Does Your Portfolio Reflect Your Risk Tolerance?
Stocks historically have exhibited the highest level of market risk -- or the potential that an investment may lose money in the short term. Over long periods of time, however, stocks have outperformed both bonds and cash investments.1
This risk/return tradeoff may influence how you allocate your investments. For instance, consider weighting assets that you intend to keep invested for 10 years or more toward stock investments. Bonds carry their own risks -- credit risk, or the possibility that a bond issuer could default on interest and principal payments; and interest rate risk -- the chance that rising interest rates could cause a bond's price to fall. Ascending interest rates historically have influenced the prices of bonds more directly than the prices of stocks.
|
The Markets
'Tis the Season
Third quarter earnings season, that is. Every quarter, companies report earnings to let investors know how profitable the companies were during the quarter. When profits grow, a company's share price may move higher. When profits decline, a company's share price may move lower.
For five consecutive quarters, the Standard & Poor's 500 Index (S&P 500) has been in an earnings recession - the earnings for the companies in the index have declined every quarter. Another earnings decline is expected for the third quarter. As of September 30, analysts estimated a -2.0 percent earnings decline for the third quarter, according to FactSet.
|
By the Numbers
Notes: S&P 500, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized ... more important disclosure mentions found here. (We urge you to read the entire disclosure statement.)
|