san diego wealth advisor

Summer is behind us, here comes the Election

by Jim Kuntz on September 9, 2016

We hope your Labor Day was a relaxing one.

August was especially quiet for the financial markets.  Stock market trading volumes were the slowest in decades.  After late June’s BREXIT volatility, the markets in late summer were on their best behavior. Unfortunately, this welcomed breather is likely to be temporary, as we now head into fall, the election, and a new U.S. President in 2017.  September and October have some additional notoriety as two of the more volatile months in a typical calendar year.

The predominant influence on the world’s financial markets continues to be driven by the monetary policies of the United States, Europe and Japanese Central Banks.  $12.7 Trillion of sovereign government bonds from Northern Europe and Japan, with negative interest rates, are driving investment capital flow into stocks and real estate, in addition to our own 10 year U.S. Treasury Bonds (currently yielding  1.6%).  Ned Davis Research states: “47% of global sovereign bonds yield less than 0%. 80% of global yields are under 1%. 96% are yielding less than 2%.”

The U.S. economy is currently in its eight year of growth, the fourth longest expansion since World War II.  The longest was in the decade of the 1990’s, when we rode the technology boom.  Since the sub-prime banking crisis and recession in 2008-9, our economy has mustered an annual 2.1% growth rate, the worst post-World War II recovery.  Despite the slow growth environment throughout the global economy, the developed world’s Central Banks will continue trying to stimulate economic growth through low-interest rate monetary policies and financial market manipulation.

When we began 2016, the U.S. stock markets experienced the worst start to a year in history.  Most of the “market’s fears” did not play out as anticipated.  Oil bottomed in mid-February and concerns about a commodity price slump eased, as energy prices stabilized and began to recover.  The surprise Brexit vote certainly created some drama, but as we stated in late June “markets are resilient and eventually right themselves to find equilibrium.”  With better oil price stability, the improved economic momentum of the U.S., China and most of Europe have reduced anxiety over a possible deflationary spiral. Overall American corporate health remains strong, as most S&P 500 companies enjoy solid balance sheets.  Our Pacific Wealth Management portfolios are appreciating nicely, as stocks, bonds and gold are all benefiting from these healthier financial markets.

We expect Janet Yellen and the U.S Federal Reserve Bank will likely wait until December before raising interest rates again.  Meanwhile, the world will be watching the final months of a painfully long U.S. presidential election.  Despite the fact Trump is likely to tighten the race between now and November 8th, a Hillary win looks like it is being priced into current markets. The Wall Street consensus perceives a Clinton administration as more predictable than Trump, and therefore more desirable.   All eyes will also be looking at the outcome of the congressional races to see if the Republicans maintain their conservative majority. With clarity on the political front, the markets will then focus on whether a new government in Washington, D.C. can successfully implement some long-awaited fiscal spending initiatives on infrastructure, education and research to help our country grow in the years ahead.

The choppy financial markets we have experienced over the last 12 months will likely continue into 2017. Pacific Wealth Management portfolios are built to effectively weather this volatility and preserve wealth, while delivering competitive long-term investment returns.

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.

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.

Market Commentary from Pacific Wealth Management

June 22, 2016

Since January of 2015 U.S. stock investments have experienced some significant ups and downs and, now 18 months later, are sitting today at around the same levels.  As we described in our last commentary, the financial markets in 2016 have wrestled with conflicting expectations for growth and inflation.  Globally, economic growth has slowed while the […]

Read the full article →

Financial Market Comment

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% […]

Read the full article →

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 […]

Read the full article →

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 […]

Read the full article →

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 […]

Read the full article →

Pacific Wealth Management Market Comment

December 23, 2014

Last December, Ben Bernanke announced the Federal Reserve Bank would begin winding down their latest and largest round of U.S. Government bond market manipulation, before 2014’s year-end. This created considerable nervousness for investors as American stock market performance had clearly become dependent on the controversial policy. As we highlighted in previous posts, our central bank […]

Read the full article →

News from Pacific Wealth Management

November 25, 2014

DEL MAR, CA, November 25, 2014 – Pacific Wealth Management®, a Del Mar, CA-based independent wealth management firm providing investment management services to preserve and grow wealth, is pleased to announce another successful and sold-out National Multiple Sclerosis Society Dinner Gala Auction on November 22nd. This 28th Annual MS Dinner Auction raised more than $500,000 toward creating a world […]

Read the full article →

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 […]

Read the full article →