Responding to Risk

Synopsis: Consistently predicting the direction of the stock market over the short term with a high degree of certainty is unlikely.  By comparison, market risk and economic risk are quantifiable.   If an investor does not need to tolerate significant risk to achieve his or her investment objectives, has a short investment horizon, or is unwilling to tolerate significant fluctuations in the value of his or her investment portfolio, it may be appropriate to adopt a more conservative approach when the level of risk is well above historical levels.   At the present time market and economic data suggest the…

The Market Week in Review

  The stock market finished the week higher as a bounty of positive earnings reports and economic data drove major stock indices higher.  Interest rates were virtually unchanged from the week prior with the 10-year treasury yield dropping 1 basis point to 2.95%.  The spread between the 10-year treasury yield and the 2-year treasury yield widened by 3 basis points to 0.32%, but still remains alarmingly narrow.  Commodity prices also saw little movement with the price of gold dropping 0.07% to $1,221.90 an ounce and the price of crude oil dropping 0.48% to $68.68 a barrel.  The U.S. dollar index…

The Market Week in Review

  The stock market finished the week mixed as investors continue to digest earnings reports and conflicting economic data.  The tech-heavy Nasdaq index dropped over 1.0% largely due to Facebook stock dropping nearly 20% on lower than expected revenue and a poor outlook.  Interest rates rose with the 10-year treasury yield rising 7 basis points to 2.96%.  Yet, the spread between the 10-year treasury yield and the 2-year treasury yield only widened by 1 basis point to 0.29% as short-term yields also rose.  Commodity prices moved lower with the price of gold dropping 0.64% to $1,222.80 an ounce and crude…

The Market Week in Review

  Stocks finished the week mixed as investors digest earnings reports resulting in major indices finishing the week virtually flat.  Interest rates moved higher with the 10-year treasury yield reaching 2.89%, 6 basis points higher than the week prior.  The spread between the 10-year treasury yield and the 2-year treasury yield widened by 3 basis points, yet still is at a very narrow margin of 0.28%.  Commodity prices ended the week slightly lower with the price of gold dropping 0.87% to $1,230.70 an ounce and crude oil dropping 0.37% to $70.31 a barrel.  The U.S. dollar index reached as high…