November 05, 2018 in Five, Five, Five | by Scott Wood

November 5,5,5: Buyback Blackouts and Stock Market Drops

Our November edition of the 5,5,5 covers some of the latest trends occurring in the market, ways you can plan ahead to protect your financial future, and a recap of True North employees giving back to the Dallas community. Enjoy!
 
1. Buyback Blackouts and Stock Market Drops:

“October and March are the months when things happen in the markets,” Dhruv Maniktala, the head of True North’s investment team, likes to remind the firm. While October was not without its jitters, the Wall Street Journal foreshadowed in September about the support that share buybacks could have been providing for the S&P 500. By October 5, more than 86% of the S&P 500 was restricted from repurchasing shares, according to the article. In the following four trading days (October 8-11) the S&P 500 dropped almost 5.5%. Was the ‘blackout period’ a coincidence or a cause of the sell-off? The first lesson of statistics is that correlation does not equal causation; buybacks have for the first time in 10 years accounted for the largest amount of cash spending by S&P 500 companies. It may, in fact, have been a contributing factor. This is notwithstanding the numerous domestic and geopolitical factors weighing on financial markets at the moment – the Fed, China, and Presidential tweets among others.

2. Survey Shows Manager Pessimism:

Continuing with this month’s theme of jittery markets and questionable correlations, Bank of America Merrill Lynch’s monthly survey of investment managers showed that fund managers are growing increasingly pessimistic about the world economy’s global growth potential, expecting growth to decelerate next year. The last time this group of managers were this pessimistic was November 2008, one quarter before the S&P 500 hit its low during the financial crisis. While this correlation may be spurious, it is evidence of the growing uncertainty that we have been witnessing from the managers that True North speaks with on a regular basis. This may be a cause for concern, but it does not mean that we are deviating from our goals in managing a diversified portfolio that is designed for unknown and volatile environments. When the turbulence of financial markets increases, maintaining conviction in prudent diversification reminds us that being able to steadily compound capital in the long-term and protecting capital in the short-term is the goal.
 
3. Are You Going to be Okay?

Do you ever feel overwhelmed by the information tidal wave that hits you every day?  Be it social media, 24-hour news feeds, smartphones, internet, or radio, humans today are routinely bombarded with data. In our business we call this “noise”, and the information (or noise) received is designed to keep you engaged by triggering your emotions. It can be the emotional high of a successful sporting event, or the emotional low of partisan politics. Most political and market news is consistently depressing and intended to drive the recipient’s anxiety levels up, which keeps them hooked and wondering “what will happen next and how does it affect me?” The long-term implications of this “information overload” is still unknown. Over time it can certainly have a negative impact on your health, stress levels and emotional wellbeing if not managed properly.

When it comes to financial markets, it’s important to remember that True North has designed and implemented a customized long-term investment strategy for you, with the goal of helping you navigate the short-term noise to achieve long-term financial success. This is just ONE part of your financial plan.

As humans, we all recognize how hard it is to ignore the noise. While we encourage our clients to tune it out, it can still raise concerns. If you find yourself questioning the success of your financial strategy, please don’t hesitate to contact us so we can walk you through your plan again.  

Our goal is for every client to have confidence that they are on a sure course to achieving their financial goals. We also want clients to understand what actions and disciplines are required to get there, in spite of the current economic environment. We advise you to be selective and disciplined in what you choose to consume from the always-available-information-buffet. Sometimes you just need to walk away from it, do something enjoyable and stop worrying about the media hype.

Please give us a call if/when you are feeling emotionally drained from all the “noise.” We are here for you.

4. Protecting Your Financial Future from the Effects of Cognitive Decline:
Over half of the U.S. population over age 85 suffers from some level of cognitive impairment. This leaves older people more vulnerable to financial fraud and abuse. What may be the most troubling is that our ability to make sound financial decisions typically declines as we age, but our confidence in the ability to make good financial decisions increases. This paradox sets the stage for financial risk, so it’s important to take protective measures and be prepared.
  1. Get started early: Develop your protection plan in your 50s or 60s. The onset of cognitive decline is often impossible to predict, and many individuals wait until it's too late to put a plan in place. 
  2. Simplify your financial picture: Consolidate your accounts and simplify your portfolio structure as much as you can so your trusted advisor, attorney, CPA or family members can easily monitor your assets for you, if necessary. 
  3. Get help from a fiduciary advisor: The Committee for the Fiduciary Standard creates a simple, legally enforceable contract called the fiduciary oath. You should only work with an advisor who is willing to sign this oath, promising to put your interests first by exercising skill, care, and diligence, avoiding conflicts of interest and not misleading you.
  4. Automate and monitor your accounts and information: 
    • The FTC’s Consumer Information website provides helpful information about how to keep your personal information secure, as well as recommendations for identity and credit monitoring services. 
    • LifeSite is a virtual safe deposit box that allows you to scan everything from insurance policies to passports with your phone. It stores your images securely on their site and allows you to give authorized family members online access to the information.
    • LifeLock is a respected resource for credit monitoring and identity theft protection. It’s a critical service if you have already been the victim of an identity or credit breach, but even better to start this type of monitoring proactively.
    • LastPass is a password management service that allows you to create unique, complex passwords for every website you use…without having to memorize them. You only need to remember the password to login to LastPass, and their site manages the rest. Services like LastPass are mobile friendly, so you have access to all your passwords on the go. You also have the option to share the account with your spouse, so you both have access to login information (even when one of you changes a website password).
  5. Block scammers to reduce fraud attempts: 
    • AT&T Call Protect is a free mobile app that detects calls from likely fraudsters, telemarketers and spam callers. The program displays “Suspected Fraud”, “Telemarketer”, etc. in the caller ID, giving you the option to screen the call. The program also allows you to block unwanted numbers. (Other phone carriers besides AT&T offer similar free apps.)
    • Nomorobo is a low-cost mobile app that allows you to block unwanted calls from scammers and telemarketers, so they never ring to your phone. Legal robocalls, like school closings and prescription reminders are allowed to go through. If you have a voice-over-IP (VOIP) landline, Nomorobo can use a service called “simultaneous ring” to intercept and block robot-dialed calls. This landline service is free and the mobile app carries a small fee ($19.99/year).
    6.  Protect your Social Security Number:
    • The Social Security Administration has invited Americans to open a MySSA Account online. This online access has created new fraud opportunities for bad actors who establish accounts using stolen social security numbers and then redirect funds. The best way to protect your SSN is to open your own MySSA account, which eliminates the risk of someone else creating a fake account with your SSN.  
    • If you know your SSN has been compromised and you are not comfortable with creating an online account through MySSA, you have the option to block electronic access to your SSN. This means that no one (including you) will be able to see or change your personal information online or over the phone. You can request to remove the block in the future by proving your identity to the Social Security Administration.
5. Fulfilling Lives in our Community:

November_555_-_Google_DocsTrue North Advisors celebrates employee’s passion for serving their community. True North gives employees volunteer time off to give back to causes they care deeply about. Blake Kinney, Business Operations Analyst, used his time to serve on the 2018 Board for the Rise Roundup event. The Rise Roundup is the largest event of the year for The Ashford Rise School of Dallas & the Touchdown Club of Dallas (“TDC”), which celebrated their 20th Anniversary this year. Blake oversaw the sourcing, evaluating, negotiating and selection of the caterer for 800+ people, met bi-monthly to plan and coordinate the event and worked with other volunteers to set up the venue for the big day, featuring Pat Green. The event was held Friday, October 12. “Being around the Rise School students reminds you how important it is to find the joys in life. I think that was the goal for the event: to raise money for a really great cause and have some fun doing it.” said Kinney.

The TDC of Dallas is an organization of like-minded men working together to raise charitable donations and contributions through various annual events that directly benefit the school. The mission of TDC is to provide financial, volunteer, and advisory support to the school, its students and their families. Recently relocated to the newly constructed Moody Family YMCA located in the Park Cities, the Ashford Rise School of Dallas is an early childhood education program for children ages 6 months to 6 years with developmental disabilities like Down syndrome.  Ashford Rise is the only community resource in Dallas that delivers intensive education, intervention and therapy during the children’s early formative years.  TDC continues to be the lifeblood of Ashford Rise raising $750K to $1M every year to help improve the lives of the students and their families.  100% of the funds go directly to Ashford Rise. We are proud to have Blake engaged in giving back to our community.

 

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