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    Raffa Wealth Management is a boutique investment advisory firm. We can help you achieve your financial goals so you can enjoy the freedom to pursue your passion. We know that you’re working to accomplish great things for your families and in our communities. We’re proud to help you Grow it for Good!

Financial News and Portfolio Management Discussion through March 18th

All the news you need to stay informed about what’s currently driving the market – courtesy of Raffa Wealth Management, LLC.

US Stocks rose slightly over the week as it appeared, based on Fed comments, that they would not raise rates as quickly as the market was expecting. The S&P 500 gained 0.2% and the Dow ticked up 0.1% for the week.  Internationally, Europe rose 1.4%, while Japan fell 0.5% for the week.  The yield on the 10 year Treasury, after reaching its highest level in over two years, fell over the week to 2.50%.  Article

The Fed announced it was raising the Fed funds rate a quarter percentage point to between 0.75% and 1.0%. They said they still expected to make two additional quarter percentage point increases this year.  The increase was made as the Fed views the US economy as being on more solid footing.  The projections were less aggressive then the market had anticipated.  As a result treasury yields fell.  The 10 Year Treasury yield posted its largest one day drop, 0.10%, since June.  Article

Retail sales posted their smallest gain since last summer rising just 0.1% in February.

Geert Wilders, an anti immigration candidate in the Netherlands, failed to make inroads in the Dutch election.

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

 

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Financial News and Portfolio Management Discussion through March 11th

All the news you need to stay informed about what’s currently driving the market – courtesy of Raffa Wealth Management, LLC.

US stocks posted their first down week since January on a decline in oil prices. Oil fell below $50 to $48.49 a barrel and dropped 9.1% for the week.  The S&P 500 slipped 0.4% and the Dow fell 0.5% for the week.  Internationally, Japan rose 0.7%, while Europe was off 0.5% for the week.  The yield on the 10 year Treasury reached its highest level this year rising to 2.58% driven by expectations of the Fed hiking the Fed funds rate at its March meeting.  Article

Job growth maintained its steady pace with 235,000 jobs added topping expectations. The unemployment rate ticked down to 4.7%.  Average earnings rose to 2.8% from a year earlier.  The strong report provides additional support for the Fed to make an interest rate hike at their next meeting.  Article

The ECB said they will not reduce the bond purchase program they have in place or cut it short despite recent positive economic news from the country bloc. Draghi did state that it’s unlikely they will need to continue past the end of this year.

South Korean authorities are bringing bribery and corruption charges against the de facto leader of Samsung.

GM sold its Opel unit to France’s Peugeot.

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

 

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If the Fed Makes another Move, Should You?

Numerous statements have been made recently by Fed Governors saying they are actively looking at raising the Fed Funds rate soon. The most recent was a speech by Fed Chairwomen Janet Yellen stating that a March rate hike was highly likely if employment and inflation data continue to be in line with the central bank’s expectations.  After putting a low probability on a Fed rate increase as recently as Monday, February 27th, investors now believe that a rate increase is highly likely at their March meeting.

Investors’ expectations have quickly been reflected in interest rates with the 10 year Treasury yield increasing from 2.36% at the end of February to over 2.50% a week into March. Looking back to when the Fed last raised the Fed Funds rate in December, the 10 year Treasury yield is actually slightly lower now even after investors have priced in a likely March rate hike.  So while the Fed certainly has influence, there are many factors that impact interest rates.

We still very much recommend maintaining a fixed income allocation despite the head winds of a possible increase in interest rates. Fixed income should be viewed as an investment to maintain capital and provide stability from the more volatile equity side of the portfolio.  On average stocks decline in value every four years while bonds fall six years.  In addition, the declines from stock can be much more drastic than from fixed income. An increase in interest rates now is actually better for investors with a time horizon longer than the maturity of their bond portfolios as it will result in a higher expected return.

In order to cushion a fixed income portfolio from rising interest rates we recommend maintaining a shorter average maturity compared to the overall bond market. Shorter term bonds are less impacted by interest rates and have fallen less over the last six months. We also recommend diversifying amongst sectors.  Corporate, government, mortgage and credit bonds react to changes in interest rates differently.  By having exposure to all of these sectors it can limit the negative impact from rising rates.  Finally, having exposure to foreign bonds can further diversify a portfolio.  Foreign interest rates move differently than US rates providing exposure to multiple other yield curves.  While rates in the US may rise other countries may see falling rates.

Regardless of the direction of interest rates over the coming years, we still believe they are a vital piece of a well diversified portfolio. By investing across sectors and globally and maintaining a shorter term allocation it can smooth out the ride and help you meet your long term investing goals.

 

Index Performance    Feb. YTD Trl 1 Yr
US Stock (Russell 3000) 3.72% 5.67% 26.29%
Foreign Stock (FTSE AW ex US) 1.74% 5.22% 20.24%
Total US Bond Mkt. (BarCap Aggregate) 0.67% 0.87% 1.42%
Short US Gov. Bonds (BarCap Gov 1-5 Yr) 0.15% 0.34% 0.05%
Municipal Bonds (BarCap 1-10yr Muni) 0.66% 1.43% 0.01%
Cash (ML 3Month T-Bill)  0.04% 0.09% 0.39%

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

 

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Financial News and Portfolio Management Discussion through March 4th

All the news you need to stay informed about what’s currently driving the market – courtesy of Raffa Wealth Management, LLC.

US stocks posted their sixth straight week of gains posting record highs yet again on investor optimism. The S&P 500 rose 0.7% and the Dow gained 0.9%, for the week.  Internationally, Japan was up 1.0% and Europe surged 1.4%, for the week.  The yield on the 10 year Treasury yield rose to 2.49% up 0.17% over the week as investors expected an interest rate increase from the Fed in March.  Article

Recent comments by Fed Chairwomen Janet Yellen and other Fed Governors have increased the likelihood of a March interest rate increase.  Article

US auto sales were flat in February with discounts weighing on automakers.

The DOL “fiduciary” rule was delayed 60 days to allow further consideration.

The Fed’s preferred measure of inflation rose to 1.9% in January, close to its target of 2.0%

Eurozone business grew more upbeat in February with confidence reaching the highest level since before the financial crisis.

Caterpillar’s offices were raided by the IRS and other government agencies over suspected misleading information released about its financial documents and exports.

Snap’s IPO soared, rising 44% on its first day to value the company at $34 billion.  Article

Target posted declines in profit and sales and said 2017 would be worse than Wall Street expected.

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

 

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Financial News and Portfolio Management Discussion through February 25th

All the news you need to stay informed about what’s currently driving the market – courtesy of Raffa Wealth Management, LLC.

US Stocks continued to rise on expectations of business friendly proposals from the President. The Dow has posted 11 straight record high closing days and the S&P 500 posted its fifth straight week of gains.  The S&P 500 rose 0.7% and the Dow rose 1.0% for the week.  Abroad, Japan gained 0.2% and Europe edged down 0.1% for the week.  The yield on the 10 year Treasury fell over the week to finish at 2.32%, its lowest level since November.  Article

Fed minutes from their end of January meeting show the Fed is poised to raise the Fed Funds rate as soon as their March meeting based on an improving economy and the possibility of more spending and less taxation from the new administration. However, investors are still assigning a low probability of an interest rate increase at the meeting.   Article

Home Depot, HP, Tesla and Wal-Mart posted solid earnings reports.

Verizon and Yahoo have agreed to a deal that is $350 million less than the original purchase price.

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

 

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Financial News and Portfolio Management Discussion through February 18th

All the news you need to stay informed about what’s currently driving the market – courtesy of Raffa Wealth Management, LLC.

US stocks continued their run of new record highs ending the week at an all time high on strong economic growth and corporate earnings. The S&P 500 rose 1.5% and the Dow gained 1.7% for the week.  Internationally, Japan dropped 0.7%, while Europe was up 0.8% for the week.  The yield on the 10 year Treasury was relatively flat for the week finishing at 2.43%.  Article

In testimony on Capitol Hill Fed Chief Yellen stated an interest rate increase could come as soon as the Fed’s March meeting if economic news remains solid.

Retail sales rose a better than expected 0.4% in January from December and are up 5.6% over the past year.

US factory output increased 0.2% in January.

Inflation reached its highest annual pace in almost five years with the consumer price index rising 0.6% from December and up 2.5% over the past twelve months.

US new housing starts dropped 2.6% on a decline in multifamily construction.

UK retail sales fell for a third straight month, falling 0.3% in January as inflation has started to deter shoppers.

Verizon appears back on track to purchase Yahoo agreeing to reduce its purchase price by $300M after hacking revelations at Yahoo.

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

 

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Financial News and Portfolio Management Discussion through February 11th

All the news you need to stay informed about what’s currently driving the market – courtesy of Raffa Wealth Management, LLC.

US stocks hit new record highs on solid corporate earnings and expectations on tax reductions. The S&P 500 rose 0.8% and the Dow rose 1.0% for the week.  Internationally, Japan soared, up 2.5% and Europe rose 0.9% for the week.  The yield on the 10 year treasury eased to end the week at 2.41%.  Article

With 360 firms in the S&P 500 reporting earnings, companies are on pace to report a 5% growth in profits compared to the 3.2% expected at the end of 2016.

European corporations are on pace to post their first profit since 2012 and their strongest growth in five years.

A judge blocked the merger of insurers Anthem and Cigna likely derailing the deal.

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

 

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Dow 20,000, What Should you Do?

The US stock market index, the Dow Jones Industrial Average, hit the heralded milestone of 20,000 near the end of January. With the new record high many investors are asking what does it mean for the future of stocks and what should they do with their investments?

Our response to the milestone is, so what? While it is nice to see US stocks hitting new record highs as it means were seeing strong positive returns, a particular round number doesn’t really matter a whole lot.

Investors instead should remain focused and stay disciplined to their investment plans. Investors shouldn’t adjust their investment strategies based on a new stock market high.  Looking to add more to US stock based on recent performance is chasing returns and pulling back from US stock, if not driven by an unbiased rebalancing policy, is letting emotions get in the way of your long term goals.  Both are market timing and can be detrimental to a portfolio.

The stock market is continually factoring in new information to value companies and it reflects the collective wisdom of investors around the world. Even though the stock market has reached record highs it does not mean there is nowhere to go but down.  After hitting a record high of 3,000 in late 1991 the Dow didn’t suffer another sustained decline until mid 1998.

In addition, putting significant weight behind the Dow is misguided as it’s an index tracking just 30 of the largest companies in the US making it possible for just a few stocks to have an outsize impact on the index. Thus it is not providing a full picture of the US stock market. We recommend tracking the S&P 500 or Russell 3000 for a broader view.

While it’s nice to see markets rise, it’s doubtful that an investor has reached the finish line because the market hit an arbitrary milestone. Investors need to remain focused on their long term goals and not get distracted by the day to day noise surrounding the markets.  By maintaining a disciplined approach an investor greatly improves their chances for long term investing success.

 

 

Index Performance    Jan. Trl 1 Yr
US Stock (Russell 3000) 1.88% 21.73%
Foreign Stock (FTSE AW ex US) 3.43% 16.71%
Total US Bond Mkt. (BarCap Aggregate) 0.20% 1.45%
Short US Gov. Bonds (BarCap Gov 1-5 Yr) 0.19% 0.13%
Municipal Bonds (BarCap 1-10yr Muni) 0.77% -0.40%
Cash (ML 3Month T-Bill)  0.04% 0.37%

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

 

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Financial News and Portfolio Management Discussion through February 4th

All the news you need to stay informed about what’s currently driving the market – courtesy of Raffa Wealth Management, LLC.

US Stocks were relatively flat for the week after seeing significant volatility driven by policy changes from the Whitehouse. The S&P 500 edged up 0.1%, while the Dow ticked down 0.1% for the week.  Abroad, Europe fell 0.6% and Japan sank 2.8% for the week.  The yield on the 10 year Treasury was roughly flat ending the week at 2.49%.   Article

The Fed elected to keep rates unchanged after their most recent meeting and said it remained on track to raise them over the course of the year, but did not provide any additional clues about timing.  Article

In January employers added 227,000 jobs, the best month since September, but the unemployment rate rose to 4.8% as more people joined the workforce as past months were revised down. Wage growth disappointed as they grew 2.5% over the past year compared to 2.9% in December.  Article

The Fed’s preferred measure of inflation ticked up 0.2% in December and rose 1.6% for the full year, its largest increase in over 2 years.

After a strong fourth quarter Eurozone GDP rose 1.7% in 2016 slightly topping US growth of 1.6%. The jobless rate also fell to a seven year low.

Inflation is on the rise across the globe. The Eurozone saw prices rise 1.8% in January from a year earlier, Japan’s inflation expectations have risen from 0.45% to 0.61% and the US is at the fastest inflation pace in over two years.

The Case Shiller home price index rose 5.6% for the year ending in November.

President Trump signed an executive order that could undo much of the Dodd Frank financial law and sought to rollback the DOL fiduciary rule.

Apple, Facebook blew past estimates, while Exxon, Deutsche Bank and Amazon disappointed investors with their earnings releases.

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

 

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Financial News and Portfolio Management Discussion through January 28th

All the news you need to stay informed about what’s currently driving the market – courtesy of Raffa Wealth Management, LLC.

US Stocks reached new record highs over the week with the Dow topping the 20,000 mark on moves by the new administration and strong corporate earnings.  The S&P 500 rose 1.0% and the Dow gained 1.3% for the week.  Internationally, Europe increased 1.0% and Japan jumped 1.7% for the week.  The yield on the 10 year Treasury was flat over the week ending at 2.48%.  Article

US new home sales sank in December due to higher costs, but still rose over 2016.

The US grew at a 1.9% rate in the fourth quarter, a slowdown from the 3.5% third quarter pace.  Article

The Aetna Humana merger was blocked by a judge on antitrust grounds potentially ending the $34 billion deal.

Boeing posted 4th quarter earnings that topped expectations and raised future estimates. 

Microsoft posted solid results for its second quarter. 

Google’s fourth quarter revenue grew at 3 times the pace of profit as it looked for new sources of growth.  Revenue topped expectations while profit missed. 

Johnson and Johnson agreed to purchase a Swiss biotech’s drug discovery operations for $30 billion.

 

About

Raffa Wealth Management is an independent investment advisor providing nonprofit organizations, high net-worth investors, and qualified retirement plans with a full range of investment consulting services.  We were established to fill the need for transparency, clarity, and vision in the professional management of investment assets.   Visit us at www.raffawealth.com

 

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    Raffa Wealth Management
    1899 L Street, NW
    Suite 900
    Washington, DC 20036
    Tel: 202-955-6734