in-season produce and local items that have fewer production costs involved, which means less expense passed onto you,” says Allison Stowell, registered dietitian for Guiding Stars. “Not only is this practice good for your wallet, it supports your local economy and is great for the environment too.”
For a list of which produce is currently in-season, check out this guide on theUSDA website.
5. Don’t snub store brandsWhile some shoppers might immediately write off store brands as being inferior to the national brands, this isn’t always the case. From crackers to ketchup to ice cream, some store brand items taste just as good as the big brands (if not better) and often come with a cheaper price tag.
Part of the reason national brands typically cost more than store brands is simply because “national brands have to build in advertising or promotional costs to the final price,” says Andrew K. Johnson, communications manager for GreenPath Debt Solutions. “A store brand may have the exact same ingredients as a national brand—it’s all up to the consumer to try store versus national and see which passes the test in the kitchen and at the dining room table.”
6. Check the weekly circularYou can save big by checking out your grocery store’s weekly circular, which will tell you which items are on sale. One caveat: “Don’t be tempted by seeing great deals and buying what you don’t really need,” says Andrew K. Johnson.
If you don’t feel like flipping through printed circulars, the free location-based app Flipp allows you to browse hundreds of local weekly circulars right from your smartphone. You can also easily search for a specific item, brand, or store.
7. Use your phone for coupons and cash backIt’s a no-brainer that coupons can help you get many of the products you need for a whole lot less, but if coupon clipping sounds tedious and old-fashioned, you can use your smartphone to access great coupons on your favorite products.
Some coupon apps to try include Coupon Sherpa and Coupons.com. You might also want to consider downloading an app that allows you to earn cash back on your grocery purchases, such as Ibotta, Checkout 51, and SavingStar.
8. Cut, shred, and wash at homeWhen your schedule gets hectic, you might be tempted to buy bagged lettuce, precut fruits and veggies, and shredded cheese out of sheer convenience. The truth is, though, that these prepared items often come at a higher cost, and going the do-it-yourself route really won’t take you that much longer.
“It only takes a few extra minutes to rinse lettuce and tear it by hand or to shred a block of cheese,” says Kevin Gallegos, vice president of sales and Phoenix operations for Freedom Financial Network. “Skip the more expensive, single-serving packages and instead buy the bigger size and dole out smaller portions into sandwich bags or smaller reusable containers.”
9. Join your store’s rewards programGrocery store rewards programs are a great way to pay less at the register by offering you discounts, special deals, and coupons. Some rewards cards even offer you discounts on gas, such as Safeway’s Club Card. For every $100 you spend on groceries at Safeway, you’ll get a 10-cents-per-gallon reward if you fill up at a Safeway gas station or participating Chevron or Texaco station.
For more in-depth analysis and commentary, please check out RealMoney.com, TheStreet.com's subscription site.
Kristin Colella joined MainStreet in September 2011. She previously worked as associate editor for fashion, health, and lifestyle areas for Wainscot Media
by Matt Oechsl
Many so-called experts are giving their 2016 predictions. Brace yourself for volatility – be prepared for a downturn – and so on – all focused on the short-term. However two financial gurus, Larry Fink and Warren Buffett, are long-term thinkers (read the interview with BlackRock CEO Larry Fink in HBR November 2015). Fink is “on a crusade against short-term thinking” which he refers to as short-termism.
Kudos to Mr. Fink for providing HBR with an extremely insightful interview; which was the inspiration for this article. Using hockey great Wayne Gretzky’s alleged response when asked what made him great, “I skate to where the puck is going to be.” Not that we should put our heads in the sand regarding the short-term, but financial advisors would be well served by paying more attention to where the “financial advisory puck” is going to be long-term, or at least three to five years from now.
I’m not pretending to have a crystal ball, but we have a decade of research on affluent consumers and elite financial advisors. After thoroughly reviewing our findings, studying the trends, confusing myself - ha, and then finally breaking through to the fresh air of simplicity, I’ve broken this long-term approach into the three components, to borrow a geometric shape; vertices of an equilateral triangle.
I could add a fourth, embracing excellence – but excellence is a constant running through all three vertices.
With the Holidays just around the corner both the articles below will keep you and your wallet safe.
Becoming a victim of identity theft or having your credit card number stolen is happening to more people, more frequently. Just recently, a Russian crime ring has amassed the largest collection of stolen internet log-ins and passwords, researchers say close to 1.2 billion. Among this they also managed to steal more than 500 million email addresses. The experts say that thieves are mainly using this information to steal user’s identities. Since most people keep the same login information for multiple websites, it is quite easy for them to get into the more important websites where the most valuable information about you can be learned. The best way to combat this is to never use the same login id and password for multiple websites. Besides the financial loss, is the time loss due to trying to solve the problem and the anxiety that it can produce. A core part of our financial plan here at Traditions Wealth Advisors is addressing identity theft issues and credit protection with all of our clients. The simplest and smallest steps can be your greatest aid in prevention of these problems. A key step is monitoring your reports from the credit bureaus, ideally every three to four months. You should look for credit companies with whom you have never had an account with, a credit balance that you know is incorrect, and past addresses that you never lived at. If you will have no need for new credit in the near future, another step is to go ahead and freeze your credit limits. This keeps credit companies from sharing your credit file with third parties. If you find out you do need credit, this can be undone quite easily. Our job at Traditions Wealth Advisors is to keep your financial information secure by reinforcing prevention techniques. We are currently working towards a paperless office. We take the time to shred any personal documents in our own office and we work hard to keep all personal client information private. The paper personal files and information are kept locked and secure at all times. We also keep as much of your personal information out of the “cloud” and instead keep it on our internal office server. All of these things can help us and you prevent credit card fraud and keep your identity secure.
Keeping your personal information safe and secure is a top priority at Traditions Wealth Advisors. We take great care in making sure your information doesn't get into the wrong hands. With the increasing amount of cyber fraud attacks, we wanted to inform you about ways to protect yourself and also share with you the most common tactics that criminals use. The following are six things that you can do to increase personal security and protect against cyber fraud.
1. Manage Your Devices. Make sure to install the most up-to-date antivirus and anti-spyware programs on all your electronic devices and set them up to run regularly. It is also important to only access sensitive data on a secured network and to never access confidential personal data via a public computer or on a shared network, like at a café or hotel.
2. Protect All Passwords. It is important that you reset personal passwords regularly and never use any type of personal information as part of a password. Do not store passwords on a sticky note in your desk or as a word document on your computer; if necessary use a password manager program.
3. Surf the Web Safely. Do not connect to the internet on an unknown wireless network, they may lack virus protection and easily allow hackers into your computer.
4. Protect Information on Social Networks. Limit the amount of personal information that you share on social networking sites. Keep home addresses, telephone numbers, and birth dates off the web. Never underestimate the public sources that criminals will use to gain critical knowledge about you and your family.
5. Protect Your Email Accounts. Make sure to delete emails that have any detailed financial information once it is no longer needed. Review unsolicited emails carefully and do not click links or pop-up ads for programs and emails you do not recognize. Also, it is smart to establish separate email accounts for personal and financial transactions.
6. Safeguard Your Financial Accounts. Constantly review and check your credit card and financial statements, if transactions look suspicious immediately contact that financial institution directly. Do not send account information over email, chat, or any other secure channel. Do not develop online patterns of money movement, because it makes it easier for criminals to make illegal wire transfers seem more legitimate.
Cyber fraud criminals use several common tactics to gain access into your personal information. Be suspicious of unknown emails, criminals use malware software in these emails to be able to gain access to your private computer systems. Another ruse is called “phishing”, this technique used to be very simple to spot due to emails with poor spelling and grammar asking you to send money urgently or else there would be consequences. This type of “phishing” email has grown increasingly more complex and common. The criminals masquerade as an entity that you already have ties to, like a bank or credit card company, and claim to need personal information. If you receive one of these emails, call that entity directly and ask them about the email.