Lakeland Ledger articles

By Matthew Treskovich, CPA/PFS, MBA, CFP®, CMA

In the second quarter, markets continued to recover from the correction earlier in the year. The Federal Reserve increased interest rates again in June. Fundamental economic data continued to paint a positive picture. The job market remained strong, and consumer spending trends hinted at further growth.

US consumers and workers continue to do well

Heading into the 2008 recession, consumer debt as a percentage of disposable income was at a 30-year high. In the years following the recession, consumer debt as a percentage of income fell to a 30-year low. Through the end of the second quarter, consumer debt remains at historically low levels. Earlier in the year, we saw that in some regions there were more open jobs than individuals looking for work. This situation has expanded to cover the entire country. There are now more job openings in the United States than unemployed workers. Almost 70% of the US economy is consumer spending.  Low debt and good employment prospects mean that consumers will likely continue to spend money. A recession caused by declining consumer spending is not likely this year.

Global economy still expanding

The global economy is still in expansion, although some parts of the world appear to be slowing. The steady and synchronized global economic growth we saw last year has given way to a more volatile environment this year. In the United States, economic indicators are still positive. In other parts of the world such as China, there are signs of slowing growth. Earnings growth for US companies continues to improve. The earnings growth of companies in emerging markets appears to be slowing. Tariffs are still a risk to global economic growth, but an all-out trade war is not the most likely outcome.

Diversification is still important

In 2017, large company stocks outperformed small company stocks.   So far this year, we’ve seen the opposite occur. Through the end of the second quarter of 2018, small company stocks have outperformed large company stocks. This is a great example of why it is important to stick to a consistent diversified asset allocation. In any given year, certain parts of the market will outperform, and other parts will under-perform. Proper diversification means having the right mix of different assets in your portfolio. Periodic re-balancing helps keep your portfolio properly diversified. Both of these things are very important for investors to who want to achieve and maintain financial independence.

Long term investors know that chasing performance reduces returns. A properly diversified, periodically re-balanced, portfolio is still the best way to get good returns and reduce risk in the long run.

Matthew Treskovich is the Chief Investment Officer for CPS Investment Advisors.

Protecting Your Portfolio from Tariffs and Trade Wars

Matthew Treskovich, CPA/PFS, MBA, CFP®, CMA

For much of the past few months, talk of tariffs and trade wars has dominated the news. For the past several decades, US trade policy has consistently favored globalization. Trade policy has favored the easy movement of goods across borders. US policy has also allowed the easy movement of production from the United States to other counties. Policymakers in the US and abroad now seem to be more willing to enact policies that restrict trade. This could indicate that globalization is decelerating. There are other signs of declining globalization, with production of goods being moved back into the United States.

What does a decline in globalization mean for investors?

Globalization has generally been a positive trend for investors. Large US companies have generally benefited by being able to move production overseas. This allowed those companies to reduce costs and increase profits. Moving production overseas has also had negative impacts on investors. Almost seventy percent of the US economy is personal spending. Lower wages and job losses due to globalization have reduced personal spending. This effect has offset some of the benefits of globalization for investors.

The biggest risk to investors is the uncertainty that could come with shifting to a less-globalized system. In the stock market, uncertainty usually means volatility. Higher volatility doesn’t always mean lower returns, but it can cause investors to make mistakes that can cost them money.

The headlines move faster than the fundamentals

Headlines in the news change every day, but economic fundamentals don’t change overnight. Talk of tariffs has been in the news since January. So far, only a small number of imports are subject to new import taxes. Other countries are starting to enact their own tariffs in response, but it will be time for the effects to show up in the economy. If tariffs have a large negative effect on the economy, it is possible they could be removed as quickly as they were created.

For long term investors, the key to surviving a trade war is having a properly diversified, well-balanced portfolio. Investors who have concentrated positions in companies that could be hurt by tariffs should consider diversifying their portfolios. Long term investors should resist the temptation to make changes to their portfolios based on short-term news. This is especially true when the news is more about politics than economics. In the short run, escalation of tariffs and talk of trade wars could cause market volatility. Long term investors should focus on their financial plan instead of the headlines. Investing in great companies in America and the world is still the best way for investors to achieve and maintain financial independence.

Matthew Treskovich is the Chief Investment Officer for CPS Investment Advisors.

By Peter C. Golotko, CPA/PFS, MBA, and Matthew Treskovich, CPA/PFS, MBA, CFP®, CMA

People often think estate planning is only for the wealthy. Actually, just about everyone who owns property or has money needs an estate plan. Estate planning is more than deciding what happens to your property when you’re gone. It also includes the planning during your life that leads to creating and safeguarding assets like your retirement savings. Estate planning is an important part of protecting your financial security.


The first major stock market correction in over a year appears to be in the rear view mirror, but many investors are still nervous. Market commentators have decided to declare that “interest rates” were responsible for the initial drop in early February, and the President’s announcement on trade policy and tariffs was the reason for the second drop later in the month.


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