You may have heard that you should always sell your shares as soon as it is allowed. In fact, this is a fairly common recommendation from financial advisors. But is it really always in your best interest to sell immediately? While it is often prudent advice to sell, it may not be the right decision for you. Perhaps you are a career starter who had a big windfall after your company went through an IPO, you have a stable income, and all of your basic needs are met — does it still make sense to turn around and sell everything right away? Let’s explore some common myths surrounding when to sell your equity awards.

Show Notes:

Important Disclosures: https://www.bosinvest.com/disclosures.

Without a doubt, some Californians have chosen to reside in the Golden State for its vast beauty, tremendous employment opportunities, and diverse population and points of view. However, many folks are beginning to question whether these benefits are justified by the high cost of living, particularly when it comes to housing and taxes.

Show Notes:

Important Disclosures: https://www.bosinvest.com/disclosures.

[1] See Franchise Tax Board Publication 1031 for a full list of what might be deemed a close connection.

Sources:

U.S. Census Bureau, “2019 Median Household Income in the United States,” September 17, 2020, https://www.census.gov/library/visualizations/interactive/2019-median-household-income.html

Zillow, “United States Home Values,” https://www.zillow.com/home-values/

Katherine Loughead, “State Individual Income Tax Rates and Brackets for 2021,” Tax Foundation, February 2020, https://files.taxfoundation.org/20201130112944/State-Individual-Income-Tax-Rates-and-Brackets-for-2020-U.pdf

Janelle Cammenga, “Ranking Property Taxes on the 2021 State Business Tax Climate Index,” Tax Foundation, December 9, 2020, https://taxfoundation.org/best-worst-state-property-tax-codes-2021/

Lee Ohanian, “California Businesses Leave The State By The Thousands,” Hoover Institution, September 8, 2020, https://www.hoover.org/research/california-businesses-leave-state-thousands

Jared Walczak and Janelle Cammenga, “2021 State Business Tax Climate Index,” Tax Foundation, October 21, 2020, https://taxfoundation.org/2021-state-business-tax-climate-index/

Cato Institute, “Freedom in the 50 States,” https://www.freedominthe50states.org/regulatory/california

Our weekly updates on the markets and economy released most Wednesdays.

Show Notes:

This Flash Briefing referenced the Bloomberg Barclays U.S. Treasuries Index, which is an index that measures US dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury. The episode also referenced the Bloomberg Barclays 1-5 Year Government Credit Index, which is a broad-based bond index that measures the non-securitized component of the US Aggregate Bond Index and targets bonds with maturities between 1 and 5 years. Further, the episode referenced the &P 500 Index, which is a market capitalization-weighted index that generally contains the 500 largest publicly traded stocks in the U.S., subject to certain restrictions. Additionally, the briefing referenced the NASDAQ 100 Index, which is a modified market capitalization-weighted index of the 100 largest and most active non-financial domestic and international issues listed on the NASDAQ exchange. No security may have a weighting of greater than 24%. This episode also referenced the MSCI ACWI ex US Index, which is a market capitalization-weighted index that captures large and midcap companies in developed and emerging market countries excluding the U.S. The briefing referenced the MSCI Emerging Markets Index, which is a market capitalization-weighted index that captures large and midcap companies in emerging market countries around the world. Finally, the briefing referenced the MSCI China Index, which is a free float-adjusted, market capitalization-weighted index designed to measure the performance of large and midcap equity securities in the Chinese equity market. A-Shares, H-Shares, B-Shares, Red Chips, and P-Chips may be included in the index. An index is unmanaged and not available for direct investment.

For important disclosures, please see bosinvest.com/disclosures.

The stock market serves a very important function in our society, helping to steer excess savings (capital) to its most productive uses and ultimately contributing to faster economic growth and rising living standards. Most of the time, the stock market is reasonably effective in this role. Occasionally, however, the market’s capital allocation mechanism seems to break down as excessive investor optimism or pessimism drives the prices of certain stocks and sectors to extreme levels that are largely disconnected from their underlying fundamentals. This appears to be one of those times.

Show Notes:

Chart referenced: S&P 500: % Allocated to Tech & New Economy Stocks 

Important Disclosures: https://www.bosinvest.com/disclosures.

* The sources for this article are Morningstar and Yahoo Finance unless noted otherwise.

1 SPAC stands for special purpose acquisition company. Per Jeremy Grantham, founder of GMO, there were 480 IPOs in 2020 of which 248 were SPACs.

2  These five companies’ earnings per share grew by an average of 25% in 2020 based on actual results through September and estimates for the fourth quarter. 

3 NASDAQ Composite Index: A market capitalization-weighted index of common equities listed on the Nasdaq stock exchange. The index includes all Nasdaq-listed stocks that are not derivatives, preferred shares, funds, exchange-traded funds (ETFs) or debenture securities. An index is unmanaged and not available for direct investment.

4 S&P 500 Index: A market capitalization-weighted index that generally contains the 500 largest publicly traded stocks in the U.S., subject to certain restrictions. An index is unmanaged and not available for direct investment.

5 Per data from Yale economist, Robert Shiller, the CAPE ratio of the S&P 500 was 34.3 as of 12/31/20. This was its highest level over the past 100 years with the exception of the tech bubble in the late 1990s.

6 Technology and other new economy stocks comprised 22% of the MSCI ACWI ex USA Index, a broad index of developed and emerging market stocks, as of 12/31/20.

7 Per data from Research Affiliates, the CAPE ratio of the MSCI ACWI ex USA Index was 18 as of 12/31/20.

Our weekly updates on the markets and economy released most Wednesdays.

Show Notes:

This Flash Briefing referenced the S&P 500 Index, which is a market capitalization-weighted index that generally contains the 500 largest publicly traded stocks in the U.S., subject to certain restrictions. It also referenced the MSCI ACWI ex US Index, which is a market capitalization-weighted index that captures large and midcap companies in developed and emerging market countries excluding the U.S. Additionally, the episode referenced the MSCI Emerging Markets Index, which is a market capitalization-weighted index that captures large and midcap companies in emerging market countries around the world. Finally, the episode referenced the MSCI China Index, which is a free float-adjusted, market capitalization-weighted index designed to measure the performance of large and midcap equity securities in the Chinese equity market. A-Shares, H-Shares, B-Shares, Red Chips, and P-Chips may be included in the index. An index is unmanaged and not available for direct investment.

For important disclosures, please see bosinvest.com/disclosures.

Our weekly updates on the markets and economy released most Wednesdays.

Show Notes:

This Flash Briefing referenced the S&P 500 Index, which is a market capitalization-weighted index that generally contains the 500 largest publicly traded stocks in the U.S., subject to certain restrictions. It also referenced the Russell 2000 Index, which is a market capitalization-weighted index of U.S. small cap stocks that consists of the 2,000 smallest publicly traded stocks in the Russell 3000 Index. Lastly, the episode referenced the NASDAQ 100 Index, which is a modified market capitalization-weighted index of the 100 largest and most active non-financial domestic and international issues listed on the NASDAQ exchange. No security may have a weighting of greater than 24%. An index is unmanaged and not available for direct investment.

For important disclosures, please see bosinvest.com/disclosures.

There was a lot of very important financial news the week of January 25th. Apple, Microsoft, and Tesla announced their earnings, the Fed held a meeting, and the first estimate of fourth quarter U.S. GDP was released. But all of that important information was overshadowed by the trading activity of retail investors on Reddit. The GameStop story has transcended the pages of the Wall Street Journal and has captured the attention of many who are not usually interested in such things. Unfortunately, it has also attracted the attention of the SEC and Congress.

Show Notes:

Important Disclosures: https://www.bosinvest.com/disclosures.

On today’s episode David is joined by B|O|S Director of Financial Planning, Michelle Soto and her online personal trainer, Chad Morgan. They’re in conversation exploring the foundational elements of financial and physical fitness.

Should investors be concerned about the increase in volatility and speculative activity that was prevalent in 2020? Let’s just say that there is a reason that it is more expensive to insure a Porsche Spyder than a Toyota Camry. The faster things move, the higher the probability of an accident. The strong rallies in some assets and asset classes have led to rich valuations that may lead to price declines at some point down the road, but no one knows for sure when and if that will happen or how steep the declines may be. The best insurance against these types of declines is a carefully considered investment plan that you can stick with no matter what obstacles lie in the road ahead.

Show Notes:

The complete Quarterly Summary is available on the B|O|S website here.

The following are important footnotes from this episode:

[1] S&P 500 Index: A market capitalization-weighted index that generally contains the 500 largest publicly traded stocks in the U.S., subject to certain restrictions. An index is unmanaged and not available for direct investment.

2 Russell 1000 Value Index: A market capitalization-weighted index composed of constituents in the Russell 1000 Index with low price to book ratios and lower forecasted growth rates. An index is unmanaged and not available for direct investment.

3 Russell 2000 Index: A market capitalization-weighted index of U.S. small cap stocks that consists of the 2,000 smallest publicly traded stocks in the Russell 3000 Index. An index is unmanaged and not available for direct investment.

4 MSCI World ex US Index: A market capitalization-weighted index that captures large and midcap companies in developed countries excluding the U.S. An index is unmanaged and not available for direct investment.

5 MSCI Emerging Markets Index: A market capitalization-weighted index that captures large and midcap companies in emerging market countries around the world. An index is unmanaged and not available for direct investment.

6 Bloomberg Barclays US Aggregate Bond Index: A broad-based bond index that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government agency bonds, corporate bonds and securitized fixed income securities. An index is unmanaged and not available for direct investment.

7 Bloomberg Barclays 1-5 Year Gov/Credit Bond Index: A broad-based bond index that measures the non-securitized component of the US Aggregate Bond Index and targets bonds with maturities between 1 and 5 years. An index is unmanaged and not available for direct investment.

8 Bloomberg Barclays US Treasury Index: An index that measures US dollar-denominated, fixed-rate, nominal debt issued by the U.S. Treasury. An index is unmanaged and not available for direct investment.

9 Bloomberg Barclays US TIPS Index: An index that measures the performance of the U.S. Treasury Inflation Protected Securities (TIPS) market. The index excludes any inflation protected securities held by the U.S. Federal Reserve. An index is unmanaged and not available for direct investment.

10 Bloomberg Barclays US Credit Index: An index that measures the investment grade, US dollar-denominated, fixed-rate, taxable corporate bond markets. An index is unmanaged and not available for direct investment.
 
For important disclosures, please see bosinvest.com/disclosures.

Our weekly updates on the markets and economy released most Wednesdays.

Show Notes:

This Flash Briefing referenced the S&P 500 Index, which is a market capitalization-weighted index that generally contains the 500 largest publicly traded stocks in the U.S., subject to certain restrictions. It also referenced the Russell 2000 Index, which is a market capitalization-weighted index of U.S. small cap stocks that consists of the 2,000 smallest publicly traded stocks in the Russell 3000 Index. Further, the briefing referenced the heavy NASDAQ 100 Index, which is a modified market capitalization-weighted index of the 100 largest and most active non-financial domestic and international issues listed on the NASDAQ exchange. No security may have a weighting of greater than 24%. Additionally, the briefing referenced the Bloomberg Barclays U.S. Aggregate Bond Index, which is a broad-based bond index that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government agency bonds, corporate bonds and securitized fixed income securities. Finally, the briefing referenced the Bloomberg Barclays 1-5 Government/Credit Index, which is a broad-based bond index that measures the non-securitized component of the US Aggregate Bond Index and targets bonds with maturities between 1 and 5 years. An index is unmanaged and not available for direct investment.

For important disclosures, please see bosinvest.com/disclosures.