UPDATE

🌤️ Happy Tuesday

Good morning. We’re about in the middle of October, which means a.) that time flies quickly, and b.) you’ve probably noticed that it’s getting cooler where you live. Best to keep your favorite sweater or quarter-zip close by for the foreseeable future 🧥

MARK IT. took the week off last week for our team to focus more on some research and other work. That said, this week we have updates to stories we’ve reported on in the past few weeks and some insight about investments.

Read time: 4 minutes

WEEK IN REVIEW

📈 Market Performance

S&P 500 (1-month), via Google Finance

When looking at the S&P on a day-to-day basis, or even a weekly view, it can be tempting to think that hypervolatility is the new trend. Last week, the index had multiple swings of ±1.25%.

• Now there is some volatility happening, some of which may be attributed to macro events like the escalating conflict in Israel/Gaza or the fact that House Republicans are in a race to elect a speaker.

If you zoom out to a monthly view (pictured above) you’ll be surprised the see that the movement in the past two weeks appears to be part of a slow recovery for the index. Coming off of the summer, the S&P was pushing toward the 4,500-point mark.

• A September slowdown saw much of those gains revert to lower levels between 4,200-4,300 points, but this trend in October could be the beginning of the index finding a middle ground.

WEEKLY WATCHLIST

📊 Q3 Earnings Reports for Major Firms

GS Company Logo by Ivan Radic, via Flickr

Several large market cap stocks are reporting their earnings today. While some have already announced the actual results, it takes a few hours for publications to update.

The goal for companies is to beat the expected Earnings per share (EPS) and revenue estimates. Usually, the more the actual amount exceeds the expected, the better.

Here are a few to look out for:

• Bank of America (BAC) with an expected EPS of 0.82 and expected revenue of 25.07B.

• Pharmaceutical company Johnson & Johnson (JNJ) with an expected EPS of 2.52 and expected revenue of 21.05B.

• Defense contractor Lockheed Martin (LMT) with an expected EPS of 6.63 and expected revenue of 16.72B.

• Investment bank Goldman Sachs (GS) with an expected EPS of 5.53 and expected revenue of 11.13B.

MARK IT. EXPLAINED

📎 Index Funds vs. Stocks

Nasdaq, via Wikimedia Commons

While stocks might be easier to value because of their quarterly reports and cash flow statements, the majority of Americans don't pick and choose stocks. Instead, many choose the set-it-and-forget-it approach to investing. This is most commonly done with index funds or exchange-traded funds (ETFs).

• These usually gather anywhere from 20 to 500 companies in one tradable asset. This way, investors might be able to purchase a single asset that has a percentage of each company on the S&P 500 within it. This is ideal for investments like 401(k)s or pensions because these assets perfectly track the market over the long run.

However, those looking to trade within a year to five years might not see huge benefits from buying an index fund because of the risks of over-diversification. Essentially, over-diversification means having too much money spread out over too many stocks, which lessens the profit while not necessarily decreasing any risk.

• Diversification to a degree is one of the most beneficial and time-tested ways of bulletproofing your portfolio, but as you can see from the explanation above, too much diversification doesn't provide any benefit.

In an ideal world, those investments you wish to hold for an extremely long amount of time (say 20-30 years in an IRA) would be index funds that track the market and its average 7 to 10% increase per year, while investments that you hope to pay off in the medium term future would be stock-based.

Remember, stocks on average are always more volatile and risky than index funds. Please do your research before making any investing decisions.

ONE MORE THING

🤝 Keep in Touch

• For general announcements or updates on what we're working on, follow Abbas on Twitter 👉 @RealAbbasAkhtar

• Also, we want to hear your feedback! Send any comments or suggestions to [email protected]

Thanks again for reading!

Nothing MARK IT. publishes constitutes professional and/or financial advice, nor does any information published by MARK IT. constitute a comprehensive or complete statement of the matters discussed.