Broker Check

The RFG Weekly Wealth Report

October 29, 2018

All three indexes are down significantly for the month, and both the S&P 500 and Dow have entered negative territory for 2018. International stocks in the MSCI EAFE also struggled, posting a 3.87% drop for the week, and a 13.31% decline for the year.

Fact of the Week

The speed of light in a vacuum is 186,282 miles per second (299,792 kilometers per second), and in theory nothing can travel faster than light. In miles per hour, light speed is, well, a lot: about 670,616,629 mph. If you could travel at the speed of light, you could go around the Earth 7.5 times in one second

Market Minute

Why did stocks drop? Will they continue to do so?

Currently, many topics are on investors' minds, from inflation to tariffs to valuations and beyond, but analysts are not pointing to one single culprit for last week's performance. Instead, a mixture of concerns, with a large dose of emotion, seemed to drive the markets.

Emotional reactions are understandable when volatility emerges, but they have no place in long-term investment strategies. Instead, we need to focus on the fundamentals.

What did we learn last week?

Trying to find simple explanations for market behavior can feel impossible, in part because the markets aren't a machineļ‚¾they're a reflection of many human actions. Investors make choices based on their interpretations of current conditions, and the effects of these decisions become "market performance."

Amidst the volatility, we received several updates on the economy, including:

  • 3rd Quarter Gross Domestic Product (GDP) beat expectations: The initial GDP reading for the 3rd quarter came in at a strong 3.5%, helped in large part by consumer spending.
  • Corporate earnings have been strong, but imperfect: So far, this corporate earnings season is showing 22% growth, but fewer S&P 500 companies are exceeding analysts' predictions than in the 1st quarter of 2018. In particular, some major tech companies' results disappointed investors.

  • Housing continued to struggle: New home sales were lower than expected in September, which followed disappointing results from existing-home sales data, as well.

  • Inflation growth eased: The Personal Consumption Expenditures Price Index, which shows inflation, increased by 1.6% in the 3rd quarter, much lower than projected.

Examined together, this data indicates that while the economy has potential challenges, it also demonstrates solid growth, reasonable inflation, and strong corporate performance. That story feels different than the sharp drop we experienced last week. However, when you look at the bigger picture, our current circumstances provide another reminder that volatility is normal, and examining economic fundamentals is critical.

Still, risks exist, and in the coming weeks we will pay very close attention to data and performance. In particular, we will follow the Federal Reserve's comments and actions to see what may lie ahead for interest rates. In the meantime, please let us help answer your questions and address your concerns. We are here to help you pursue your goals, in every market environment.

Retirement Rundown

THE "YOUNG AT HEART" HEALTH BENEFITS

Researchers have found that people who feel younger than their chronological age show fewer age-related changes in their brains, compared with those who say they feel their age or older.

In a study published in the journal Frontiers in Aging Neuroscience, scientists performed MRI scans on the brains of 68 healthy people between the ages of 59 and 84. The subjects also took a memory test and filled out a survey, which asked whether they felt younger or older than their age. Their overall health and cognitive abilities were also assessed.

The scientists found that participants who felt younger had a greater amount of gray matter (which is involved in information processing) in key regions of the brain than did those who felt their age or older. They were also likely to score higher on the memory test and considered themselves to be in better health. And they were less likely to report signs of depression.

The researchers said they suspect that those who feel older may actually be sensing their own gradual loss of gray matter, which can make cognitive tasks more difficult.

"If somebody feels older than their age, it could be a sign for them to evaluate their lifestyle, habits and activities that could contribute to brain aging and take measures to better care for their brain health," Chey said.

Financial Strategy of the Week

USING PASSWORD SAFEGUARDS FOR FINANCIAL DATA

As we do more of our daily activities online, we become more vulnerable to security compromises, such as breached data and identify theft. A key item that can put you at risk is the vulnerability of your passwords. Here are tips for taking better steps to safeguard your passwords to protect your important financial data.

1. Create long passwords

Breaking into a long password is more difficult to do than one with just a few characters and numbers. As such, you should create passwords that have a minimum of 8 characters.

2. Use combinations of characters and capitalization

Characters

Sometimes companies will control what types of characters you can use. When you have the freedom to choose a variety of characters, you can create a secure password using a combination of letters, numbers and symbols.

Capitalization

You also should vary using capitalized and lowercase letters. Be sure to include at minimum one uppercase and one lowercase letter.

3. Avoid personal information

While details such as your children's or pets' names can be memorable, they make guessing your password easy for criminals. Avoid using any personally identifying information in your chosen password.