Market Review 17.03.2017:

The US market seems to slightly lose its winning streak after this closing week. It does not mean that the market is losing, but the market is an unpredictable figure churner that such a decline is already expected. Meanwhile, the European Central Bank keeps the current interest rates, which it said would be extended further in time. The program on bond-buying would most likely stay until December.

This week, the focus of this article would be on how to gain a deeper understanding of fixed-income investing. What could be deduced here in case of the bullish market happening in the US? Would it entail a losing side on other financial markets or would it boost the other markets’ upheaval?

Fixed Income Investing – What to make of it?

As an introduction, bonds offer fixed rates of return for a fixed period of time or an extended one, depending on the investor’s choice. Portfolios would mostly consist of bonds and stocks, which would entail the feature of a diversified investment.

What are the rewards from such risks then?

  • Generally, when rates increase, the risk for any return in bond investment also rises. As an observation, interest rates do not faze out modest returns from bond investing.
  • The rate may be too low at the current level of investing nowadays, but this is a fool- proof testament that bonds would still perform well when stocks are dropping. Bonds and stocks show an inverse relationship where, if one is falling, the other would rise. That is why bonds are effective shields against market volatility.
  • Stocks that are paying dividends provide a great assessment of a well-performing investment. Remember that dividends are not a guarantee of fixed returns because it is part of equity, and corporate discretion always comes into play.

A diversified portfolio really means enough buffer in case other types of investment do not work out. It acts like a leverage that would enable an investor to forecast and see any upcoming upsets and market flow for a better set of decisions to be made.

What should an investor do?

  • Assess what the component of your portfolio would be through proper allocations of how much would be in bonds or in stocks. Ask a legitimate financial advisor for better decision-making.
  • Diversification is a must, as it would contain different types of assets in each bond and stock classifications.
  • Bonds should be kept in varying terms of maturities. Short-term bonds are preferred for better investment positioning and determination.

 

Market Price Recap

Stock Index Closing Change from Last Week % Change
Dow Jones 21, 903.54 897.83 -0.05%
NASDAQ   5, 861.73   -9.02 -0.02%
S&P 500   2, 372.60    10.52 +6.00%
Russell 2000   1, 365.26   -28.87 -0.03%

 

 

Others Closing Change from Last Week % Change
Oil        48.43 -.31 -9.20%
Gold 1, 201.40  5.90 +0.49%
EUR/USD           1.0674 -0.0033 -0.31%
USD/JPY      114.78 +1.24 -0.20%

 

Stock Index Closing Change from Last Week % Change
UK FTSE 100 7, 374.39 31.31 +0.43%
Stoxx Europe 600     374.73   1.51 +0.40%

 

Stock Index Closing Change from Last Week % Change
Nikkei 225 19, 633.75   29.14 +0.15%
Shanghai Composite   3, 237.02   24.26 +0.76%