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Category: Commentary

The Power of Dividends

The Power of Dividends

Posted By Lineweaver Financial Group
September 09, 2021 Category: Blog, Economy, Commentary, Dividends, Portfolio

  If we look at the data over the past 90 years, dividends were responsible for over 40% of the total return of the S&P 500 index, according to a 2021 publication by Hartford Funds. And over the last 50 years, dividend paying stocks have produced average annual returns largely in line with the S&P 500 Index, but with a lower degree of volatility.   While dividend stocks may not receive the same popularity as growth stocks in the current environment, dividend paying stocks can meaningfully contribute to total return over time, with potentially lower price fluctuations. This is especially important in the continuing low interest rate that we’ve seen persist over the last couple of years.   In the past, investors focused on producing current income, such as retirees or individuals nearing retirement, have been able to do that through bond allocations, when yields were much higher. However, in today’s low interest rate environment, it’s become increasingly difficult to achieve that investment objective though fixed income alone.   There are many investment vehicles that can help you combat low interest rates. With the 10-year Treasury bond paying just over 1% and similar bonds in Europe and Japan paying 0% or slightly negative interest rates, but in our view, there are a number of high-quality dividend paying stocks out there that pay a 2%, 3%, or even 4% dividend yield.   Income from bonds, such as Treasury or corpora

Your Portfolio and Diversification

Your Portfolio and Diversification

Posted By Lineweaver Financial Group
August 26, 2021 Category: Educational, Finance, Commentary, Portfolio

Diversification should be an important part of everyone’s strategy when it comes to investing, but it can be easy to either over or under diversify. Many people think they’re diversified, but when you dig deeper on any given portfolio, we find that’s often not the case. You want to choose a variety of assets – stocks, bonds, cash, and others – but you also want to choose ones whose returns haven’t all historically moved in the same direction, and, ideally, assets whose returns typically move in opposite directions to help your portfolio hold up better in down markets. That way, even if a portion of your portfolio is declining, the rest of your portfolio, hopefully, is growing, and you can potentially offset some of the impact of poor performance on your overall portfolio. Another important aspect of building a well-diversified portfolio is that you try to stay diversified within each type of investment. In terms of your individual stock holdings, beware of overconcentration in a single stock. We usually advise our clients that a single security shouldn’t account for more than 5% of your stock portfolio, unless it’s with the company you work for, and even then, you should limit it to 25% if you can. It’s also smart to diversify across stock holdings by market capitalization (including small, medium, and large caps), sector, and geography. Another important consideration is stock overlap or duplication between funds. M

The Benefits of Active Management

The Benefits of Active Management

Posted By Lineweaver Financial Group
August 05, 2021 Category: General, Finance, Educational, Commentary

  Active management is not about timing the market – it is about smart investing, diversification, and taking advantage of macro trends in the marketplace. Remember, time in the market always beats timing the market.   Keeping your portfolio tilted to any one asset class year after year makes it difficult for you to capitalize on emerging trends and dynamic markets.   One important idea behind active management is the idea of active rebalancing. For example, if your financial goals rely on a mix of 60% stocks and 40% bonds, over time, this balance can change as the markets fluctuate. Rebalancing is regularly resetting your portfolio to target allocations. While it’s important to rebalance at regular intervals, it’s also important to rebalance at times like these when market volatility is extreme. Not only does this provide some much-needed stability in your portfolio, but it also allows you to take advantage of opportunities as they arise. It’s also important from a tax standpoint. Some firms rebalance non-IRA accounts with no regard for the tax ramifications.   Even in challenging market conditions, there are always opportunities. For example, as reopening has gotten underway across the nation, we’re seeing a rotation away from Tech and into Value. Cyclical sectors like energy, financial, and industrials are leading the markets. Overweighting certain segments can help give your portfolio a competitive edge and set

Is Your Portfolio as Diversified as You Think it Is?

Is Your Portfolio as Diversified as You Think it Is

Posted By Lineweaver Financial Group
July 22, 2021 Category: General, Finance, Educational, Commentary

  Diversification should be an important part of everyone’s strategy when it comes to investing, but it can be easy to either over or under diversify. Many people think they’re diversified, but when you dig deeper on any given portfolio, we find that’s often not the case.   You want to choose a variety of assets – stocks, bonds, cash and others – but you also want to choose ones whose returns haven’t all historically moved in the same direction, and, ideally, assets whose returns typically move in opposite directions to help your portfolio hold up better in down markets.   Another important aspect of building a well-diversified portfolio is that you try to stay diversified within each type of investment. It’s also smart to diversify across stock holdings by market capitalization (including small, medium, and large caps), sector, and geography.  Something else to consider is stock overlap or duplication between funds. Many people select what they think are very different funds, when in fact they may not be. For example, if you hold several funds, they may be diversified on their own. But if you were dig a bit deeper on them of these, you might notice that many of the top holdings of the different funds are the same, meaning that you’re not nearly as diversified as you had though.  Another key issue to maintain diversification is rebalancin

‘Superfoods:’ Fad or Fact?

Superfoods: Fad or Fact

Posted By Lineweaver Financial Group
July 08, 2021 Category: General, Finance, Newsletter, Educational, Commentary

What are superfoods? Currently, there is no set scientific definition for what counts as a superfood trusted source. Generally speaking, the term describes foods rich in nutrients and known to offer significant health benefits. Superfood products are ubiquitous in the wellness world. For example, typing superfood into a well-known e-commerce search engine offers page after page of products branded as superfoods, including coffee creamers, green tea powders, dried fruits, and supplements, some of which are prohibitively expensive. Many health experts are wary of the term superfood and for good reason. There is no set definition of the word and no regulations surrounding the use of the term on packaging labels. Because of this, there is no guarantee that a product with the superfood label offers any special health benefits or contains certain nutrients. The Bottom Line Even though there is no set definition of a superfood, there is no denying the health benefits of some foods labeled as superfoods, such as berries, citrus fruits, cruciferous vegetables, garlic, and green tea. While incorporating foods that are considered superfoods into the diet is likely to benefit overall health, it’s important to focus more on the overall quality of the diet rather than on specific foods. Consuming a nutritious, balanced diet that is especially rich in vegetables and fruits, no matter if they carry the superfood label or not, is one of the best ways to promote health and redu

Fed Catches Up With Restart Reality

Fed Catches Up With Restart Reality

Posted By Lineweaver Financial Group
July 07, 2021 Category: General, Finance, Newsletter, Educational, Commentary

The Fed has now made a meaningful upgrade to its inflation outlook by embracing a more pronounced overshoot of its 2% target. We view this upgrade as the Fed catching up with the restart dynamics. While the upgrade largely reflects the incoming data since the last meeting, there is a notable change: The Fed now sees the ongoing inflation surge as contributing to achieving its objective as opposed to focusing on its transitory nature. The Fed surprised markets by embracing higher inflation and heralding a lift-off from zero rates in 2023, rather than 2024. We think this could add to its new framework's credibility as long as last week's fall in inflation expectations does not persist. 01 FED'S OUTLOOK SHIFT Fed officials embraced higher 2021 inflation as contributing to their medium-term policy objective, opening the door to a 2023 lift-off. 02 CONSISTENT WITH NEW FRAMEWORK We see this shift as consistent with the Fed's new framework, implying a much more muted response to inflation and supporting risk assets. 03 DATA WATCH Global purchasing managers' index (PMI) and other sentiment data this week will help investors gauge the status of the economic restart. THE BOTTOM LINE Our bottom line: We believe the Fed's new outlook will not translate into significantly higher policy rates any time soon. This, combined with the powerful restart, underpins our pro-risk stance. Large cash balances held by investors and no obvious signs of financial vulnera

Madison Yuzwa Crowned Miss Ohio’s Outstanding Teen

Madison Yuzwa Crowned Miss Ohios Outstanding Teen

Posted By Lineweaver Financial Group
July 07, 2021 Category: General, Finance, Newsletter, Educational, Commentary

On Tuesday, June 15th, Madison Yuzwa, the granddaughter of Lineweaver Financial client Ann Yuzwa (both pictured) was crowned Miss Ohio's Outstanding Teen at the Renaissance Theater in Mansfield, Ohio. Madison also won the talent segment of the competition with her high energy, power tumbling routine. She has been dreaming and working toward this experience since the age of 9 when she took the stage as a Miss Ohio Princess. Madison will move on to compete nationally representing the state of Ohio at Miss America's Outstanding Teen July 28-30th in Universal, Orlando, Florida. Her social initiative includes promoting confidence in youth and teens through her platform; F.I.T. to be Confident. Using specific guidelines set by the American Heart Association, Madison incorporates exercise, nutrition, and self-acceptance to help empower young people's confidence. Madison is a recent Summa Cum Laude graduate of North Royalton High School and resident of Broadview Heights. She will be attending The Ohio State University in the fall majoring in Pharmacy through the Early Assurance to Doctorate program. You can also look for Madison cheering on the Buckeyes this coming football season as a rostered varsity

How to Protect Your Portfolio During Rising Inflation

How to Protect Your Portfolio During Rising Inflation

Posted By Lineweaver Financial Group
June 29, 2021 Category: General, Finance, Educational, Commentary

  The country is opening again after the severe disruptions we saw over the last year. But, the stimulus of the past year, coupled with the growing economy and some of the shortages we have experienced are causing rising prices. In fact, the labor department is reporting the fastest pace of inflation since 2008. So, what is inflation, and how you can help protect your portfolio?   First, let’s go over the differences between reflation and inflation. Reflation is more akin to what we are seeing now –price increases due to the reopening and growing economy, as the economy works its way back to full employment. Inflation is generally increasing prices in a more stable situation – when an economy is at full capacity, and unemployment is generally low.   To most of us, higher prices affect us negatively, regardless of the root cause. Shopkick, a retail marketing app, surveyed 19,000 consumers to see what their experience with inflation was. Of those, 86% have noticed increased prices, and 83% plan to tighten their belts because of it.   Inflation is a problem because it eats at the value of your retirement savings. Average inflation is about 3.23% according to tradingeconomics.com. So, even in optimal economic conditions, you’re losing 3% or more of your savings most years. But there are some strategies you can use to help protect yourself, your family, and your hard-earned money.    First, there are certain asset cl

The Return of the Roaring 20s

The Return of the Roaring 20s

Posted By Lineweaver Financial Group
April 26, 2021 Category: General, Finance, Educational, Commentary

When we think about the roaring 20s, nearly a hundred years ago, we all think of a decade of growth and celebration! And there were really 2 reasons for that: The end of World War One and the end of the Spanish Flu Pandemic. While we don’t have the end of a major war, we are starting to see the end of the pandemic on the horizon and getting closer to herd immunity. But is that enough to kick off the roaring 20s for us again? First, let’s consider this year so far. We had a solid first quarter: the S&P was up 6.2%, the Dow was up 6.8%, and the US lead the world according to the MSCI. Even the Russell 2000 was up 13% in a sign that small caps are recovering. The driver of much of this growth is the growing vaccine numbers- on April 21st, President Biden announced that over 200 million people have received at least one dose of a Covid vaccine. With herd immunity on the horizon, and the likely lifting of restrictions this spring or summer, it’s no surprise to imagine that a lot of people will be traveling, making major purchases, and generally heading out and celebrating. There does appear to be significant pent-up demand – certainly enough to return to normal, and maybe then some besides. The wherewithal to spend is certainly there. As of February, the savings rate in the US was about 13%- double the historical average! So, consumers do seem coiled for recovery, which would affect travel, leisure, housing, and many other sectors of the economy. P

2021 Economic Commentary

2021 Economic Commentary

Posted By Lineweaver Financial Group
April 06, 2021 Category: General, Finance, Educational, Commentary

Vaccine-led Restart The new nominal theme – which flags a more muted response in nominal government bond yields to rising inflation than in the past – has played out since last year. Inflation-adjusted yields, or real yields, have fallen further into negative territory as a result. Additional fiscal spending could turbocharge a vaccine-led economic restart later this year – one that we believe may exceed market expectations. Activity in many services sectors is already compressed with less room to decline further. Businesses have also adapted to an environment of social distancing, allowing operations to continue. Consensus expectations of the size of the shock have been revised down materially, particularly for the euro area. Vaccine rollouts are likely to stoke a sharper-than-anticipated rebound. A Different Shock We see pent-up demand in contact-intense services rebounding sharply once restrictions lift in the U.S. and euro area – as seen in China, and supported by the accumulation in personal savings. U.S. consumers have built up a savings buffer equivalent to more than 12% of annual consumer spending over the past year. Not only is the policy response this time far more overwhelming, but a large part of economic activity will restart on its own once the pandemic is under control, in our view. This is a key difference with the Global Financial Crisis (GFC). The objective of the current policy response has been different: it is not to stimulate

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