October News

October 5th, 2018 by Anchor Bay Capital's Investment Team

Admin News


Jeran, our President and Director of Financial Planning for the past 3 years, will be leaving to take a position with another firm. He was offered a great opportunity and felt that it was the right decision for him and his family. We are very thankful for all the great work he did on behalf of our clients and wish him well as he embarks on his new opportunity and challenge.

With Jeran’s departure, we have placed a high priority on finding the right individual to take over as the head of financial planning at our firm. We are actively interviewing individuals holding the CFP designation, but also hope to expand our services by finding with someone who will add a tax planning background.

As a reminder, and per many client requests, we are hosting a Social Security Seminar and free lunch at the Crossings in Carlsbad on Wednesday, October 24. Please RSVP to Sophie ASAP as this room will fill up. The head of the Social Security Public relations office in San Diego will be conducting a question and answer session as well as informing our guests of new Social Security rules instituted and pending. Please join us and feel free to invite a friend or neighbor who you think may benefit from this valuable information.

Market News


We have just wrapped up the best quarter for the Dow and S&P 500 since the end of of 2013, despite a variety of challenges. Continued strength in the U.S. economy and impressive growth in corporate America, were key drivers of stock market performance last quarter.

The stock market’s year to date performance has been impressive given the constant news barrage surrounding tariffs and trade tensions. But those weren’t the only challenges. Last week The Federal Reserve (Fed) raised interest rates for the eighth time this cycle and is on track to hike again in December. Long-term interest rates have been rising all year, but the yield curve has stayed flat. The upcoming midterm elections introduce policy risk. Add all that to the fact that the third quarter has, historically, been the worst quarter for the stock market. Despite the numerous headwinds, stocks have sailed upward, extending the longest bull market ever.

Thursday and Friday we saw some small pullbacks as the bond prices dropped some and 10 Year Treasury yields hit over 3.2%. However, in the grand scheme of things, losing 600 points on the Dow isn’t much to get worked up about. Unemployment was at 3.9% in August[1] – historically low, while personal income increased by 0.3%[2] and Q2 GDP growth was up 4.2%[3]. And yet, inflation still sits at 2.2%[4], right about where the Fed wants it. All of these metrics check the boxes for an economy that is firing on all cylinders, even in the face of the headwinds mentioned earlier.

At Anchor Bay, we are pleased with the recent success the market but also believe it is smart to put in place protective measures to make sure we are prepared should there be a downturn. We are making a shift into short-term treasuries and away from corporate bonds on the fixed income side. Treasuries are offering short-term yields comparable to corporate bonds, only with less default risk and potential state tax relief. Staying short allows us to take advantage of future interest rate hikes as we go forward. Additionally, we are maintaining our stop loss strategy on some of the equities that have seen incredible gains over the last year. Should these securities see a sudden and large sell-off, we have automated measures in place to respond and help limit the downside.

[1]National Employment Monthly Update National Conference of State Legislation http://www.ncsl.org/research/labor-and-employment/national-employment-monthly-update.aspx

[2] Principal Federal Economic Indicators Bureau of Economic Analysis. U.S. Department of Commerce https://www.bea.gov/

[3] Principal Federal Economic Indicators Bureau of Economic Analysis. U.S. Department of Commerce https://www.bea.gov/

[4] Databases, Tables, & Calculators by Subject Bureau of Economic Analysis. U.S. Department of Commerce https://data.bls.gov/timeseries/CUUR0000SA0L1E?output_view=pct_12mths