Relatable Finance

Relatable Finance Podcast

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Chart of the Week - November 18, 2024
This week's chart examines the contribution to returns for various equity markets over the last 12 months. Starting with the S&P 500, the total return for the last year is nearly 40%. Notably, more than half of this return is attributed to multiple expansion, meaning prices have risen faster than earnings. The valuation multiples for the S&P 500, which currently exceed 22 times earnings, have generated considerable discussion, as historical trends suggest that such high valuations may lead to lower future returns. To also note, and somewhat forgotten when the index has returned almost 40%, earnings per share (EPS) growth has been robust, exceeding 10%. The MSCI AC World Index, representing global stocks, has experienced a similar trend over the past year to the S&P 500. In contrast, other markets, such as the MSCI Emerging Markets (EM) index, have seen returns more driven by earnings growth.
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Chart of the Week - November 11, 2024
The chart of the week compares a diversified 60% stock/40% bond portfolio with the returns of gold and cash investments going back to 1987. Gold has received considerable attention in recent months and is on pace for its best year since 1979. Gold investors tend to gravitate toward the shiny metal in times of inflation, market volatility, and geopolitical uncertainty. While gold can play a defensive role in a diversified portfolio, long-term investors ought to not overlook the benefits of traditional stocks and bonds, which over time have produced stronger returns with less volatility. Corporations can expand, innovate, and generate profits over time, while gold is viewed more so as a safe haven and store of value. In addition, dividend and interest payments present in stock and bond investments allow for greater long-term compound growth, a feature not found within gold or other precious metals.
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Chart of the Week - November 4, 2024
The chart of the week examines the spread, or the additional yield earned by investing in corporate bonds compared to Treasury bonds. This spread represents the extra return required to compensate for the potential default risk associated with corporations, as opposed to government bonds. Recently, this spread fell to its lowest level since March 2005, at 0.83%. This decline indicates that investors have confidence in the strength of the economy and likely anticipate a continued soft landing as the Federal Reserve begins to cut interest rates. Spreads are utilized across the fixed income spectrum to identify where investors are either adequately or inadequately compensated for taking on risks beyond those associated with Treasury securities and are a key tool in managing fixed income portfolios.
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Chart of the Week - October 28, 2024
The chart of the week examines a recent estimate from Goldman Sachs. Their research predicts a significantly different trajectory for the S&P 500 over the next 10 years compared to the past decade. They forecast an annualized return of just 3% per year, in contrast to the 13% annualized return we have experienced over the last 10 years. Some possible reasons for these lower estimates include increased competition from other asset classes, high concentration within the S&P 500 and historically above-average valuations. This is just one prediction, but a somewhat similar situation occurred in the 1950s and 1960s, as well as in the late 1990s when market returns were heavily influenced by a small number of companies. In the following years, returns were less than favorable.
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About Us

We’re Shane Phillips and Evan Dunayer, the hosts of Relatable Finance. We’ve been working together at Provenance Wealth Advisors (PWA) since 2022, and we’re both based in South Florida. With backgrounds in financial planning and a shared commitment to making finance approachable, we’re excited to bring you insights from our experience as Certified Financial Planners (CFP®).

Relatable Finance was born from our shared passion for simplifying complex financial topics. Every other week, we release episodes focused on breaking down essential financial concepts, discussing the various risks and opportunities investors encounter, and providing our take on current events impacting the financial world.

Our goal is to make finance and investing accessible, engaging, and relevant to your life. We hope you find our podcasts both informative and enjoyable. Happy listening!

 
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The Relatable Finance Podcast is proudly sponsored by Provenance Wealth Advisors.
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www.provwealth.com 

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