October Newsletter to Clients

Enjoy this month’s edition that features a note about your monthly Schwab statement, a tip to avoid a new type of cyber fraud as well as a review of the stock market so far this year.

September statements:

You will receive both a TD Ameritrade statement for each account as well as a Schwab  statement for each account for the month of September. The TD Ameritrade statement will likely show a $0 balance since the account(s) transferred to Schwab over Labor Day weekend. The Schwab statement(s) should display the full balance of your account. 

A tip to avoid a new type of fraud:

Smishing is the latest in fraud attempts. Combining the words “SMS” and “phishing” these text messages are designed to trick people into clicking a malicious link where the criminals can harvest our credentials, install malware and collect personal data. 
 
The messages often appear urgent, telling us we must “click here to unlock our accounts” or “respond to suspicious account activity.” Making them more confusing, they often appear to have come from familiar companies such as Schwab or your bank. 
Good reminders:

•    Do not click on links or attachments included in a text message;
•    Slow down if a message is described as urgent and remain skeptical;
•    Avoid using links directly from the message – go to the official website if need be;
•    Double check the phone number the text came from. Odd looking numbers with only 4 digits can be a red flag the scammer uses to mask their true number.
Stock Market review:

Phew! That sigh of relief heard ‘round the investing world indicates that the 3rd Quarter is finally over. Those late summer into early fall months are traditionally the nadir of the stock year and this year was no different. Here is what happened in September and where we are year to date:

•    S&P 500 Index of large, U.S. companies: Dropped 4.87% in September and is up a little over 13% on the year;
•    Dow Jones Industrial Average Index of 30 large, U.S. companies: Dipped 3.5% last month and is up 2.7% through September;
•    NASDAQ index of technology companies: Dropped 5.8% in September and is up 27% year to date;
•    MSCI EAFE index of international companies: Declined 4% in September and is up 7.5% for the year so far.
In addition to September typically being a down month for stock prices, investors had to navigate some tricky issues that could signal a slowdown of the economy resulting in lower company earnings….emphasis on could. While the Federal Reserve held interest rates at their current levels, they indicated inflation had not yet declined to their targeted 2% rate so they may need to hike rates further this year. Higher interest rates often mean lower stock prices and bond prices. Bond yields increased rather dramatically and that too negatively impacted both stocks and bond prices. Finally, oil prices have risen as Saudi Arabia has limited production swinging the old supply/demand equation out of balance.

So, what’s the good news? History. “One-month periods where stocks do nothing but go down have usually seen a bounce back effect in the period that followed,” wrote analysts at Bespoke Investment Group. In September, the S&P 500 hit an intraday low below the previous day’s low 15 times. That has only happened 14 times since 1993 and the index was higher 79% of the time three months later, by an average of 8.1%. Of course, previous results don’t indicate what will happen in the future. Potentially more good news for the future, core inflation rose only 3.9% in August, down from 4.3% in July. So, while not yet down to that Fed target of 2% yet, the numbers are trending in the right direction. 

Thank you for your continuing confidence.