3 investing insights from Edward Jones -- what you'd expect from their solid brand

I really appreciate the straight-forward financial insight I get from Jennifer Wilken – and from the firm that supports her, Edward Jones.

Her personal brand is unrivaled, and the Edward Jones brand is solid in my view.

The Edward Jones ads invite consumers to “join us,” if for example, “you buy the renegade idea that investing should be done face-to-face, not just inbox-to-inbox”; “if you believe that your relationship with your investments shouldn’t be long-distance”; or “if you endorse the radical theory that investors should spend less time playing the market, and more time understanding it.”

Here’s some of the latest advice Jennifer has shared with us from Edward Jones:

U.S. stocks again reached new record highs in the second quarter, as earnings and economic growth improved. However, long-term interest rates began to rise – and, in response, stock and bond prices fell. We expect a choppy third quarter because every economic indicator is likely to provoke an outsized, or abnormally large, reaction – up and down – as markets try to guess when the Federal Reserve (Fed) will start to slow its bond purchases. Remember, you don’t control what the Fed will do, but you can ensure your portfolio is ready.

1. Stocks still near new record highs – U.S. stocks largely shrugged off the Fed’s signal of possible policy shifts and the increase in long-term interest rates, since continued economic growth tends to be good news for stocks. In our view, the fundamental drivers of rising stock prices remain in place, but the focus on every economic indicator means greater volatility.
2. Rates start to rise – Long-term interest rates rose sharply in the second quarter, although they remain at quite low levels historically. Bond prices move in the opposite direction from interest rates, and you may have been surprised by their declines. We think long-term rates are likely to continue to move higher over time, reducing bond values, but don’t be surprised if interest rates fluctuate.
3. Policy shifts move all markets together – The Fed’s monetary policies have always affected financial markets, but for the past few years, the Fed has been a steady, calming hand. As a result, Fed announcements – especially any signs of policy changes – tend to provoke sharp reactions. U.S. markets reacted, and international stocks, especially many in emerging markets, dropped sharply. Although policy changes may move all markets together short term, over time they’ll react differently.

Action for Investors

You can’t control interest rates or the stock market. But you can control the quality and diversification of the investments you own and your reactions to market ups and downs. Make sure you’ve constructed a properly diversified portfolio with the right mix of stocks, bonds and international investments based on your situation, your financial goals and your tolerance for risk. Then prepare to stay invested as markets shift in anticipation of policy changes ahead.