Author: Franklin J. Parker

Franklin is the founder and chief investment officer of Directional Advisors. Since beginning his career in 2007, Franklin has been dedicated to helping investors of all kinds achieve their goals using financial markets. A CFA charterholder and active researcher, Franklin is an international speaker and author of dozens of peer-reviewed articles and trade publications, including the 2023 book with Wiley, Goals-Based Portfolio Theory. In 2016, he was the winner of a Quora knowledge prize, and in 2017 Franklin was recognized by the National Association of Active Investment Managers for his work incorporating business cycle analysis to help individuals achieve their goals. Franklin serves on the advisory board of the Journal of Wealth Management, and his written work has appeared in Enterprising Investor, Forbes, Financial Planning Magazine, RealClear Markets, CityWire, Foundation for Economic Education, HuffPost, Journal of Wealth Management, Journal of Impact & ESG Investing, Journal of Behavioral Finance, International Family Offices Journal and many others. Franklin is an adjunct professor for the American College of Financial Services, and he is the incoming Season 4 host for the CFA Society of Dallas-Ft Worth Podcast. Franklin is also a member of the Sons of the American Revolution. Franklin enjoys playing guitar and piano with his free time, and expressing his creativity in the kitchen. More than anything, he enjoys good food and good wine with good friends.

Trust

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Two Kinds of Trust

When it comes to managing your money, trust is everything. But did you know there are actually two types of trust you need? Both are super important for making sure your finances are in good hands. Let’s break it down and see why each type of trust matters.

The First Layer of Trust: Intentions

The first type of trust is what most people think of right away. It’s the do you have my best interests at heart? kind of trust. You want to be sure that the person handling your money genuinely cares about helping you reach your financial goals and isn’t just looking out for themselves. It’s about feeling confident that they’re on your side and want the best for you.

The Second Layer of Trust: Competence

The second type of trust is just as important, but it’s often overlooked. This is the can this person do what they say they can do? kind of trust. It’s not enough for someone to have good intentions; they also need to know what they’re doing. They should have the skills, knowledge, and experience to manage your money effectively.

This is where things can get tricky, especially if you’re thinking about asking a friend or family member to help with your finances. Even if you trust them personally, they might not have the expertise needed to handle your investments properly.

Why Both Layers Matter

As a financial advisor, I’ve seen how crucial it is to have both types of trust. Many people assume that because they trust someone personally, that person is also capable of managing their money. But that’s not always the case. You need to find someone who you can trust on both levels: someone who has your best interests at heart and who also knows how to manage your finances effectively.

Finding the Right Financial Advisor

So, how do you find someone who meets both criteria? Start by looking for a financial advisor with a good reputation and proven track record. Check their credentials and ask for references. It’s also important to have open and honest conversations with potential advisors. Ask them about their approach to financial management, their experience, and how they stay updated with the latest financial trends and regulations.

Pay attention to how they communicate with you. A good financial advisor should be transparent, willing to explain their strategies in a way you can understand, and open to answering your questions. They should also be someone you feel comfortable with, as you’ll be sharing personal financial information and discussing your long-term goals.

Conclusion

In conclusion, managing your money effectively requires both types of trust: trust in the person’s intentions and trust in their competence. By ensuring that your financial advisor meets both criteria, you can feel confident that your money is in good hands. Remember, it’s not just about finding someone you like or trust personally; it’s about finding someone who can deliver the results you need. Take the time to evaluate potential advisors carefully, and you’ll be well on your way to achieving your financial goals.

Let’s Talk

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Directional Advisors to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

Explain it Like I’m Five: An Investment Portfolio is Like A Car

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Your Portfolio is Like a Car

When it comes to investing, a well-designed portfolio can be a lot like owning the right car. Both serve as tools to help you reach your destination, but just as with cars, different parts of your portfolio play specific roles. Let’s dive into how viewing your investments through the lens of a car can make it easier to understand the balance needed for financial success.

The Engine: Stocks Drive Growth

In a car, the engine is what keeps you moving down the road and gets you to your destination. Similarly, stocks are the “engine” of your investment portfolio. They drive growth and are what propel your wealth forward over time. But just as car engines come in various forms—from a reliable diesel to a high-powered Dodge Viper—the stocks you choose will depend on your goals and risk tolerance.

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Are you aiming for rapid growth with higher volatility? Then a high-performance “engine” might be right for you, like tech or small-cap stocks. Or maybe you’re more conservative, preferring steady, reliable returns, akin to a diesel engine, where you might opt for large, stable companies. The key is finding the right balance of stocks that aligns with where you want to go and how quickly you want to get there.

The Safety Features: Bonds for Stability

No car is complete without safety features like airbags and seatbelts—components that protect you when things go wrong. In your investment portfolio, bonds serve as these safety features. Bonds offer stability and security, cushioning your portfolio from market crashes or downturns. While stocks might rise and fall, bonds tend to be more consistent, helping to keep your portfolio steady when the “road” gets bumpy.

Think of bonds as the parts of your portfolio that can help prevent significant loss during turbulent times. They’re not flashy, but they play a crucial role in protecting your investments, especially when the market is unstable. Without these “airbags,” you could be left vulnerable if the unexpected happens.

The Steering Mechanism: Diversifying with Alternatives

Just as a car needs a steering wheel to navigate twists and turns, an investment portfolio needs alternative assets to stay on course. This includes investments like commodities, real estate, and other non-traditional assets that often “zig” when stocks “zag.” These alternative investments help provide balance and direction, adding flexibility and stability when mainstream assets are underperforming.

Commodities and real estate, for example, can perform well during inflationary periods when stocks might struggle. Including these alternatives in your portfolio is like having a reliable steering mechanism, helping you adjust to changing market conditions and maintain control.

Choose the Right “Car” for Your Journey

The right portfolio depends on your individual goals, much like selecting the right car. A cattle rancher may not need a Ferrari, and someone living in the city likely doesn’t need a diesel truck. Similarly, your portfolio should be tailored to your financial objectives, timeline, and risk tolerance. Are you focused on fast growth, or are you seeking long-term stability? Understanding where you’re headed and how quickly you need to get there is key to building a portfolio that serves you well.

Dream Big—And Let Your Portfolio Take You There

Just as your car helps you reach your destination, your portfolio is your vehicle for achieving your financial dreams. Your job is to envision where you want to go; the role of a well-balanced portfolio is to help get you there safely, efficiently, and aligned with your unique journey.

Let’s Talk

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Directional Advisors to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

Is Retirement Possible for You? Here Are 3 Essential Tips

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Can I Retire?

Have you ever wondered if it’s even possible for you to retire? The idea of retirement can seem daunting, but with the right planning, it can be within your reach. Here are three quick tips to help you get started, with the third being the most crucial.

1. Determine Your Dream

The first step in planning for retirement is to determine what your dream is. What do you want to do once you retire? Where do you want to live? This vision is unique to each individual, and there is no right or wrong answer. Whether you dream of traveling the world, spending more time with family, or pursuing a hobby, identifying your goals will give you a clear direction.

2. Figure Out Your Monthly Needs

Next, you need to figure out your monthly financial needs. By the time you retire, most of your significant purchases, such as a home or car, are likely behind you. Therefore, your focus should be on your living expenses, travel plans, and any additional activities you wish to pursue. Understanding your monthly budget will help you plan more effectively and ensure you have enough to cover your desired lifestyle.

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3. Calculate Your Required Investments

The third and most important tip is to calculate how much you need to have invested to generate your desired income. A simple rule of thumb is that for every $1,000 you want in monthly income, you should have $300,000 invested. This calculation provides a basic idea of what you need to aim for to achieve a comfortable retirement. While this is a general guideline, it can help you understand the scale of investments required to support your retirement goals.

Let’s Plan Your Dream Future

Thinking about retiring and wondering if it’s possible? These tips are a great starting point, but everyone’s situation is different. Let’s chat and put together a personalized plan to make your dream future a reality. With careful planning and the right strategy, you can look forward to a fulfilling and financially secure retirement.

Let’s Talk

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Directional Advisors to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

The Biggest Mistake in Your 401(k)?

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The Biggest Mistake in Your 401(k)

When it comes to managing your 401(k), there’s one major mistake many people make: not diversifying properly. While diversification is a commonly discussed investment principle, it’s often misunderstood or overlooked in 401(k) accounts. Many investors believe that simply owning multiple funds means they’re properly diversified. Unfortunately, that’s not quite how it works.

The Importance of True Diversification

Diversification isn’t about the number of funds you own; it’s about the different types of risk those funds cover. When you invest in multiple funds that essentially track similar parts of the market, you’re not truly diversified, even if you hold several different ones. In fact, you might still be exposed to a single economic sector or market trend, leaving your portfolio vulnerable to sudden downturns.

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What Does Proper Diversification Look Like?

Proper diversification involves balancing different “sources of risk.” For instance, consider spreading investments across various asset classes, such as stocks, bonds, real estate, and even international markets. Within these asset classes, it’s also crucial to include both growth and value stocks, small and large companies, and both high-yield and investment-grade bonds. This approach ensures that your portfolio won’t be overly affected if one asset class or sector experiences volatility.

The Role of Regular Portfolio Reviews

To make sure your 401(k) remains diversified, it’s important to periodically review and adjust your investments. Market conditions and economic factors change over time, which means the balance of your portfolio will naturally shift. A regular review, ideally on an annual basis, helps ensure that your investments continue to align with your goals and risk tolerance.

Steps to Avoid Common Diversification Pitfalls

  1. Avoid Overlapping Funds: Carefully review the funds in your 401(k) to ensure they’re not investing in similar assets. For instance, multiple large-cap funds likely won’t add much diversification benefit.
  2. Think Beyond Domestic Stocks: Don’t limit yourself to U.S. stocks alone. Consider adding exposure to international and emerging market stocks, which can enhance diversification and potentially boost returns over the long term.
  3. Include Bonds and Other Asset Classes: While stocks offer growth potential, bonds provide stability and income, making them a valuable addition to a diversified portfolio. Real estate or other alternative investments (if your 401(k) offers them) can also improve balance.
  4. Adjust Based on Age and Goals: The closer you are to retirement, the more you’ll want to shift toward a conservative allocation. Younger investors, on the other hand, might focus more on growth-oriented assets, like stocks, which tend to be riskier but have higher long-term returns.

Final Thoughts

Diversification is essential to building a resilient 401(k) that can weather market fluctuations and support your retirement goals. Remember, it’s not about owning a lot of funds; it’s about balancing different types of risk. Take the time to understand the types of assets in your portfolio and adjust as necessary to achieve true diversification.

Let’s Talk

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Directional Advisors to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

How to Say “No” to Family and Friends Asking for Money—Without Hurting Relationships

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How to Say “No” to Family and Friends Asking for Money — Without Hurting Relationships

When you’ve achieved financial stability, it’s common for family or friends to reach out for help. Sometimes, these requests are genuine and come from a place of need; other times, they may simply reflect different expectations. So how do you offer support without becoming the go-to source for financial assistance?

One effective approach that many wealthy individuals use is setting up a Friends and Family Fund. This fund creates a structured way to help loved ones while establishing financial and emotional boundaries.

Why Use a Friends and Family Fund?

This strategy is helpful because it addresses two scenarios:

  1. Supporting Legitimate Needs: You want to help someone in real need but want to avoid creating dependency.
  2. Avoiding Unnecessary Requests: You want to say no to non-urgent requests without damaging relationships.

The Friends and Family Fund acts like a small charity designated for your loved ones. It allows you to allocate a set amount of money for them, providing help in a structured way. Here’s how to set it up and manage it:

  1. Choose an Amount: Decide on a sum you’re comfortable dedicating to this fund. Consider it part of your personal charitable giving.
  2. Invest Conservatively: Use low-risk investments to ensure the fund grows or maintains itself over time without needing additional contributions.
  3. Appoint a Third-Party Manager: Designate a trustworthy person—such as a financial advisor—to manage the fund and make decisions on requests. This allows you to step back from every financial request, making the process less personal.
  4. Set Funding Criteria: Work with the fund manager to determine guidelines for what constitutes a “legitimate need” (such as medical expenses or emergencies). These standards help ensure that requests are fairly evaluated.
  5. Direct Requests to the Fund: When someone approaches you for money, gently inform them about the fund and explain that they can reach out to the manager. This removes you from the decision-making process and allows the fund’s criteria to determine if the request is granted.

Benefits of the Friends and Family Fund

  1. Reduces Emotional Strain: A third-party manager and criteria reduce the pressure on you to make every financial decision.
  2. Promotes Thoughtful Requests: By introducing a formal process, you encourage loved ones to consider whether their needs are essential.
  3. Preserves Relationships: This neutral approach avoids potential misunderstandings, keeping relationships intact while setting boundaries.
  4. Protects Your Assets: By defining a set amount, you’re able to provide support without endangering your financial security.

Creating a Friends and Family Fund is a compassionate, practical solution to saying “no” without straining relationships. It allows you to support those you care about in a responsible way that maintains both your financial stability and personal boundaries.

Next time you’re faced with a request, let them know about your fund—it may be exactly what they need.

Let’s Talk

Let’s Connect

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Directional Advisors to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

What I Care About This Week | 2024 Nov 11

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by Franklin J. Parker, CFA

The election dominated the news last week, of course. Markets rallied strongly across the board, with the dollar strengthening globally. Bitcoin was a big winner, passing above $80,000 per coin. I have been a critic of cyptocurrency (here’s why), but I have softened in that view in recent years.

The Fed cut rates last week, as expected, and Powell reiterated the Fed’s changed view: that employment now has bigger risks than inflation. It seems likely that rates will continue to come down, and markets have an 85% chance that the Fed will cut again in December.

Most companies have reported earnings, and it looks like companies grew earnings by about 5% over this time last year. This is pretty dissappointing, especially when compared with the 36% run-up in the S&P 500. That run has been largely driven by investor’s willingness to pay higher valuations for the same stocks. Current valuations imply the S&P 500’s return will be in the 3%/year range over the next 10 years — not much to write home about. More on that in this week’s chart.

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Despite the past week’s rally, the underlying economic data has me very concerned. While it is possible that we buck historical precedent and return to strong growth, I think that is unlikely (indeed, Buffet himself has been to selling his profitable positions, and is now sitting on about 25% cash). More likely, we are late in the economic cycle and recession is closing in. Of course, exactly how we manage that in your portfolio is dependent on your goals.

Chart of the Week

This week’s chart comes to us from LPL Financial and demonstrates my concern with valuations. The price-to-earnings ratio is the price that investors are willing to pay for every $1 in company earnings. As this chart demonstrates, as P/E ratios get higher, 10-year returns tend to be much lower, including going negative. With its current P/E ratio, returns for the S&P 500 are implied to be in the 3% per year range.

source: LPL Financial

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Directional Advisors to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

What I Care About This Week | 2024 Nov 4

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by Franklin J. Parker, CFA

We are coming to the end of earnings season, with about 70% of major US companies having reported. It looks like we will end up with about 5% earnings growth for the third quarter, which — as I have mentioned before — is a very ambiguous signal.

Of course, we have an election in the US on Tuesday. Investors are likely to watch that outcome very closely as betting markets have the candidates practically tied. It is normal have excess volatility in markets right around the election and then see a run-up into the end of the year. Check out the chart from last week for a closer look at that dynamic.

On the data front: last week, inflation came in hotter than expected leaving investors wondering if the Fed will be able to cut rates at the pace they had previously thought. Also surprising, the US created a pathetic 12,000 new jobs last month. Even after adding back the Boeing strike and effects of the hurricane, that is still well below expectations. The headline unemployment rate remained at 4.1%, but that was due to more people leaving the workforce — not a good sign.

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This week is also the week the week the Fed meets to determine the Fed Funds rate. A cut is expected, but investors will watch Powell’s commentary very closely in the press conference to get a signal about how their path for rates may have shifted.

This is a busy week in markets!

Chart of the Week

One of the indicators I follow to help me determine the business cycle is the Index of Leading Economic Indicators. Typically, this indicator tends falls ahead of recessions. In the chart I’ve noted the number of months from the peak of the index to when a recession began. The previous record (since 1989) was 21 months. We are now in our 32nd month since the index peaked in March 2022, which is the longest streak on record.

Of course, it may be that this is a false signal and the Fed has engineered a soft landing. In that case, we should expect to see this index begin to rise again very soon.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Directional Advisors to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

Thinking About Retiring to the Carribean? Here Are Some Things to Keep in Mind.

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by Matthew Tarkington

Retiring to the Caribbean is a dream for many Americans seeking a relaxed lifestyle, warm weather, and beautiful beaches. But how feasible is it to make this dream a reality? Let’s look at some of the factors:

Financial Considerations

One of the primary concerns for retirees is how far their dollar will go in the Caribbean compared to the continental US. Generally, the cost of living in the Caribbean can be lower, but how much varies significantly from island to island.

  • Cost of Eating: Dining out in the Caribbean can be quite affordable. A meal at an inexpensive restaurant might cost around $5-$10, while a three-course meal for two at a mid-range restaurant could be around $30-$40. Local markets offer fresh produce at lower prices than in the US.
  • Housing Costs: Renting or buying property in the Caribbean can be significantly cheaper. As an example, in Belize, you can rent a one-bedroom apartment in the bustling city center for $400 a month and an apartment on the beach for around $3000.

What if I don’t speak Spanish?

If you’re looking for a place where English is the primary language, there are several islands in the Caribbean that fit the bill perfectly.

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One such destination is the island of Roatán, located off the coast of Honduras. English remains the primary language spoken by the locals and visitors as well.

Another excellent choice is the island of San Andrés, which is part of Colombia but culturally distinct. San Andrés has a unique blend of Caribbean and Latin influences, and English is widely spoken due to its historical ties with the British Empire. The island offers a variety of activities, from exploring its beautiful beaches and crystal-clear waters to enjoying its lively music and dance scene.

Lastly, the island of Providencia, also part of Colombia, is a hidden gem in the Caribbean. Like San Andrés, Providencia has a strong English-speaking community. The island is less commercialized, offering a more laid-back and authentic experience.

Making the Move

If you’re considering retiring to the Caribbean, here are a few steps to help you get started:

  1. Research: Look into different Caribbean islands to find the one that best suits your lifestyle and budget. Consider factors like cost of living, healthcare, safety, and community.
  2. Visit: Spend some time on the island you’re considering before making a permanent move. This will give you a feel for the local culture and lifestyle.
  3. Financial Planning: Ensure you have a solid financial plan in place. Consider the cost of living, healthcare, and other financial implications. This is where we can help you

Retiring to the Caribbean can be a wonderful way to enjoy your golden years, but it does require careful consideration and planning. If retiring to the Caribbean is something on your bucket list, let’s talk about what it would take to get you on track.

Let’s Chat

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Directional Advisors to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

What I Care About This Week | 2024 Oct 28

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by Franklin J. Parker, CFA

More earnings! This week we get important profit figures from oil & gas majors, like Chevron and ExxonMobil. Energy earnings are expected to decline by 27%, the largest decline of any S&P 500 sector. Looking at the companies that have already reported — which is only about a third of total companies — and the companies that have yet to report, it looks like earnings will grow somewhere around 4% for this quarter. Again, happy for the growth, but it is well below the growth rate needed to sustain the market rally we’ve seen this year, in my view.

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It is worth mentioning election-year dynamics now that the election is coming in to view. Historically, in presidential election years, we see some volatility around election day followed by a rally into the end of the year, however actual annual returns are not usualy much different from any other year (2008 being the big exception, but there were other dynamics at work that year). See this week’s chart to see what election years since 1984 look like.

This week we see important data: third-quarter GDP growth, job openings, unemployment (expected to hold around 4.1%), and PMIs. All of this data could move markets, and are all important insights into the status of the business cycle. I will again emphasize that I am cautious, but growing somewhat optimistic if earnings can grow more significantly and unemployment move lower in a meaningful way.

Chart of the Week

This week’s chart — courtesy of JP Morgan Private Bank — is a history of stock markets in every election year since 1984. As we can see in the chart, election years typically have somewhat greater volatility than in normal years, however, we usually see a rally into the end of the year, with a couple of notable exceptions, but those were also years when recessionary dynamics pervade.

While it is true that every time is different, it is helpful to anchor our expectations in history.

Source: JPMorgan Private Bank, Bloomberg Finance L.P. Analysis as of January 18, 2024.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Directional Advisors to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.

What I Care About This Week | 2024 Oct 21

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by Franklin J. Parker, CFA

Earnings, earnings, earnings, earnings, earnings! With the Fed having given a clearer path for rates, investors are watching earnings very closely. It appears that earnings are only expected to grow about 3.5% — which is lower than we thought before earnings season began. As I mentioned last week, earnings growth is concentrated in one or two sectors (technology and communication services), which belies some underlying weakness in the economic growth story.

This week we see data on durable goods orders and we enter the thick of earnings season, with major companies like General Electric, Verizon, 3M, Boeing, Tesla, IBM, and many others reporting. As I have said before, for this market rally to continue, we really need to see meaningful earnings growth across the board (10% to 15% growth).

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I am growing a bit more optimistic. There are still underlying weaknesses in the economy — the yield curve remains inverted and unemployment levels have moved in a recessionary way. However, if earnings growth can catch on and unemployment levels stabalize, I may shift my outlook from cautious to optimistic.

Chart of the Week

Private Inventories are a key component of the economy. When businesses are not optimistic, they tend to stop ordering excess inventory, and sell down existing stock. That said, this figure is also one of the components of GDP itself, so it is much more of a coincident indicator. As you can see, after contracting last year, inventories have begun to climb again this year.

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Directional Advisors to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.