Broker Check

The Markets

More money managers are feeling less bullish, but you sure couldn’t tell by the performance of U.S. stock markets last week.

So far, 2019 has been a tremendous year for U.S. stocks. Through the end of last week, the Standard & Poor’s 500 Index had gained more than 20 percent year-to-date, the Dow Jones Industrial Index was up more than 15 percent, and the Nasdaq Composite had risen more than 24 percent.

All three indices finished last week in positive territory. Lawrence Strauss of Barron’s reported signs that global markets are stabilizing supported investors’ optimism. In addition, yields on 10-year U.S. Treasury notes increased, which suggested “investors are more optimistic about growth and overall economic prospects.”

Despite strength in U.S. markets year-to-date, Barron’s most recent Big Money Poll found fewer money managers are bullish than just one year ago when 56 percent anticipated gains in the months ahead. When 134 money managers across the United States were asked about their outlook for the next 12 months:

  • 27 percent were bullish
  • 42 percent were neutral
  • 31 percent were bearish

That’s the lowest level of bullishness in 20 years and the highest level of bearishness since the mid-1990s.

Barron’s reported there could be a variety of reasons for the change in attitude, including high valuations, an uncertain economic outlook, or the divisive political environment.

One money manager commented, “There are so many different headlines to watch right now…Brexit, trade, the economy, elections. Trying to predict them all correctly is like trying to predict what the weather will be like in November 2020. We might get things directionally correct, but getting them exactly right is a matter of luck more than skill.”

How much is too much? In 1986, Fortune magazine asked Warren Buffett his thoughts on inheritance. He responded children should receive, “…enough money so that they would feel they could do anything, but not so much that they could do nothing.”

It’s an important question, even though relatively few Americans may need to grapple with it. According to the Federal Reserve:

  • 55 percent of inheritances are less than $50,000
  • 85 percent of inheritances are less than $250,000
  • 93 percent of inheritances are less than $500,000
  • 98 percent of inheritances are less than $1 million
  • 2 percent of inheritances are more than $1 million

A 2015 survey conducted by Merrill Lynch’s Private Banking and Investment Group found, “a majority (91 percent) of people plan to leave the lion’s share of their wealth to family members, motivated by a desire to positively influence the lives of loved ones. Yet the results indicate that many see significant risk in passing on wealth without context, conversation, guidance, or accountability.”

So, how much is too much? Is there an amount of inheritance that will sap your children’s motivation and undermine their work ethic? The answer may depend on the source of the wealth, reported The Atlantic:

“Perspectives on what constitutes ‘too much’ seem to vary depending in part on whether parents inherited their wealth or earned the majority of it themselves. When significant wealth gets passed down through multiple generations, inheritors can get the sense that ‘they’re just the caretakers of it’, which means they might be more inclined to keep up the family tradition and will it to their own children…Self-made rich people can have a different relationship to their fortune, because they have firsthand knowledge of what was required to amass it. As such, they might be more interested in bequeathing not just money to their children, but a good work ethic as well.”

If you would like to discuss your legacy and its potential impact on your heirs, give us a call.

Weekly Focus – Think About It

“We should not forget that it will be just as important to our descendants to be prosperous in their time as it is to us to be prosperous in our time.”
                                                     --Theodore Roosevelt, 26th President of the United States


Week of October 21, 2019
Week of October 14, 2019





Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Cornerstone Investment Advisors, LLC is not affiliated with Kestra IS or Kestra AS.
Kestra Investment Services, LLC does not provide tax or legal advice.
*This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.*The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
*Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
*The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
*Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
*Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Asset allocation and diversification do not protect against loss of principal.
*Past performance does not guarantee future results.
*You cannot invest directly in an index.
*Consult your financial professional before making any investment decisi