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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 October 14th

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

US stocks ended the week higher and hit records during the week on a positive outlook for third quarter earnings. The S&P 500 gained 0.2% and the Dow rose 0.4% for the week. Abroad, Japan surged 2.2% and Europe climbed 0.5% for the week. The yield on the 10 year Treasury bond eased over the week ending at 2.28%.  Article

The IMF raised its estimate of international growth to 3.6% this year and 3.7% in 2018.

Minutes form the Fed’s September meeting showed most officials agreed they would raise interest rates one more time this year, but weak inflation remained a concern.

Social Security payments will rise by 2% starting in late December for the largest increase in six years. However, the rising costs of healthcare likely offset much of the increase.  Article

Banks began reporting earnings with JP Morgan, BofA and Citigroup topping expectations, while Wells Fargo disappointed.

 

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 October 7th

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 fourth straight week of gains on generally solid economic news. The S&P 500 gained 1.2% and the Dow climbed 1.6% for the week. Internationally, Japan rose 1.4% and Europe edged up 0.3% for the week. The yield on the 10 year Treasury ticked up for the week ending at 2.37%.  Article

The September jobs report surprised to the downside with a loss of 33,000 jobs, the first decline in seven years. In addition, August and July were revised and resulted in a decline of 38,000 jobs. On the positive side the unemployment rate fell to 4.2% its lowest level since early 2001 while the labor force participation rate expanded 0.2% to 63.1%. Wage growth also jumped to 2.9%a breakout from the recent increases seen in recent months. However, all of the data was likely impacted significantly by Hurricanes Irma and Maria.  Article

Manufacturing activity reached a 13 year high in September, well outpacing economists’ expectations.

Auto sales hit their fastest pace of 2017 in September, climbing 6.1%, driven by replacing storm damaged vehicles.

Berkshire Hathaway purchased approximately 40% of Pilot and Flying J truck stops in a bet on us economic growth.

Yahoo’s hacking scandal was worse than originally let on with all 3 billion accounts with the firm impacted.

 

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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Active vs. Passive Investing – What is RWM’s take?

What does active vs. passive investment management mean? How do you define these investment styles?

We get this question or hear this discussed frequently and the answer isn’t as black and white as many think.

Active investment managers are actively seeking to outperform an investment benchmark by making decisions on what assets to hold and at what measures that differentiate them from the benchmark. They believe that through their research and investment processes they can identify assets that are under or overvalued and exploit that pricing discrepancy.

On the opposite end of the spectrum is index investing. What investors typically think of with index investing is an investment fund trying to match a widely known index such as the S&P 500, Russell 2000, or MSCI EAFE. The goal of these investments are to try to match the performance of the index (or benchmark) as tightly as possible.

However, there is also a significant gray area. There are investments that seek to track specific industries, sectors, countries, benchmarks that are created by the manager, and certain risk factors like fundamental indexes. There are also funds that broadly cover asset and sub asset classes, but are not beholden to following an index. While you could argue that these funds are not doing due diligence on specific securities in an attempt to determine whether they should be held in the fund, they also are not reflecting a market neutral allocation to a broad market asset class. These strategies are often referred to as passive which may send a conflicting message to investors given that they are not seeking to track a broad asset class.

Where do we land between active investing, passive investing, or tracking an index? Our approach is to advise on the characteristics that are important to delivering a reliable experience rather than focusing on fund descriptors such as “active” and “passive.” Our experience, and the culmination of extensive research, leads us to believe that the most reliable investments are those that are broadly diversified, very inexpensive, and exhibit very little turnover. Mutual funds and ETF’s that track broad market indexes will deliver an almost perfectly “reliable” experience because they are comprehensively diversified, very inexpensive, and exhibit very low turnover. We believe this is a great start!

Broad market index mutual funds form the core or our client portfolios. But we also use additional funds to seek excess returns or mitigate downside risk. And while these additional funds may not seek to track an index, and therefore fall into the gray area, they are all very inexpensive, broadly diversified, and exhibit very low turnover. We know of very expensive and highly concentrated sector specific index funds whose use would not, in our opinion, deliver a reliable investment experience. Similarly, we are aware of very inexpensive, highly diversified funds that seek to outperform markets that we believe to be highly reliable. We strongly believe in focusing on a fund’s characteristics and seeking those funds that will deliver a reliable experience.

 

Index Performance Sept. Qtr. YTD Trl 1 Yr
US Stock (Russell 3000) 2.44% 4.57% 13.91% 18.71%
Foreign Stock (FTSE AW ex US) 1.88% 6.01% 21.03% 19.83%
Total US Bond Mkt. (BarCap Aggregate) -0.48% 0.85% 3.14% 0.07%
Short US Gov. Bonds (BarCap Gov 1-5 Yr) -0.34% 0.29% 1.09% -0.06%
Municipal Bonds (BarCap 1-10yr Muni) -0.51% 0.73% 3.72% 1.00%
Cash (ML 3Month T-Bill) 0.09% 0.26% 0.57% 0.66%

 

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 September 30th

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

US stocks had another positive week ending the quarter at record highs on optimism about tax reform. The S&P rose 0.7% and the Dow gained 0.2% for the week. Internationally, Japan edged up 0.2% and Europe increased 1.3% for the week. The yield on the 10 year Treasury ended the month at 2.33% its highest level since late July.  Article

Angela Merkel won a 4th term as chancellor of Germany however a surge from the right reduced her level of support.  Article

Fed chairwomen Yellen defended the Feds expectations to gradually raise rates despite recent weak inflation.

US GDP rose 3.1% in the second quarter in the final revision, up from the previous estimate of 3.0%. It was the best quarter for growth in two years.  Article

Businesses and households were more upbeat in September about their prospects then at any time in the past decade.

The German unemployment rate fell to a record low.

Equifax announced the CEO was resigning in the firm’s latest response to the massive hack of the credit-reporting firm.

Government officials decided to remove federal oversight over insurer AIG after the firm had been monitored since the financial crisis.

 

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 September 23rd

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

US Stocks edged up over the week led by bank stocks who reacted positively to the potential for another Fed rate increase this year. The S&P 500 rose 0.1% and the Dow gained 0.4% for the week. Internationally, Europe climbed 0.7% and Japan jumped 2.0% for the week. The yield on the 10 year Treasury rose again for the week finishing at 2.26%.  Article

At the conclusion of its September meeting the Fed announced it would begin shrinking its balance sheet in October by letting bonds mature and not reinvesting the proceeds. It will let $10 billion in bonds it holds mature each month increasing the amount by $10 billion every quarter until it reaches $50 billion. It also signaled that another rate hike this year was on the table.   Article

Housing starts fell 0.8% in August driven by a large decline in multifamily housing.

S&P dropped China’s credit rating to A+ from AA- due to high debt levels. The move now matches the two other credit rating agencies

Northrop Grumman agreed to purchase Orbital ATK, for $7.8 billion in a bid to strengthen its space focused defense capabilities.

Toys ‘R’ Us filed for bankruptcy.

HP Enterprise plans to cut 10% of its workforce.

 

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 September 16th

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

US stocks had one of their best weeks of the year, hitting record highs, with Hurricane Irma not as bad as feared. The S&P 500 rose 1.6% and the Dow jumped 2.2% for the week. Internationally, Japan soared 3.3% and Europe rose 1.4% for the week. The yield on the 10 year Treasury rose over the week to finish at 2.20% up from 2.06% from the previous week.  Article

Median US household income hit the highest inflation adjusted level ever last year, and is up 3.2% from a year before.

The CPI-U rose 0.4% in August, the largest increase since January, topping expectations. Core prices rose 0.2%. For the trailing year prices have risen 1.9%.

The Bank of England announced that they are likely to increase interest rates from their current record low of 0.25% over the coming months. Inflation readings have been higher than expected.

Apple released three new phones including the iPhone X which will retail for $1,000.

 

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 September 9th

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

US stocks eased over the week on concerns over Hurricane Irma and North Korea tensions. The S&P 500 declined 0.6% and the Dow fell 0.9%, for the week. Abroad, Europe eased 0.2% and Japan sank 2.1%, for the week. Investors flocked to safe havens over the week with the 10 year Treasury ending the week at 2.06% its lowest level since November.  Article

President Trump and Democrats came to an agreement on Hurricane Harvey aid and to suspend borrowing limits for three months. The deal averts a potential government default that would have occurred without an agreement at the end of the month.   Article

The ECB will likely announce plans to begin to reduce their bond buying program at their meeting next month. They also upgraded their growth forecast for the region.

Lily plans to cut 8% of its workforce.

 

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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Don’t let Another Debt Ceiling Dispute Box in your Portfolio

With the threat of hitting the debt ceiling looming at the end of the month, government leaders were able to strike a deal. The debt ceiling is the self-imposed legislative limit on the amount of national debt that can be issued by the Treasury and thus restricts how much the federal government can borrow. Treasury Secretary Mnuchin estimated that the government would be able to meet its obligations until late September before defaulting on its obligations. However, the agreement reached was just a three month extension, so this issue will resurface in December; no doubt leading to another protracted battle.

We have been down this road before. Political brinkmanship between the different factions in congress and the administration will no doubt bring increased volatility in the stock market In December. However, we don’t think it would be time to run for the exits. As we have seen with the 2011 and 2013 debt ceiling fights moving a portfolio to cash would of had a negative impact.

In both of those previous instances bonds performed well, showing that in times of uneasiness US government debt remains the ultimate safe haven. The yield on the 10 year Treasury bond has steadily fallen since early July. If there was significant fear that the US would default and not make its debt payments the yield would be rising significantly to compensate investors for holding the bonds.

In portfolio construction, RWM believes the fixed income side of the portfolio should provide stability and capital preservation, while the equity side of the portfolio purses growth.  When volatility spikes on the equity side the fixed income allocation will be there to provide support.

While it certainly can be difficult to remain disciplined to your investment allocation reading the incendiary headlines about the debt ceiling, history has shown those who stay committed to a sound investment allocation are the ones who are likely to realize their long-term investment goals.

 

Index Performance August YTD Trl 1 Yr
US Stock (Russell 3000) 0.19% 11.20% 16.06%
Foreign Stock (FTSE AW ex US) 0.50% 18.80% 19.15%
Total US Bond Mkt. (BarCap Aggregate) 0.90% 3.64% 0.49%
Short US Gov. Bonds (BarCap Gov 1-5 Yr) 0.35% 1.43% 0.45%
Municipal Bonds (BarCap 1-10yr Muni) 0.56% 4.25% 1.22%
Cash (ML 3Month T-Bill) 0.09% 0.48% 0.62%

 

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

 

There is no guarantee that any investment strategy, including those described here, will be successful. Any investment or investment strategy can lose money. Past performance does not guarantee or predict future results.  You should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Raffa Wealth Management, LLC.  This information was gathered from reliable sources but we cannot guarantee accuracy.  Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated.

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Financial News and Portfolio Management Discussion through September 2nd

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

US stocks rose on a news heavy week driven by positive economic and corporate news and despite Hurricane Harvey and tensions with North Korea. The S&P 500 rose 1.4% and the Dow gained 0.8% for the week. The Nasdaq had its best week of the year gaining 2.7%. Internationally, Europe gained 0.6% and Japan increased 1.2% for the week. The yield on the 10 year Treasury bond was flat ending the week at 2.16%. Gas prices jumped 13% over the week, the largest surge in over 5 years, as a result of Harvey. Gold also jumped gaining 2.5% over the week to finish at $1,324.50 an ounce.  Article

The August jobs report missed expectations with 156,000 jobs added and the unemployment rate ticking up to 4.4%. June and July were revised down by 41,000 positions. Wage rates have not accelerated with earnings up 2.5% from a year ago.  Article

US auto sales fell 1.9% in August. The sales pace for the year is down from last year and below analysts’ expectations.

Hurricane Harvey has severely crippled Texas’ oil output with taking offline roughly 30% of US refining capacity.

US 2nd quarter GDP was revised up to 3.0%. It’s the highest growth rate in over two years.  Article

Inflation grew 0.1% in July from a month earlier and is up 1.4% over the past year, well below the Fed’s 2% target level.

In July US personal spending rose at its fastest pace since April and personal income posted its biggest jump since February.

Uber chose Expedia CEO Dara Khosrowshahi to be its new CEO.

Gilead Sciences purchased Kite Pharma, a specialist in a new type of cancer therapy, for $11 billion.  Article

United Technologies agreed to buy aircraft equipment manufacturer Rockwell Collins for over $20 billion.

Wells Fargo revealed that its sales practice scandal covered many more accounts than previously believed, increasing the total to 3.5 million accounts from the 2.1 million previously estimated.

 

 

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 August 26th

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

US stocks rose for the first time in three weeks on advances across a board swath of sectors. The S&P 500 gained 0.7% and the Dow rose 0.6% for the week. Internationally, Europe was flat and Japan posted its sixth straight weekly decline edging down 0.1%. The yield on the 10 year Treasury ended the week at 2.17% down slightly from the previous week.  Article

New home sales plunged 9.4% in July as a lack of inventory has come on the market.

Unemployment has fallen to an 8 year low of 9.1% in the Eurozone.

Japan’s economy grew by 4% in the second quarter.

In speeches at the Jackson Hole economic Symposium Fed Chair Janet Yellen and ECB president Draghi offered few clues on the future moves by their central banks but gave a strong defense for the regulations put in place to ensure increased financial market stability and condemned protectionist trade policies.

Sempra reached a deal to buy power transition company Oncor for $9.45 billion outbidding Berkshire.

Total agreed to buy Maersk’s oil group for $5 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
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    Washington, DC 20036
    Tel: 202-955-6734