Skip to content
  • XERO Sign In
  • Client Sign In
    • Suralink Client Portal
    • eMoney Login
    • Black Diamond Login
  • Facebook
  • LinkedIn
  • Youtube
  • About
    • History
    • Our Team
  • Services
    • New Doctors
    • Financial Planning
    • Practice Transitions
    • Wealth Management
    • Accounting Services
    • Tax Services
    • New Clients
    • Book a CWA Speaker
  • Resources
    • Resources
    • Podcast
    • Annual Meeting
    • Events
    • 3to1 Foundation
  • Blog
  • Contact
  • XERO Sign In
  • Client Sign In
    • Suralink Client Portal
    • eMoney Login
    • Black Diamond Login
  • Facebook
  • LinkedIn
  • Youtube
  • Careers
  • References
  • Privacy
  • Disclosures
  • Terms of Use
  • Events
  • About
    • History
    • Our Team
  • Services
    • New Doctors
    • Financial Planning
    • Practice Transitions
    • Wealth Management
    • Accounting Services
    • Tax Services
    • New Clients
    • Book a CWA Speaker
  • Resources
    • Resources
    • Podcast
    • Annual Meeting
    • Events
    • 3to1 Foundation
  • Blog
  • Contact

Markets & Investing in Q3

  • by CWA
  • •    October 5, 2015
SHARE

CWA INVESTMENT NEWS
October 5, 2015
by Brad Sanders

The State of the Market
The S&P 500 finished up the third quarter of the year -5.29% in 2015. Stocks have been sold over the past few months because of the ongoing issues, we’ve been covering in CWA investment news recently. The potential for China to cause a global recession, the looming Fed rate decision, and market overvaluation have caused a spike in volatility and worry among investors.

It seems all my recent commentaries are always on the breadth in the market because the fact is, we’re not seeing improvement. Out of the 500 stocks in the S&P 500 Index, only 186 have a positive return YTD. Roughly two-thirds of the index is underwater.

Lipstick on a pig?
Many of the high-flying growth stocks for the year are making up a disproportionate amount of positive return in the market. If it looks attractive to you, consider Factor Investor’s recent analysis of the Russell 1000 Growth Index:
q3 chart 1

All of these stocks are a large part of the S&P 500 as well and are skewing the negative YTD return even higher than it would be otherwise.

A word of caution: Do not chase yield.
One of the first lessons in investing is not to chase yield. Many investors get themselves in trouble when in their thirst for high income, they buy stocks or bonds that sport high yields. What they forget is to consider all the reasons why those yields might be so high. The risk may have been extremely high, or the dividend may be in trouble of being lowered, thus turning the investment into a money loser – and usually in very short order.

One area of the market that has been a popular source of yield over the past five years has been the MLP space (Master Limited Partnerships). These companies are largely midstream companies that service the oil and gas industry. In September alone these partnerships, as measured by the Alerian MLP Index, were down -15.28%. Year-to-date they are down -30.67%. Many of these partnerships had yields at the beginning of the year in the 3% to 5% range, and now many of those same yields are 10%+.

These yields are tempting, but if you think about the slide in oil prices, it’s very possible that producers will now want to restructure pricing with these companies and thus put the yields at risk. Additionally many of these companies operate with leverage, making a drop in revenue dangerous not only to the yield, but to the company itself.

The bottom-line is, if you find yourself being drawn to high-yielding stocks or bonds, particularly in a volatile market, you need to be asking a lot of questions starting with, “What are the true risks here?” One thing savvy investors know is that things aren’t always what they seem.

Brad Sanders is CWA Digital News Investments Editor and Managing Director at Tectonic Advisors.
Brad Sanders is CWA Digital News Investments Editor and Managing Director at Tectonic Advisors.

Cain Watters is a Registered Investment Advisor.  Cain Watters only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability.  Request Form ADV Part 2A for a complete description of Cain Watters investment advisory services. Diversification does not ensure a profit and may not protect against loss in declining markets.  Past performance is not an indicator of future results. 

LIKE THIS ARTICLE? HERE ARE OTHERS YOU MIGHT LIKE.

The Great Correction: Inflation, Interest Rates and the Bond Market

December 6, 2022

Should You Let Your Investments Ride Out Market Volatility?

July 5, 2022

Steps to Negotiating PPO Fees as Inflation Rises

June 3, 2022

Market Watch: Does an Inverted Yield Curve Signal Times of Economic Trouble?

May 20, 2022
GET THE LATEST NEWS AND INFORMATION IMPACTING YOUR PRACTICE.
Email will be used in accordance with our Privacy Policy

CATEGORIES

All
Categories
  • Accounting (7)
  • Accumulating Wealth Podcast (78)
  • Annual Meeting (14)
  • Digital News Feature (107)
  • Financial Planning (121)
  • Inside CWA (27)
  • Investing (57)
  • Knowledge & Know-How (75)
  • News (80)
  • PR/Marketing/Social Media (5)
  • Practice Management (82)
  • Practice Transition (1)
  • Seminars & Events (12)
  • Tax News (83)
  • Technology (5)
  • The 3to1 Foundation (12)
  • The Advisors' Shelf (11)
  • Videos (31)

TOP POSTS

Employee Retention Tax Credit Retroactive Credits for Dental Practices

September 16, 2022

Roth or Pre-Tax? Select the Best Savings Strategy for You

April 18, 2022

IRS Funding Limits for 2022

January 14, 2022

Regaining Control of Dental Practice Salaries

July 9, 2021

Employee Retention Tax Credit Retroactive Credits for Dental Practices

September 16, 2022

Roth or Pre-Tax? Select the Best Savings Strategy for You

April 18, 2022

IRS Funding Limits for 2022

January 14, 2022

Regaining Control of Dental Practice Salaries

July 9, 2021
CONNECT WITH US
  • About
    • History
    • Our Team
  • Services
    • New Doctors
    • Financial Planning
    • Practice Transitions
    • Wealth Management
    • Accounting Services
    • Tax Services
    • New Clients
    • Book a CWA Speaker
  • Resources
    • Resources
    • Podcast
    • Annual Meeting
    • Events
    • 3to1 Foundation
  • Blog
  • Contact
  • Careers
  • References
  • Privacy
  • Disclosures
  • Terms of Use
  • Events
Cain Watters & Associates 17 Cowboys Way, Suite 300 Frisco