Category Archives: Money

Market Update

by Mark Holloway & Paul Stropkay

Stock Yards Bank Wealth Management and Trust

top

markApril 3, 2018

Dear Clients and Friends,

We were all spoiled by last year’s 21% return and low volatility in the stock market.  Yesterday’s 458 drop in the Dow was just the most recent of several days with large point declines in the major stock market indices that began with the 1,032 point drop on February 5th.  The market is now down approximately 3.0% year to date.

Market volatility is traumatic for investors who forget that, while stock prices may be erratic, the fundamental value of quality businesses is actually quite stable.  Over time, price and value tend to converge.  Alert investors can take advantage of opportunities that price volatility provides.  We are encouraged by the growth in corporate profits that we are seeing this year and remind ourselves that stock valuations are reasonable in the context of history.

That said, what is causing the wild market swings?  Increasing interest rate expectations from the Federal Reserve have added a level of uncertainty.  Late last year, most analysts believed that we should expect two and possibly three increases in rates during 2018.  That expectation is now up to four increases based on the strength of the economy and renewed inflation fears related to full employment.  Full employment generally brings increasing wage pressure and has historically been an omen of future inflation.  Increasing interest rates are a threat to economic activity, increase costs for companies that borrow, and pose competition to stocks for new investment dollars.

Secondly, the drama and political turmoil in Washington has added to uncertainty.  The high rate of turnover in key areas of the Trump advisory team including Secretary of State and Chairman of the Economic Advisors rattled the markets.  The failure of Congress to pass an acceptable budget also added to the feeling of political dysfunction.

The third and most important cause of the recent volatility is the discussion of tariffs.  The Trump administration wants to impose tariffs on imported steel and other products.  Tariffs are essentially taxes on imported goods.  Exporting countries seldom sit by idly and accept these taxes.  They retaliate with tariffs of their own.  Remembering our economic history, tariffs were one of the reasons the great depression was so severe and prolonged.  The global trade war that resulted set back economic growth for a decade.  Fear of slowing global growth resulting from a new trade war has rattled markets.  We can only hope that this is part of the “art of the deal” and that the new administration is trying to force our trading partners back to the negotiation table.

We still believe that we are in a secular bull market for common stocks.  A secular bull market is a market in a general uptrend with higher highs and higher lows in absolute index price levels.  This does not mean that there will not be corrections.  The attached chart shows that stock market declines in secular bull markets of 5%, 10%, or even 20% should be expected.  Larger declines have only happened during recessionary periods.  There are no signs that the economy is heading for a recession in the near future.  In fact, economic growth is accelerating.stock vot.jpg

It is important to keep things in perspective.  The 500 point drop in 1987 represented a 21% decline.  The nearly 500 point drop yesterday was only a 1.9% decline on today’s much higher market level.

Remember, no one can time the market.  It is against human nature and too many consecutive correct decisions must be made very quickly to ever be successful.  It is important to stay invested for those good days that make all the difference in portfolio performance.  As the attached chart shows, many times these bounce-backs happen immediately after days like yesterday.neg days.jpg

We appreciate your continued trust and confidence.

The Wealth Management & Trust Group

Stock Yards Bank & Trust

 


The Wealth Management Group

KATHY THOMPSON, J.D., Senior Executive Vice President, (502) 625-2291
E. GORDON MAYNARD, J.D., Managing Director of Trust, (502) 625-0814
MARK HOLLOWAY, CFA, Chief Investment Officer, (502) 625-9124
SHANNON BUDNICK, CTFA, CFP®, Managing Director of Investments, (502) 625-2513
PAUL STROPKAY, CFA, Chief Investment Strategist, (502) 625-0385

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE


We provide the information in this newsletter for general guidance only. It does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, investment, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, expressed or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
Advertisements

7 Worthwhile Ways to Use Your Tax Refund

 

SYB-Logo_Since1904

According to the Internal Revenue Service, more than 70 percent of the nation’s taxpayers received a tax refund averaging nearly $3,000 in 2017 and will get a similar amount this year. As Americans receive their refunds along with additional benefits coming from the Tax Cuts and Jobs Act passed in December, we have highlighted seven tips to help them use their money wisely.

To help consumers make the most out of their money, We have provided you with the following tips.

  • Save for emergencies.  More than 60 percent of Americans are not prepared for unexpected expenses. You can prepare by opening or adding to a savings account that serves as an “emergency fund.” Ideally, it should hold about three-to-six months of living expenses in case of sudden financial hardships like losing your job or having to replace your car.
  • Pay off debt.  Pay down existing balances either by chipping away at loans with the highest interest rates or eliminating smaller debt first.
  • Save for retirement, your child’s education or future health expenses. Open or increase contributions to a tax-deferred savings plan like a 401(k) or an IRA. Your bank can help set up an IRA, while a 401(k) is employer-sponsored. Look into opening a tax-advantaged 529 education savings plan to ensure school expenses will be covered when your child reaches college age. Or save for future health expenses with tax-free dollars by investing in a Health Savings Account.
  • Pay down your mortgage or student loans.  Make an extra payment on your mortgage or student loans each year to save money on interest while reducing the term of your loans. Be sure to inform your lender that your extra payments should be applied to principal, not interest.
  • Invest safely with U.S. savings bonds or municipal bonds. The U.S. Treasury allows for savings bond to be purchased using your tax refund for as little as $50. Savings bonds earn interest for a maximum of 30 years.
  • Invest in your current home.  Use your refund to invest in home improvements that will pay you back in the long run by increasing the value of your home.  This can include small, cost-effective upgrades like energy-efficient appliances that will pay off in both the short and long term – and with tax credits (as long as Congress continues to renew the program).
  • Donate to charity.  The benefit is two-fold: Giving to charity will make a difference in your community, and you can also claim the tax deduction, if you itemize.

Resource information provided by the American Bankers Association.

SYB-Logo_.png

Market Update

by Mark Holloway & Paul Stropkay

Stock Yards Bank Wealth Management and Trust


st     wealh

Having enjoyed relative calm in the capital markets, as well as all-time highs across a variety of equity indices during 2017 and into the first month of 2018, many investors were stunned by price volatility in stock and bond markets this afternoon.  While price volatility may feel unsettling, we are aware that secular bull markets are often temporarily interrupted by intermittent downdrafts in market prices.

So, what happened today?  Early reports cite computerized trading as the source of market price volatility.  A more fundamental cause may be that interest rates have risen in recent weeks and offer current yields that investors have not seen in recent memory.  At some level of interest rates, bonds compete with stocks.

Famous value investor Benjamin Graham is attributed with the following quote: “In the short run, the market is a voting machine but in the long run, it is a weighing machine.”  As long-term investors, we weigh the wealth-creating power of the companies we have purchased for our clients’ portfolios and welcome investment opportunities that price volatility provides.

As always, we will continue to monitor developments in the economy and in the capital markets with our clients’ portfolios in mind.  Rest assured that our commitment to quality, liquidity, and risk management will not waiver.

Should you have any questions or concerns, please contact your investment officer at Stock Yards.  We always welcome the opportunity to discuss your objectives and to develop an investment portfolio to help you reach your goals.


Wealth Management & Trust

KATHY THOMPSON, Senior Executive Vice President, (502) 625-2291
E. GORDON MAYNARD, Managing Director of Trust, (502) 625-0814
MARK HOLLOWAY, Chief Investment Officer, (502) 625-9124
SHANNON BUDNICK, Managing Director of Investments, (502) 625-2513
PAUL STROPKAY, Chief Investment Strategist, (502) 625-0385

NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE


We provide the information in this newsletter for general guidance only. It does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, investment, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, expressed or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.

st1.jpg

INVESTMENT INSIGHTS

by Joan Schade

Stock Yards Bank Wealth Management & Trust


We all like to plan and dream about how we’ll spend our retirement years. What does your plan look like? Will you travel, play golf, garden, or visit with friends and family? Maybe you’re planning to move, or perhaps you’d simply like to spend some time relaxing and enjoying some well-earned rest. Sometimes, however, unplanned events arise that leave us stunned and thinking, “What just happened?” Fortunately, if we have the right type of insurance in place it can make dealing with the unexpected a whole lot easier.

When you start to plan for your retirement years it is always a good idea to review the insurance you already have in place. Consider if your needs or objectives have changed since you made the original purchase. For example, was your term policy to insure that your children’s education would be covered or that your house would be paid off should something happen to the main bread winner? If your children are grown and there are only a few payments left on the mortgage, your current policy may not be the right type of protection needed at this stage in your life.

Purchasing insurance to provide some income for a surviving spouse is common, but you may also want to look at a long-term care policy. Without the right kind of insurance, you could be forced to use all of your hard-earned savings, including your retirement savings to pay for care. The cost of such needs continues to grow by leaps and bounds. Long Term Care Insurance policy options have grown as well in the last decade. As opposed to the “use it or lose it” options in years past, many policies now offer a wide array of hybrid products that will allow you and/or your spouse to use what you need and pass any remaining dollars on to your beneficiaries tax-free.

Insuring for the right purpose today could protect the quality of your retirement years. Wouldn’t we all like our retirement dreams to come true?

For more information about Investment Plans, please contact our Wealth Management and Trust Department.

 

5 Ways to Spot a Lottery Scam

According to the FBI, in 2014 consumers lost more than $8 million to solicitation scams promising instant wealth and grand prize earnings. These scams, commonly referred to as the “advance fee,” “lottery” or “sweepstake” scam, involve fraudsters issuing counterfeit checks and fake award letters to consumers who have allegedly won a lottery or sweepstake raffle. The consumer, who most likely never entered the alleged drawing, is issued a check worth more than the amount owed and instructed to pay taxes and fees before receiving their lump sum payment. Unfortunately, the check — in addition to the raffle — is bogus.

Before you participate in any lottery or sweepstake, Stock Yards Bank & Trust encourages you to keep these tips in mind:

• Don’t be fooled by the appearance of the check. Scam artists are using sophisticated technology to create counterfeit checks that mirror the appearance of legitimate checks. Some are counterfeit money orders, some are phony cashier’s checks and others look like they are from legitimate business accounts. The companies whose names appear may be real, but someone has dummied up the checks without their knowledge.

• Never ‘pay to play.’ There is no legitimate reason for someone who is giving you money to ask you to wire money back or send you more than the exact amount —that’s a red flag that it’s a scam. If a stranger wants to pay you for something, insist on a cashier’s check for the exact amount, preferably from a local bank or one with a local branch.

• Verify the requestor before you wire or issue a check. It is important to know who you are sending money to before you send it. Just because someone contacted you doesn’t mean they are a trusted source.

• Ensure a check has “cleared” to be most safe. Under federal law, banks must make deposited funds available quickly, but just because you can withdraw the money doesn’t mean the check is good, even if it’s a cashier’s check or money order. Be sure to ask if the check has cleared, not merely if the funds are available before you decide to spend the money.

• Report any suspected fraud to your bank immediately. Bank staff are experts in spotting fraudulent checks. If you think someone is trying to pull a fake check scam, don’t deposit it—report it. Contact your local bank or the National Consumers League’s Fraud Center, fraud.org.

For more information about fake check scams and how you can avoid them, go to fakechecks.org.

Resource information provided by the American Bankers Association

6 Tips For Saving Success

As the summer months quickly approach, there’s no better time to evaluate savings strategies. Whether it be for that dream summer vacation or a down payment on a home, a few small changes can have a big impact on your financial future.

Stock Yards Bank offers the following tips to put you on the path towards saving success:

  • Set a goal. The first step is to establish a realistic savings goal. Consider your expenses, make a budget and determine how much you can put away each month.
  • Track your spending. Hold yourself to the budget you’ve set by tracking your expenses. Consider using websites that segment your spending so you can easily see what areas, if any, you are going over budget then adjust accordingly.
  • Pay yourself first. Arrange to have a specific amount transferred to your savings account every pay period. If you wait till the end of the month to see what’s left over, you are less likely to save.
  • Consult a banker. Stop in to Stock Yards and speak with a banker about which package of products and services would best suit your saving needs.
  • Consider investments.For long-term goals, such as saving for a home or retirement, look into bonds, mutual funds, real estate and stocks.
  • Set up automatic bill pay.Although 97 percent of Americans pay their bills on time, some consumers find themselves paying late fees. Set up automatic bill pay so you’re never paying more than you have to.

Resource information provided by the American Bankers Association