As we end the summer, let us take a moment to congratulate Alexis Long, who was recently promoted to Wealth Manager at the Firm.
Alexis has been with Willis Johnson & Associates for three years now and has worked her way up from Paraplanner to Associate Wealth Manager to Wealth Manager.
Alexis earned her undergraduate degree in International Business from Texas Tech University and her Finance M.B.A from the University of St. Thomas. In 2016, she received the CERTIFIED FINANCIAL PLANNER™ designation from the CFP Board of Standards.
Mrs. Long was recognized in the Houston Business Journal in People on the Move last month.
We are honored to have her as part of our team.
Willis Johnson, CFP®
President and CEO
Did you know that missing the 10 best days of the stock market would have reduced your return by 3.68% per year over the last two decades?
Not only that, but six of the 10 best days in the stock market occurred within two weeks of the 10 worst days in the stock market over that time frame. The chart below shows the performance of a $10,000 investment in the S&P 500 from January 2, 1996 to December 31, 2015.
A recent example of this phenomenon occurred after the Brexit vote in 2016. The S&P 500 had its worst day of performance in the aftermath of Brexit, when it fell by 76 points on June 24. By July 8, only 10 days later, the S&P 500 had completely recovered. On top of that, June 26 was one of the top 10 performance days for the S&P 500, during which it posted a 1.47% gain that day. If an investor had sold out of the stock market after Brexit, he or she would have lost out on the recovery and the high performance day.
Our recommendation: Don’t try and time the market in the short term by making major transitions to cash or dumping money into equities—stay with a consistent diversified strategy over time, and rebalance as needed.
Jason Mishaw, MSF
As an associate wealth manager at Willis Johnson & Associates, Jason Mishaw is actively involved in both the Financial Planning role and the Investment Management role. On the financial planning side, he helps to implement customized financial plans for WJA clients. On the Investment Management side, under the supervision of a Senior Wealth Manager, he assesses the financial goals of WJA clients and assists in creating a customized strategy to further those goals.
Jason received a Master of Science in Finance at the University of Houston C.T. Bauer College of Business, a B.A. in economics and a B.S. in biochemistry and cell biology from Rice University.
P/E Ratio’s don’t do as well Predicting Returns in the Short Run as they do in the Long Run.
We are currently sitting at a forward price-to-earnings (P/E) ratio of about 18x, which is above the 25-year long-run average of 16.0x. Even though we are above the long-run average, that does not necessarily mean the market cannot keep running. P/E ratios are one method that we use to determine if the market is overvalued.
In the graph below, you can see that P/E ratios are better at predicting the subsequent 5-year returns than they are the subsequent 1-year returns. Just because the market looks over valued does not mean we will see an immediate correction.
When making investment decisions, we believe it is important to do a comprehensive analysis. Do not try to use one metric to time the market in the short run—you could be wrong.
Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. This information is not intended to be a substitute for specific individualized advice and should only be relied upon when coordinated with individual advice.
Nick Johnson, CFA®,CFP®
Nick Johnson believes that financial planning is more than numbers on a balance sheet and a standardized process. People are unique and should be treated as such.
As Vice President and Wealth Manager at Willis Johnson & Associates, his goal is to really get to know his clients, all the while providing a proactive approach to comprehensive wealth management.
The last day of July saw each of the indexes listed here post gains over their June closing values. Despite slumping tech stocks at the end of the month, the Nasdaq led the benchmarks for the month, closely followed by the Global Dow, as each index gained over 3.0%. Both the large-cap Dow and S&P 500 posted gains, spurred by charging energy stocks and favorable corporate earnings reports. The small-cap Russell 2000, which has lagged behind the other indexes listed here, gained a little more than half a percent for the month and is up just over 5.0% year-to-date. The overall favorable performance of the market was more noteworthy considering the upheaval in the White House and the failure of Congress to enact health-care legislation. The yield on 10-year Treasuries was little changed from June. Yields increase as bond prices decrease.
By the close of trading on July 31, the price of crude oil (WTI) was $50.18 per barrel, up from the June 30 price of $46.33 per barrel. The national average retail regular gasoline price was $2.312 per gallon on July 24, up from the June 26 selling price of $2.288 but $0.106 more than a year ago. The price of gold increased by the end of July, closing at $1,275.60 on the last trading day of the month, up $34.20 from its June 30 price of $1,241.40. Click here to see full update.