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Wealth

Coping with Market Volatility: Understand How Your Biases Can Affect Investment Decisions

When it comes to your finances, "go with your gut" might not be the wisest adage to follow. In fact, it may work against you, particularly in periods of market turbulence. Before jumping to conclusions about your finances, consider what biases may be at work beneath your conscious radar. Recency bias refers to the tendency for recent events to have a stronger influence on your decisions than more distant events. For example, when the market was in the midst of an 11-year bull run, you may have increased your investments in equities, hoping to take advantage of any further gains. By...

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Market Update from Ashley Vice, CFA, CFP(r)

Last quarter was unprecedented in many ways. Global economic activity basically stopped as the world sought to slow COVID-19 infections and protect the health care system by ‘flattening the curve’. The efforts seem to be working, with strong evidence that the worst of the contagion has passed. Virus-induced deaths will likely turn out to be orders of magnitude less than initially predicted. We’re all thankful for that. I won’t spend much time discussing the virus since the updates come so rapidly. Nor will I expound on the fiscal responses, other than to say that they have been large and necessary, and...

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Coronavirus Update – Part III

In investing, there are years when nothing happens and there are years when decades happen. 2020 will be one of the latter. At today’s close, the S&P 500 is down 29% from the February 19 highs. This is the sixteenth “bear market” in the modern era—defined as a decline of 20% or more from a previous market high, on a closing basis. What makes this instance particularly challenging is the unprecedented speed; it took just 16 days to go from an all-time high to a decline greater than 20%, the fastest bear market in history. To effectively deal with bear markets, it’s...

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Please be advised: SIMA Response to COVID-19

In response to COVID-19 we will be transitioning our team to a remote working policy for the foreseeable future. At this time a limited staff will remain at our office to provide essential operations. Our service to you as well as the health and safety of our team is our primary concern throughout this time. Our team has the technology and resources required to effectively work remotely and will continue to provide you the service you need. Our Accounting team plans to remain at the office until further guidance is provided by the Internal Revenue Service (IRS) on the possible extension...

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Coronavirus Update – Part II

Yesterday the Dow fell 1,190 points—the largest point decline in history. It sounds apocalyptic, but it was only the 125th worst percentage decline. It matters how we measure these things. Yet all we hear are stories about points. Take from that what you will. In all, the S&P 500 lost 11.45% this week, a swift decline from last week’s all-time highs. No matter how often we have corrections or bear markets, or how periodic or “normal” they are, we’ll never get used to them because we abhor losses. Even temporary ones drive us crazy. Blame the limbic system and the amygdala...

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Coronavirus Update – Market Impact Report from Ashley Vice, Portfolio Manager

The outbreak of the coronavirus has damaged investor confidence, resulting in back-to-back declines of 3% in the S&P 500 on Monday and Tuesday. It’s unsettling, but not uncommon; we’ve now had 80 such daily declines of 3% or more since 1990. Putting aside today’s performance, U.S. markets fell 7.6% from last week’s record high; notable, but well below the average intra-year decline of -14%.[i] Every sell-off is unique, but the formula is familiar; overconfidence collides with a catalyst, causing investors to realize that perhaps they’re out over their skis. Changes in confidence are hugely important but nearly impossible to predict. Confidence isn’t...

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Market Commentary from Ashley Vice, CFA, CFP®

Time to read: 8 minutes We’re starting the new decade amid a record economic expansion. While it hasn’t been a particularly strong expansion, it certainly has been durable. The widespread narrative this time last year was that without a trade deal with China, the economy and the market wouldn’t get traction. Clearly that was not true, as unemployment declined from 4% to 3.5% and the S&P 500 advanced more than 30% including dividends. What’s driving the economy today is a tsunami of technology. Tablets, smartphones, apps, streaming services, cloud computing, the 5G rollout, etc. It’s raising productivity, boosting profit margins and will bolster...

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The Financial Marathon

A Marathon for Everyone Recently, I went to cheer on a friend running in her first marathon. The excitement of watching thousands of people accomplish such an amazing goal was an experience like no other. I waited at the last bend before the finish line so I’d have a good vantage point for cheering my friend on. What I did not expect was the wave of emotion that washed over the faces of each runner as they saw the finish line for the first time. There were people from all walks of life, from young athletes trying to beat previous race...

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Market Watch – A Decade in Review

Ashley Vice, CFA, CFP ® By almost any economic or financial metric, the twenty-tens have been an amazing decade. This has been the first decade in American history without a recession. Our economy grew 40% while the population grew by less than 10%. (Said another way, GDP per capita soared). Unemployment hit generational lows. Earnings of mainstream equities more than doubled, closely in line with the rise in share prices. Meanwhile, the Consumer Price Index grew only 18% (as did the price of a postage stamp). The misery index (inflation + the unemployment rate) hit a 60-year low. Despite political turmoil,...

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Defensive Investing

Here’s an example of the times we live in: Company A is 10 years old. They employ 383 people. Despite revenues of $115 million, they lost $30 million in the last year. Company B is 100 years old. They employ 18,000 people. They made almost $700 million of profits on $9.5 billion of revenue over the same time period. Which company is worth more? For a brief moment, it was Company A, also known as Beyond Meat. Despite being small and unprofitable, Beyond Meat’s market cap topped that of Conagra (Company B). Who can make sense of that? Maybe plant-based meat substitutes...

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