September 2024 Blog

By: Zachary Bouck, CFP®

Another month, another fluctuation in the stock market.

Source: Ycharts

When we look at the S&P 500’s performance over the past 50 years (from 1950 to 2024), the average annual return has been 11.48%. Breaking it down by month, this translates to roughly a 1% return per month (though this is a simplification for conceptual purposes). Historically, September has been the weakest month for stock returns, while October, November, and December tend to align more closely with the average 1% return.

Source: officialdata.org

So, given September’s tendency for volatility, is now a good time to invest in businesses through the stock market?

If you're focusing on the next 12 months, be prepared for some turbulence. While economic data isn’t disastrous, it’s not particularly encouraging either. The job market is cooling, which often signals a slowing economy. 

However, if you can look beyond the next year and focus on the next 5 years, the outlook is much more promising. Developed economies around the world continue to innovate and grow. Here are a few major projects currently in development that I find particularly exciting:

We’re also just now figuring out what to do with all the computing power we have.

Source: The Wall Street Journal

Unlike the internet bubble of 2000, today’s platform companies are not only profitable but also poised for continued growth.

Stock market investments are inherently long-term commitments, and despite short-term uncertainties, the future remains bright.

Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Stock investing includes risks, including fluctuating prices and loss of principal.​ There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.​ ​The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. The S&P 500 is a stock market index tracking the stock performance of 500 of the largest companies listed on stock exchanges in the United States. Indexes are unmanaged and cannot be invested in directly. Dollar cost averaging involves continuous investment in securities regardless of fluctuation in price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

EP: 158 Is the 4-Hour Work Week Possible?

Co-hosts Zachary Bouck and Austyn Garcia discuss Tim Ferriss' popular book, the 4-Hour Workweek and whether it's principles are still realistic in today's world.

Visit https://www.denverwealthmanagement.com/ for more information.

Check out Tim Ferriss' book's on his website, https://tim.blog/tim-ferriss-books/.

August 2024 Blog

By: Zachary Bouck, CFP®

Even if you don’t follow the stock market closely, you might have heard about the significant downturn during the first week of August. Specifically, on Monday, August 5th, Japan’s Nikkei index experienced its worst single-day drop since 1987, causing the Japanese market to fall by 12.4%.

The reasons behind this crash are fascinating. They include a complex hedge fund strategy known as a carry trade, 30 years of Japanese economic stagnation, and a microscopic rise in interest rates. However, what’s most relevant to your investments at Denver Wealth Management is the significant pullback in the US stock market. As measured by the Nasdaq, the US stock market is down more than 10%, and the S&P 500 is down by 9%.

In addition to the Japanese market drop, we saw two other data points last week that investors reacted to negatively: a tepid jobs report that increased the unemployment rate to 4.3%, and a lower-than-expected Purchasing Managers' Index (PMI).

From a macroeconomic perspective, these data points are important. However, from an individual investor’s point of view, what matters more is how the companies we’ve invested in are performing.

We believe that none of these three headline-grabbing economic data points—Japanese interest rates, a 0.1% increase in the unemployment rate, or a small decrease in the PMI—are significantly important to your portfolio.

If you’ve been a client of Denver Wealth for over 10 years, you might recall our idea from 2014 about a permanent newspaper with headlines that remain consistently relevant. Here are a few from our decade-old newsletter:

• Unrest in the Middle East

• Economic Uncertainty Ahead

• Pope Denounces Violence

• Technology Companies Innovate

• New Medication Discovered

Some headlines make the news but don’t impact our investment decisions. Conversely, some headlines may not make the news but have significant implications for our investment portfolios.

For example, if you’re a young, aggressive-growth investor with Denver Wealth, you likely hold XBI—a diversified ETF of biotech companies. As of January 8, 2024, the fifth-largest holding in XBI was Karuna Therapeutics, a remarkable company founded in 2009 by Dr. Andrew Miller. Karuna’s goal is to ‘develop novel therapies to dramatically improve the lives of people with psychiatric and neurological disorders.’

Their dual focus is on helping patients with schizophrenia and psychosis in Alzheimer’s disease. Having witnessed my grandparents suffer from Alzheimer’s and then dementia, this cause is personally significant to me. Although drug approval and success are uncertain, Karuna’s pipeline shows enough promise that the company was acquired by Bristol Myers Squibb in 2024.

See below for a chart detailing Karuna’s drug development phases. This visual will help illustrate the progress and potential of their pipeline.

Interestingly, if you own an S&P 500 index or an S&P Healthcare ETF, you own shares in Bristol Myers Squibb, and your investments contributed to this potential solution for dementia and schizophrenia disorders. While most investors are focused on the negative never-changing headlines like ‘Unrest in the Middle East’ we choose to focus our energy on the headlines that make our clients money and benefit society. In addition to investing in healthcare, we see potential opportunities in technology (after the recent sell-off), small US companies, and energy.

We anticipate many ups and downs over the next three months as election day approaches. Nevertheless, we will remain vigilant for opportunities and continue to focus on your goals, regardless of the headlines that emerge between now and November 5th.

Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

Stock investing includes risks, including fluctuating prices and loss of principal.​

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.​ ​The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful