Two Faces to Show Upside Volatility and Downside Volatility | Sheaff Brock

The Two Faces of Volatility

“Remember that there are two varieties of volatility. Downside volatility is the type to avoid, not generally upside volatility,” Craig Israelsen writes in Financial Planning magazine. Far from doing everything possible to avoid volatility, we should all want portfolios that have higher levels of upside volatility, Israelson asserts. Traditionally, one advantage of building a broadly diversified portfolio is reduced volatility of returns. When higher standard deviation results in impressive upside performance, that is hardly something to be upset about, he observes. The [...]

Talking with investment advisor about option strategies | Sheaff Brock

Are You and Your Advisor Talking About Options Strategies?

The study results represented good news for the Options Industry Council. The OIC had commissioned global research and consulting firm Cerulli Associates to find out how much interest and involvement there is among financial advisors when it came to including options in client portfolios. The report, published a year and a half ago, highlighted three important developments: One third of financial advisors were already using options in 20% of their client portfolios. Advisors expected to increase the use of options [...]

Sheaff Brock Discusses Risk and Volatility | Child on Teeter Totter

Is It Smart for Investors to Equate Risk and Volatility?

Value means different things to different people. Therefore risk (the possibility of losing something of value) can also mean different things. For decades, investors defined risk as the chance of permanent loss of capital. Wherever there was volatility in the price of an investment, that meant there was risk. But are risk and volatility really the same? As Sheaff Brock Director Jim Murphy explains, understanding the difference between market volatility and market risk is a key skill for investors to have. Volatility is how [...]

Post-Election Stocks | Perspectives by Sheaff Brock Investment Advisors

The Rest of the Post-Midterm Election Story

The performance of healthcare stocks, as we’ve been discussing, has in general “tracked well with the prospects of a divided government.” One Sheaff Brock research source, Strategas Research, remarks that in post-election periods in general, healthcare has been just one of many beneficiaries of a “divided government.” Of course, the December ruling by a Texas judge on the constitutionality of the ACA and the subsequent staying of his ruling during appeal has caused some volatility in the healthcare sector. As [...]

Dividend Stocks could take the Baton from Growth Equity Stocks for Income | Sheaff Brock

Dividend Stocks Could Take Baton from Growth Equities

“High dividend stocks appeal to many investors living off dividends in retirement because their high yields provide generous income,” simplysafedividends.com observes, almost stating the obvious. Why, exactly, is it that some dividend-paying stocks offer much higher yields than others? There are several possible answers, the authors explain: a high yield reflects a company’s mature status (think utilities and telecom companies) some companies have unique business structures that require them to distribute cash flow to investors some stocks use financial [...]

Selling puts on the SPY to help offset market volatility | Sheaff Brock Investment Advisors

Sheaff Brock Sells Puts on the SPY

It has a long name, but the Sheaff Brock Investment Advisors Index Income Overlay portfolio strategy has one simple goal: seeking additional income that is incremental to (meaning on top of) a high-net-worth investor’s existing portfolio. For those investors comfortable with taking additional stock market risk for the opportunity to generate added (net of fees) cash flow, the Income Overlay portfolio is a long-term, bullish play on stock investing using a the SPDR S&P 500 ETF (symbol SPY). This strategy [...]

Market Effects of Midterm Elections | Sheaff Brock Perspective

Market Effects of Midterm Elections

“A quick look at historical performance shows that stocks often see rough sledding in the September of years that feature midterm elections,” MarketWatch comments, adding that it was not “clear that the midterm congressional elections on Nov. 6 … would be enough to derail the bull market.” One thing that has characterized midterm seasons, Sheaff Brock Managing Director Dave Gilreath notes, is greater stock price volatility. In fact, he notes, midterm years have been more volatile than the average. The [...]

Sheaff Brock | Economic indicators looking up | thumbs up

Following the Lead—Economic Indicators Point Upwards

The economy, like the scenery on a car trip, can be viewed through the windshield, the rearview mirror, or the side window, Investopedia explains. Leading indicators are pieces of data which economists see as they look through “the windshield” at the economy, using those indicators to help predict the future direction of the markets. Examples of economic indicators include: current stock prices stock futures bond and mortgage interest rates the yield curve foreign exchange rates commodity prices (gold, grains, oil, [...]

Sheaff Brock | Market Volatility in End-of-Day Trading Volume

At the End of the Day, Market Volatility Happens at the End of the Day

Bet you didn’t know this startling statistic—26% of all stock market trades are done at the very end of the trading day! How does that relate to the market volatility fear reaction that many investors are experiencing these days? Take a closer look. In just the first quarter of 2018, there have been four times as many days with a greater than 1% price move as there were in all of 2017. When weaker job statistics, political scandals, and scuttlebutt [...]

Sheaff Brock | Stock Market Volatility as a Sheep in Wolf's Clothing

Market Volatility—A Sheep in Wolf’s Clothing?

“The market is as much about sentiment and psychology as it is earnings and profits,” Avi Salzman stated in Barron’s. As Salzman observed the “tit-for-tat proposals” of tariffs between China and the U.S., he realized that the fear factor was going up regarding a potential trade war. Meanwhile, stocks were also being rattled by an anemic jobs report. Salzman is reminded, he says, of “the importance of perception versus what is reality.” No tariffs have actually been approved or [...]