james kuntz

Brexit Commentary

by Jim Kuntz on June 27, 2016

The United Kingdom’s surprise vote last week to exit the European Union rattled financial markets around the world.  Stocks, currencies and commodities felt the brunt of the emotional knee-jerk reaction to the news. Friday’s selloff erased gains from earlier in the week, when polls were suggesting a victory for the Remain alternative. U.S. stock markets finished the week down approximately 1.5-2%.  As money flowed out of stocks, most of it landed in the safe havens of the U.S. dollar and Japanese Yen, in addition to gold, while demand for U.S. Government and other sovereign bonds rose dramatically. Fortunately, our financial portfolios’ diversification helped mitigate the stock market declines. Investments in bonds, managed futures and gold appreciated in value as money exited stocks.

On Friday, June 24, 2016, The Wall Street Journal aptly stated; “The implications of Britain’s vote to leave the European Union will reverberate through the Continent’s politics and economy for years.”  The U.K. vote certainly caught investors off guard; as many analysts suggested a better than 80% probability of a Remain outcome. The Brexit, however, is really no different from many of the exogenous geopolitical events that have disrupted financial markets over the course of our 34 year history managing wealth. This is another example of an unexpected event that causes investors to react emotionally, and the result is a large amount of immediate market turmoil.   The financial pain caused from this turmoil is real, unsettling and can stir those emotions of fear.  However, over the long term, history has shown us time and time again, through world wars, revolutions and an extensive list of other types of disruptions, that markets are resilient and eventually right themselves to find equilibrium.

Pacific Wealth Management’s disciplined wealth preservation focus, proactively reduced stock market allocations in anticipation of an event like Brexit. We expect more uncertainty and market volatility as we move through the summer. We continue to plan and prepare for what lies ahead to help our client’s financial goals become reality.

This commentary contains forward looking statements and opinions. These opinions may not develop as predicted. It is our goal to help investors by identifying changing market conditions. However, investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the market.

Financial Market Comment

by Jim Kuntz on April 20, 2016

Investors who only check market prices at the end of every quarter, may easily conclude the first three months of 2016 were uneventful, as stock market values finished March relatively close to where they began in January. However, as you are likely aware, global stock markets in early 2016 were unusually volatile, declining over 10% to start the year, then bouncing in mid-February and rallying through March, to end the first quarter recouping most of their earlier declines. As interest rates declined, bond investments delivered positive returns in the first quarter and helped cushion the stock market’s swings in our portfolios. After rising nicely in January and February, Gold has been able to hold its recent gains and once again, is viewed as a “safe haven” asset for many investors.

The major catalysts for the rebound in stock values include; a growing belief that oil prices have begun a sustainable recovery, better than expected economic reports, and supportive monetary policy announcements from the central banks of the United States, Europe and Japan. Janet Yellen reiterated, while acknowledging improvements in the American economy, she is also focused on weaker international growth and assured the markets that future interest rate increases by the Federal Reserve Bank will be slow and gradual. The markets were also helped in March, when Europe’s Mario Draghi, announced the European Central Bank would cut interest rates further and expand their bond buying efforts (Quantitative Easing) to keep their interest rates low.

Although encouraged to see the stock market rebound, we expect relatively weak first quarter corporate earnings results and more volatility in the second quarter. The trajectory of those earnings should improve as we progress through the year if the following two trends occur: oil prices continue to stabilize and the strength in the U.S. Dollar begins to abate. The magnitude of recent market swings has been dramatic and affirms our view we are in a risk-on/ risk-off environment, rather than one with a definitive positive or negative trend. That said, we see a low probability of recession over the next year and a global and U. S. economy that continues to grow slowly. Our economy is being helped by the combination of low mortgage rates and energy prices, low unemployment and finally some healthy consumer income growth.

The presidential election politics and distasteful mud-slinging will likely create uncertainty for investors as we progress into the summer and the party conventions. That uncertainty should dissipate as the election approaches and we get more clarity on the likely winner and the next resident of the White House. History has shown us that the sitting President’s political party has little impact on long term investment performance.

Market corrections are an inevitable part of investing. Our well diversified portfolios are designed to dampen the magnitude of corrections, in any and all markets, to tolerable levels so our clients can stay the course. We remain dedicated to assisting families meet their long-term financial goals and objectives.

Financial Market Comment

February 29, 2016

As February winds to a close, the financial markets continue experiencing higher than normal levels of volatility. Since our last update in January, global stock markets have ridden a rollercoaster mostly tied to the ups and downs of oil and gas prices. The significant decline in energy prices have certainly resulted in earnings setbacks for […]

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Financial Market Comment

January 19, 2016

We hope you and your families had an enjoyable holiday season and were able to find time for some relaxation and fun. The financial market volatility in 2015 was challenging, but the start to 2016 has been decidedly worse. Stock markets around the world have declined sharply to begin the year with multiple triple-digit down […]

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Market Comment

December 8, 2015

We hope you enjoyed your Thanksgiving holiday and have plans for more fun, rest and relaxation as the holiday season continues and 2015 winds to a close. This year has been challenging for investors as nervous financial markets continue experiencing uncomfortable levels of volatility. Declines in stock market values over the summer were initially precipitated […]

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James Kuntz is Once Again Named One of San Diego’s Top Wealth Advisors

March 27, 2014

Pacific Wealth Management’s James Kuntz is once again named one of San Diego’s Top Wealth Advisors. Online PR News – 27-March-2014 –James Kuntz, CIMA®, Managing Director of Pacific Wealth Management®, an independent boutique wealth management firm that provides investment management services to preserve and grow wealth, once again, has been named a Five Star Wealth […]

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