Stocks and bonds are two of the better-known asset classes in the family of potential investments. Recently, they were in opposition.
Bond interest rates have been moving higher in anticipation of the Federal Reserve raising rates again. We’ve seen multiple maturities of government bonds boasting a yield above 4 percent of late.
When bond rates move higher, borrowing becomes more expensive for companies. As the cost of doing business rises, the outlook for company earnings tends to moderate, sometimes pushing stock prices lower. (Companies in the financial industry are often an exception, because financial companies often benefit from higher rates.)
In addition, higher bond yields may lead to lower stock prices, as investors who seek income move some assets from stocks to bonds. For example, more conservative investors who have held dividend-paying stocks to help achieve retirement income goals might choose to move some assets into bonds.
Latest Financial Forum Insights
I attended a research meeting this week hosted by First Trust – a large independent investment firm based in Chicago. After comments by nationally recognized speakers, here are two items of interest:
- The data points to continued rate increases and a slowdown in certain sectors of our economy.
- There is potential for a recessionary economy with inflation at the same time.
I’ve honed in on what types of allocation designs can work best with this situation, and we are making placements in traditional businesses, dividend stocks, and certain select types of bonds. Feel free to give me a call if you want any further details in this area.
The Power of Sunshine
If you’re worried about the possibility of dementia, make sure you’re topped up with vitamin D. That’s the finding of an ongoing study from the University of Calgary’s Brain Institute in Canada, the University of Exeter in the United Kingdom, and the U.S. National Alzheimer’s Coordinating Center.
More than 12,000 people participated in the study. The average age of participants was 71, and none had dementia when the study began. Slightly more than one-third of participants received vitamin D supplements. Researchers noted:
“… taking vitamin D was associated with living dementia-free for longer, and they also found 40 percent fewer dementia diagnoses in the group who took supplements. While vitamin D was effective in all groups, the team found that effects were significantly greater in females, compared to males. Similarly, effects were greater in people with normal cognition, compared to those who reported signs of mild cognitive impairment – changes to cognition which have been linked to a higher risk of dementia.”
Vitamin D is known as the sunshine vitamin. When you walk outside on a sunny day, ultraviolet rays from the sun interact with chemicals in your skin to produce the vitamin. The amount you produce depends on a variety of factors, including where you live, the time of day you’re outside, and your pigmentation, as reported by the Mayo Clinic.
About one billion people around the world are deficient in vitamin D. That number includes about 35 percent of the U.S. population. In the U.S., people who are older than age 65 and people who have darker skin are more likely to experience vitamin D deficits, according to the Cleveland Clinic.
Having too little Vitamin D can be a significant health issue, because it may play a role in preventing cancer, multiple sclerosis, psoriasis, bone softness, muscle weakness, and osteoporosis. As people become more aware of the importance of vitamin D, the market for supplements is expected to grow.
Focus – Think About It
“The first wealth is health.”