Have you ever ordered a meal at a restaurant only to regret the choice when your dining partner was served with something that looked even tastier?  I know I have. It may not be often (since you can almost never go wrong with a cheeseburger and fries!) but it does happen.  If you’re lucky, maybe you’ll get a bite or two– but ultimately, you almost always end up having to make due with what you ordered.

Sometimes returns on an investment account can be the same way.  You thought you wanted to play it safe and go conservative, but once you saw your neighbor racking up the gains and buying a new Tesla, you wished you had ordered the pedal to metal aggressive approach too.  If this sounds like you, it’s important to keep a few things in mind.  First, your investment advisor (that would be me) is legally bound to follow your instructions- whatever they may be.  These instructions are spelled out in the “Investment Agreement Contract” (IAC) that gets signed at the beginning of every relationship.  So if we did agree to take a very conservative approach and the market roared higher while your account showed only modest gains, then we can refer back to the original agreement and if it needs to changed, change it.  Second, it’s important to understand that while everybody wants to make money when the market goes up, the feelings of pain and anguish are almost always worse when the market goes down.  And while lately it seems like the market may never go down again, rest assured, it will.  So we need to be prepared for that.  And, mark my word, someday you’ll be thankful you didn’t put all your money into that “next sure thing” technology stock that was going to grow 100-fold and instead declared bankruptcy.

The Prior Month

The good times rolled on in February with the S&P 500 recovering its January losses and then some, finishing the month with a 5.5% gain.  Greece effectively kicked their debt bomb can down the road another six months and Russia signed a ceasefire that ceased absolutely nothing (shelling continues in the Ukraine, despite the supposed ceasefire).  Federal Reserve Chairwoman “Gentle Janet” Yellen promised the House and Senate Banking Committees that the Federal Reserve would not raise interest rates for “at least a couple of meetings” (i.e. months) and continued by saying the Fed would be cautious in raising rates and not do so until economic conditions improved.  Many are skeptical she’ll ever raise rates.  Meanwhile, it was a positive month for the labor markets as the U.S economy added 295,000 jobs and the unemployment rate dropped to 5.5%, the lowest percentage since mid-2008.  Interest rates for a 30 year mortgage closed the month slightly higher at 3.77%.

Kicking CanAt the end of this road that Greece and the EU are walking along is probably a cliff.  We’ll get there someday, but it’ll be awhile longer…

This Month

With Europe relegated to the backburner until summer, March may well be a quiet month.  SG Cowen is hosting a big biotechnology conference early in the month but otherwise the calendar is light.  Crude oil has stabilized around $50/barrel, the earnings calendar is nearly empty, and the Federal Reserve is on hold.  And, once again, corporate bonds continued to bought up in mass quantities, which will serve to support equities.

Cookie MonsterIf cookies were corporate credit and the bond market was Cookie Monster there’d be a lot of crumbs lying around– because the market continues to gobble up just about every bond offering presented!

Credit Tip of the Month

Ready to be shocked?  Your credit score could actually drop when you remove a black mark from your credit report.  Turns out credit ratings agencies move borrowers amongst different “scorecards.”  So if you transfer to a “cleaner” scorecard, perhaps when a bankruptcy drops off your record, and are now compared to customers with better credit than those on your previous scorecard, you may actually receive a lower ranking. Don’t worry though, over time your credit score will rise more without the black mark on it than with it.  So by all means, get that credit report cleaned up!

Fun Fact

Plants, like people, run fevers when they’re sick.

Have a great March,

Steve Zakelj, CFP®

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