The S&P 500 Index and the Nasdaq Composite closed at all time highs on April 23^rd, marking a significant turnaround from the U.S. stock market’s decline at the end of 2018.  The S&P 500 Index closed the day at 2,933.68 and the Nasdaq at 8,120.82.  For the year, the S&P 500 Index is now up over 17%.  A combination of encouraging macroeconomic and microeconomic data have led the stock market higher this year.  In light of the market recovery, it makes sense to review what are the contributing factors.

Academic theory of the financial world is often built upon one main assumption: that people are perfectly rational in making economic decisions and that these rational decisions by individuals help to create a high degree of efficiency in the broader financial markets.  Efficient markets work, as the theory goes, because all actors are behaving in ways to maximize their own self-interest.  And usually this is how markets, and economies, function effectively and efficiently.

The need to diversify is so foundational to financial advice that it can seem absurd to even question it. But sometimes clients question us in ways that have made us rethink the conventional wisdom regarding diversification in finance. Here’s what happened to me.

Energy stocks have been some of the weakest performers of the U.S. stock market over the past five years.  It’s easy to understand why these stocks have done so poorly in recent history, given significant volatility in the underlying oil market.  Following a precipitous drop in the price of oil, which reached a bottom at below $30 per barrel of crude oil in early 2016, oil has recovered to a recent price well above $60 per barrel.  The past five years have been an unpleasant rollercoaster ride for those with exposure to energy stocks.

For the past ten years, we’ve had a strong bull market in equities; in fact this is one of the longest bull markets in history. That doesn’t mean that it’s been all upside for the past decade. For instance, the S&P 500 Index declined by more than 10% in late January / early February of last year.

Growth is an important theme at Brown and Company.  We place a tremendous emphasis on hiring great people, utilizing the latest technology to improve efficiency and re-investing back into the client experience.  It is through growth that we are able to deliver our best work to our clients.

It is not uncommon to see old video footage of Steve Jobs or Jeff Bezos on social media. We’re all interested in what these influential leaders of two of the most iconic companies in the world have had to say. What is unusual is to see both of them say nearly the exact same thing in two separate interviews around the same time period.

A common fact pattern for our clients is that they will have multiple income streams when they stop working.  Social Security benefits, private pensions, annuity payments, income from real estate holdings, income from private equity and mineral royalty checks: these sources of income will often play a vital role in creating a successful long-term plan for financial independence.

Sir Edmund Hillary is widely known as the first man to have climbed Mount Everest. Hillary and his companion Tenzing Norgay reached the peak in 1953. There is some controversy, however, that another man named George Mallory was actually the first to reach the summit. Mallory's climb occurred nearly 30 years earlier, but was never confirmed because he did not survive the descent.

The Federal Reserve announced its expectation not to raise short-term interest rates any more in 2019, reflecting a more subdued forecast for economic growth in the remainder of the year.  Previously, the Fed had indicated that it expected to hike short term rates by a quarter percentage point twice more in 2019.  The current Fed Funds target rate will remain at 2.25-2.5%.  [1]

Martin Walsh attended the Barron’s Team Summit in Las Vegas in early February.  The conference is an invitation-only event, aimed at recognizing the achievements of the top financial advisors in the United States.  Mark R. Brown has been a perennially leader in Colorado atop the Barron’s Top 1,200 Advisors list.

In a world of increasing complexity and unprecedented technological advancement, it is easy to feel overwhelmed. As a result, simplification can be a real gift. Ask anyone who has recently tried to research and enroll in health care benefits, and they will gladly accept an expert’s offer to simplify all of it.

The question of when to file for Social Security benefits is a frequent topic of conversation with our clients.  Even with ultra-high net worth clients, the value of the income stream from Social Security is large enough to warrant a careful discussion.  Indeed, the capitalized value of an inflation-adjusted income stream that pays several thousand dollars per month for the rest of someone’s life is worth hundreds of thousands of dollars.

One of the most common descriptions of financial planners and advisors is that we are problem solvers. But while it is certainly true that advisors need to be able to solve problems for clients, we would argue that the value of problem solving is not what it used to be. The greater value an advisor can provide is to correctly anticipate problems before they occur. We call this “upfront hindsight.”

Historically, financial advisors have tended to think of two broad categories of investors: do-it-yourselfers and delegators. Delegators tend to seek out advice and are willing to pay for it. Whereas, DIY types are less inclined to see the value of wealth advice and, therefore, are less willing to hire someone to help them. That’s the theory, anyway, but we’ve found that this type of categorization can be misleading.

We see a very common fact pattern among retired couples, a potential pitfall that can lead to unintended consequences if not planned for appropriately.  Often, a husband has been the primary breadwinner for a family and has been the dominant decision maker on most financial decisions of consequence.  These financial decisions include hiring a wealth advisor and making investment decisions on behalf of himself and his family.  It is an arrangement that can go unquestioned for decades.  The problem is: what if a husband pre-deceases his wife?  Will she be properly cared for with a well-conceived plan?

As technology has improved and it has become increasingly easier to open accounts and invest money in a diversified portfolio, people are often asking whether financial advice is worth paying for.  Or, more specifically, what is the value of financial advice?

There has been much doom and gloom predicted for the stock market looking ahead to 2019, at least in some corners of the investment world.  Much of the volatility in the market that we witnessed at the end of 2018, and the ensuing pessimism from investors, is predicated on a potential economic recession for the U.S. and global economies.  And there is no doubt that if a severe recession were to be anticipated in the United States, that the stock market would suffer.