FOREIGN TRADE TARIFFS
On-again/off-again trade negotiations/threats/tweets with foreign governments, primarily China, continued to have influence on short-term market movements during the third quarter and into the month of October. The stock markets do not like the uncertainty surrounding this topic. As disputes threaten to escalate, the stock market has declined. As prospects improve for new trade deals, stocks have recovered. This cycle has repeated itself many times over the past couple of years.
Failure to resolve these issues is starting to have longer-term implications for the global economy as economic activity has slowed in most of the world, including the US. The lack of trade certainty has caused businesses to become very cautious in their investment in capital projects. These lack of investments not only have a short-term impact on economic activity but also will reduce, or at least delay, future productivity gains which are crucial to increasing economic growth, particularly in countries with low or no growth in the working age population such as the United States.
The resolution of these matters is hard to predict in terms of both timing and form. However, just the removal of the uncertainty will benefit all. Let’s hope that this occurs soon.
GROWTH VS. VALUE INVESTING
Growth stocks have had the upper hand in terms of performance when compared with value stocks over the past several years. These types of cycles have occurred at various times in the past, but over the long haul, value investing has provided better returns, particularly when viewed from a risk-adjusted perspective. Of course, no one knows for sure when the trend that has been observed for the past decade will reverse, but the reversal can happen quickly and dramatically. The following article from Dimensional Fund Advisors (DFA) provides some interesting data on the reversal of one of these cycles earlier this century: Value Judgments: Viewing the Premium’s Performance Through History’s Lens. Some of the facts in this article reinforce our bias for having a larger proportion of our clients’ equity exposure in value stock funds.
SCHWAB TRANSACTION FEES FOR ETFs AND STOCKS
As you might have heard, Schwab announced earlier this month that they would be eliminating their transaction fees for stocks and ETFs. These formerly ranged from $4.95 to $8.95 per trade. While stock and ETF transaction fees have never comprised a significant expense in our managed portfolios, we are happy to see our clients benefit from Schwab’s pricing change.
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Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Market Street Wealth Management Advisors, LLC), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Market Street Wealth Management Advisors, LLC. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Market Street Wealth Management Advisors, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Market Street Wealth Management Advisors, LLC’s current written disclosure statement discussing our advisory services and fees is available for review upon request. Please Note: Market Street Wealth Management Advisors, LLC does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Market Street Wealth Management Advisors, LLC’s web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.