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Furstenau Wealth Update

February 22, 2021

The Markets

 

It’s a contrarian’s dream come true.

 

Contrarian investors like to buck the trend. They buy when other investors are selling and sell when others are buying.

 

Last week, Bank of America (BofA) delivered a contrarian’s dream. BofA’s monthly survey of 225 global asset managers, who are responsible for $645 billion in assets under management, showed the managers were almost fully invested, according to CNBC.

 

The survey showed asset managers’, “…cash levels at the lowest since March 2013, global equity allocations at a 10-year high, and a record number of respondents reporting taking a ‘higher than normal’ level of risk,” reported Randall Forsyth of Barron’s

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Furstenau Wealth Update

February 16th, 2021

The Markets

 

Way back, when radio disk jockeys played 45-rpm vinyl singles, the A-side of a disk was the song the record company was promoting and the other side – the flip side – held a song that sometimes had an equal or greater impact. For instance, the flip side of Queen’s We Are the Champions was We Will Rock You.

 

When it comes to the economy and financial markets, flip sides can have significant impact, too. For example:

 

  • Stock market performance. Last week, major stock indices in the United States – the Standard & Poor’s 500, the Dow Jones Industrial, and the Nasdaq Composite – finished at record highs. That was happy news for investors.

 

The flip side: Concern that share prices may not be sustainable. “The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior…this bubble will burst in due time…,” wrote asset manager Jeremy Grantham of GMO in January 2021.

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Furstenau Wealth Update

February 8th, 2021

The Markets

 

It’s not a black diamond ski run yet, but the yield curve for U.S. Treasuries is steeper than it has been in a while.

 

A yield curve is the line on a graph showing yields for different maturities of bonds. Yield curves provide insight to bond investors’ perceptions about the economy. There are four basic types of yield curves:

 

  • Normal: The slope is upward because short-term bond yields are lower than long-term bond yields. A normal curve for U.S. Treasuries has a yield gap of about 2.3 percent between 30-year Treasury bonds and 3-year Treasury bills, according to Fidelity. On Friday, the difference was 1.78 percent.

  • Steep. The upward curve is unusually steep. This may occur when an economic expansion is underway, demand for capital pushes interest rates higher, and inflation rises.

  • Flat: There is no curve because short- and long-term bonds have similar yields. Flattening yield curves can be a precursor of economic slowdown and lower interest rates.

  • Inverted: The curve slopes down. Long-term bond yields are lower than short-term bond yields. Some believe an inverted yield curve is a signal that recession is ahead.

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ARTICLES

 

Do Politics Belong in Retirement Planning?

Financial advisers discourage people from letting political news cycles influence their retirement planning strategies. Political winds can shift in a short period, sometimes drastically, whereas saving and investing for retirement are a process that takes place over decades.

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Top 10 Financial Tips

U.S. presidential elections can be tough on the nerves, and 2020 has been no different.

 

Politics can bring out strong emotions and biases, but investors would be wise to put these aside when making investment decisions.

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12 Tax Angles For Investors: What Will Survive The Democratic Congress?

Democrats are equipped to undo parts of the 2017 Trump tax cut and, perhaps, to attack some of the long-standing tax lowering schemes that investors use. But most tax-wise investing strategies will probably survive. 

Read on to hear about the 12 tax angles.

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How the SECURE Act Affects Your Retirement Planning

The new legislation brings changes for long-term retirement savings and affects Americans at every age.

Here is what you need to know..

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