On It with Offit Newsletter

On It with Offit

BY BEN OFFIT, CFP®

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Interesting Tidbits
You’re not ready to be a successful stock market investor if you are nervous when the market is up and scared when it’s down.
-Peter Lynch

I'm a great believer in luck, and I find the harder I work the more I have of it.
-Thomas Jefferson

Innovation distinguishes between a leader and a follower. 
-Steve Jobs

My favorite things in life don't cost any money. It's really clear that the most precious resource we all have is time.
- Steve Jobs

Half of the net worth created across the entire US stock market since 1926 comes from just 90 companies. The best way to make sure you participate in the next 90 is to own a diversified portfolio.
-Source: Hendrix Bessembinder/Arizona State

It's good to have money and the things that money can buy, but it's good, too, to check up once in a while and make sure that you haven't lost the things that money can't buy. 
- George Lorimer

That man is richest whose pleasures are cheapest.
- Henry David Thoreau

Las Vegas is the only place I know where money really talks - It says, "Goodbye.
- Frank Sinatra

He who loses money, loses much; He who loses a friend, loses much more; He who loses faith, loses all.
- Eleanor Roosevelt

It's not the employer who pays the wages. Employers only handle the money. It's the customer who pays the wages. 
- Henry Ford

Wealth is not about having a lot of money; it's about having a lot of options.
- Chris Rock

Both poverty and riches are the offspring of thought.
 - Napoleon Hill, American Author
 
The top 3% of taxpayers make about 29% of all adjusted gross income and pay just over 50% of all income taxes.
-Source: IRS

Formal education will make you a living; self-education will make you a fortune.
- Jim Rohn

Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.
- Johann Wolfgang von Goethe

While pundits are trying to figure out the timing of the next recession, it doesn’t hurt to be aware that the stock market actually posts positive returns through recessions! While the average isn’t great at just 3%, returns are both positive and higher than current bond yields.
-Source: New York Times

Wealth consists not in having great possessions, but in having few wants.
- Epictetus

Offit Advisors is pleased to welcome Financial + Student Loan Advisor, Jamie Callighan, to our growing company.   We believe that student loans are one of the most paramount financial planning issues facing our society today.     For years we have been offering our Financial Planning clients student loan advice, including Public Service Loan Forgiveness, Income-Based Repayment options, and refinancing suitability analysis. Now we have taken that a step further with Jamie. By directly offering Jamie's expertise to our Financial Planning clients, and stand-alone consultations for Physicians, Dentists, Lawyers, Graduate Students, and anyone with student loan debt, we can help them pay down their debt as efficiently as possible.  Jamie has extensive experience in managing student loan debt and other debt repayment strategies. In addition to debt matters, she also has experience in college savings, retirement, and estate planning.  Jamie graduated from Metropolitan State College of Denver with a degree in Behavioral Sciences and holds Series 63 (Uniform Securities Agent State Law Exam) , Series 65 (Uniform Investment Adviser Law Exam) , Series 7 (General Securities Representative) registrations, as well as Life, Accident & Health Insurance licenses.  We welcome the opportunity to review this niche subject matter as part of your overall financial plan to make sure you have the best strategy possible.

Offit Advisors is pleased to welcome Financial + Student Loan Advisor, Jamie Callighan, to our growing company.

We believe that student loans are one of the most paramount financial planning issues facing our society today.


For years we have been offering our Financial Planning clients student loan advice, including Public Service Loan Forgiveness, Income-Based Repayment options, and refinancing suitability analysis. Now we have taken that a step further with Jamie. By directly offering Jamie's expertise to our Financial Planning clients, and stand-alone consultations for Physicians, Dentists, Lawyers, Graduate Students, and anyone with student loan debt, we can help them pay down their debt as efficiently as possible.

Jamie has extensive experience in managing student loan debt and other debt repayment strategies. In addition to debt matters, she also has experience in college savings, retirement, and estate planning.

Jamie graduated from Metropolitan State College of Denver with a degree in Behavioral Sciences and holds Series 63 (Uniform Securities Agent State Law Exam) , Series 65 (Uniform Investment Adviser Law Exam) , Series 7 (General Securities Representative) registrations, as well as Life, Accident & Health Insurance licenses.

We welcome the opportunity to review this niche subject matter as part of your overall financial plan to make sure you have the best strategy possible.

Financial Planning Tips - Can I afford to buy Starbucks coffee?

The personal finance space has no shortage of tips to managing your spending, from bag lunches in lieu of eating out at work to home-brewed coffee instead of the morning Starbucks routine. Yet the truth is, we dig ourselves a tremendous spending hole because of our big purchases, and then worry about the small stuff trying to make up the difference. If you really want to change your financial reality for the better, though, it’s the big stuff you really need to focus on – where you live, and what you drive.

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If we add up all of the Housing categories and sub-categories, and add Transportation on top of it, we come to a whopping 63% of the household’s total annual expenditures. Entertainment? Only 5.5%. Clothing and apparel? 3.5%. Food at least is almost 13%, although we can still only trim so much, since we do still have to eat a few times every day.

In real terms – we buy the most expensive house and car we can afford, and then drive ourselves crazy clipping coupons to make up the difference. Perhaps the better conversation is about owning more affordable houses, and driving less expensive (or dare I say it, USED!?) cars.

Choosing an apartment that’s $500/month less expensive or a smaller house that has $500/month in mortgage costs, similarly, saves so much money on “the big stuff” that many wouldn’t have to sweat the small stuff at all anymore. And sadly, the more affluent the individual, the more that significant housing and automobile costs consume huge portions of the annual income!

Unfortunately, these are difficult conversations to have. Many people view their nice homes and their nicer cars (1, 2, or even 3+ of them) as entitlements that we “should” get the moment a lender will approve us to finance them. But the reality, as the research shows, is that maxing out your capacity to borrow might not lead to a default, but it certainly does crowd out our ability to spend money on the experiences that ultimately bring us more happiness.

As long as there’s a secure roof over your head, and you have an automobile that’s capable of getting you to work and the kids where they need to go – even if that car isn’t as fancy as you hoped, or the house isn’t as big as it might have been – life will go on. And you might even enjoy it more. - Source: Kitces.com


Market Update

Equity Markets

The S&P 500 Index achieved a new all-time high in July and broke above the 3,000 level for the first time in its history. The momentum from June continued in July as the market’s recovery from the May sell-off, which was triggered by a negative turn in the China trade negotiations, kept going. Although trade issues remained unresolved, they were trumped by rising expectations of a more accommodative Fed and a likely rate cut in July, which indeed occurred.

Most major U.S. equity indices gained in July, but international stocks could not overcome U.S. dollar strength and declined during the month. It is worth noting that although U.S. equity indices posted gains for the month, a portion of those gains were lost on July 31 following the FOMC meeting as equities sold off sharply to close out the day.

The numbers for July were as follows: The S&P 500 gained 1.44%, the Dow Jones Industrial Average (DJIA) rose by 1.12%, the NASDAQ Composite advanced 2.15%, and the Russell 2000 Index, a measure of small-cap companies, edged higher by 0.58%. Large-cap value stocks, as measured by the Russell 1000 Value Index, lagged their growth counterparts once again in July with an advance of 0.83%.

Comparatively, large-cap growth stocks, as measured by the Russell 1000 Growth Index, advanced 2.26%. Although this continues to be a challenging period for managers using value characteristics, we believe the value/growth relationship continues to become more and more stretched and over the long-term, value companies will be rewarded once again.

International equities slipped lower in July. Despite the anticipated and ultimate rate cut by the Fed during the month, the rest of the world remains more accommodative than the U.S. on a relative basis and the U.S. dollar rallied. In fact, the U.S. dollar index rose to its highest level in more than two years in July. With this backdrop, emerging market equities, as measured by the MSCI Emerging Markets Index, fell by -1.22% in July and the MSCI ACWI ex USA Index, a broad measure of international equities, declined -1.21% for the month. Year-to-date returns have still been solid for international stocks, but in general, they have not been able to keep pace with U.S. equities so far this year.

Fixed Income Markets

The 10-year U.S. Treasury yield has dropped dramatically so far in 2019. The yield ended June at 2.0%, and early in the month (July 2nd and 3rd), it closed below the 2% mark for the first time since 2016. Although it bounced up from those lows as the month progressed, it slid lower later on in the month and ended July at 2.02%. (Quick update: Following the FOMC meeting on July 31st, the 10-year U.S. Treasury yield dropped dramatically below the 2% mark at the beginning of August.)

The Fed is trying to engineer a challenging balancing act by supporting economic growth but at the same time, not cutting rates too much too soon. Markets will continue to monitor any information from the Fed closely as investors try to figure out the pending course of Fed action. The situation seems to be complicated by ongoing pressure from the Trump administration to cut rates, which should, by definition, not be a consideration as the independent Fed determines policy action.

The yield-curve inversion (comparing the 10-year U.S. Treasury and 3-month T-bill yields) shallowed in July and had a brief day back in a positive position. However, the yield curve inversion resumed from that point and ended the month back in inverted territory. History shows us that the length of the inversion matters, and the yield curve has been in that position for the most part since late May.

We acknowledge that an inverted yield curve has historically been a negative signal for the direction of the U.S. economy. At the same time, other economic readings that tend to be on the front end of the economy, like the leading economic indicators index and job market data, are not showing the same cautionary signals. We continue to monitor developments in this area closely, but we believe economic growth will continue through 2019 and into 2020.

In this environment, fixed income results were as follows: The Bloomberg Barclays U.S. Aggregate Bond Index was up 0.22% for the month, the Bloomberg Barclays U.S. Credit Index gained 0.52%, the Bloomberg Barclays U.S. Corporate High Yield Index advanced by 0.56% and the Bloomberg Barclays U.S. Treasury Index fell by -0.12%. TIPS showed gains for the month and muni bonds were among the best performers in the fixed income space in July.

S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index.

Dow Jones Industrial Average - The Dow Jones Industrial Average is a popular indicator of the stock market based on the average closing prices of 30 active U.S. stocks representative of the overall economy.

NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes approximately 5,000 stocks, more than most other stock market indices. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indices.

Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index which includes the 3,000 largest companies in the U.S., based on market capitalization. As of the latest reconstitution, the average market capitalization was approximately $762.8 million; the median market capitalization was approximately $613.5 million. The largest company in the index had an approximate market capitalization of $2.0 billion and a smallest of 218.4 million.

Russell 1000® Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values.

Russell 1000® Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.

Government bonds are guaranteed by the U. S. Government and, if held to maturity, offer a fixed rate of return and fixed principal value.

Offit Advisors
28 E Susquehanna Ave
Towson, MD 21286
Phone + Fax: 410 600 PLAN (7526)
E – BOffit@OffitAdvisors.com
W- www.OffitAdvisors.com

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The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. OffitAdvisors. is not affiliated with Kestra IS or Kestra AS.