In our last blog, we wrote on our goal to further our research into Environmental, Social, and Governance (ESG) standards; both on how it is used in our world of finance and in our personal business workspace. We were quite excited when we had an ‘aha moment’ while chatting about creative ways we could further incorporate ESG values into what we do. The idea: we could document the birds at the Stump Farm – the name of the property where White Raven Financial is located. We had recently learned from a friend, via an enlightening email, that the bird population has fallen almost 3 billion since 1970. We should mention that neither of us knew much about birds, but we thought this would be a great learning opportunity. So by taking some hints from the Cornell Lab of Ornithology website, we plan to become involved with bird conservation.
Photographing and documenting birds in the field is not as easy as it sounds. While we can hear the tweets of our winged friends, it was difficult to pinpoint the source. Alas, our initial attempt to bird watch failed in January. If anything, we do know that eagles often visit the Stump Farm, but the photo attached to this blog is not to our credit. An interesting side note, which you may already know, was brought to our attention: The cry of an eagle you hear in movies is usually that of a red-tail hawk.
Even though there are no great singers or tweeters here at White Raven Financial, we take pride in our ability to be good listeners. We find that active listening is especially important in our Financial Consulting and Financial / Retirement Planning work. We are a bit unusual from most firms in that we do allow hourly consulting for those who seek the service. The meetings are typically one-time for those clients that need some quick, fundamental advice. However, we will admit that there are times when we don’t know the answer to every question. With careful due diligence, we perform research or consult an expert in the field before providing an answer or recommendation.
Recently the news has us listening carefully to the impact of the wide-spreading coronavirus and its effects on both a national and international economic scale. Within a weeks’ time, due to sanctions provided by various government agencies, the U.S. economy now appears to be in a risk-off mode with continued consumer confidence. Charles Schwab’s Jeffery Kleintop, in his January-end blog, felt that it may take a few months to assess the actual impact of the virus. He further indicated that the global economy and their markets have been relatively immune to past viral epidemics. Additional good news was received at the beginning of February when the Institute of Supply Management (ISM) announced that factory activity had a reading of 50.9, signaling expansionary territory; quite an improvement from the 47.8 that was announced in December of 2019. In December, we read many 2020 growth outlooks, but a recent couple of articles caught our eye: Mark Hulbert, a columnist for MarketWatch and editor of Hulbert Financial Digest, wrote about his indicators for future forecasting: How stubbornly low interest rates could indicate lower economic growth for future market returns. In his article, he cited the latest research from the Pew Charitable Trust where the study where it indicates an assumed equity return rate of 7.4%, down from 8.0%
Traveling our reading and listening ear overseas for news we found that Blackrock, in their Key Points, addressed the possible financial impact to the global economy due to the coronavirus. They wrote that due to easier financial conditions and trade tensions going sideways, they still expected 2020 growth to edge higher. Matthews Asia, addressed the Wuhan-Coronavirus, stating they were encouraged with the response and transparency shown by the Chinese authorities. They felt that if the virus can be brought under control, the impact should be negligible over the course of the full year. Naturally, no one can accurately predict the magnitude and/or the duration of the virus, which brings us back to our mantra of having diversification of your investments within your risk tolerance.
The January major indices brought us turbulence and a reminder that the markets can be volatile – much like the weather. The blue-chip barometer (the Dow)* had a few light showers and ended the month falling -0.99%. The S&P 500 (SPY)* was not quite as overcast and ended January with dropping -0.16%. The tech-rich Nasdaq Composite (COMPTR)* preferred the sun and the month-end showed a 1.99% gain. (*After linking, click on Quarterly & Monthly Total Returns, “Monthly” tab.) On Tuesday, January 28th, the Dow Jones Indices released the latest S&P CoreLogic Case-Shiller report and noted that home prices are continuing to increase at a modest rate. The 20-city composite Home Price Index in November reported a 2.6% annual gain; a 2.2% gain from the previous month year-over-year posting. Before seasonal adjustments, month-over-month data had the month of November showing a 0.1% increase over the prior month of October for the 20-city composite index.
Regards and thank you,
The Team at White Raven Financial
*Indexes are unmanaged and do not reflect service fees, commissions, or taxes. You cannot invest directly in an index. Past performance is not necessarily indicative of future results. Returns for the DOW, S&P 500 and the NASDAQ are the total return (price only) provided by Morningstar as of January 31, 2020. Diversification and asset allocation do not assure or guarantee better performance and cannot eliminate the risk of investment loss.
*The Standard and Poor’s 500 is an unmanaged, capitalization weighted benchmark that tracks broad-based changes in the U.S. stock market. This index of 500 common stocks is comprised of 400 industrial, 20 transportation, 40 utility, and 40 financial companies representing major U.S. industry sectors. The index is calculated on a total return basis with dividends reinvested and is not available for direct investment.
*The Dow Jones Industrial Average covers 30 blue chip U.S. companies selected by the editors of the Wall Street Journal. The Dow represents about 25% of the NYSE market capitalization and less than 2% of NYSE issues.
*The NASDAQ is a market-value weighted index that measures all NASDAQ domestic and foreign common stocks.