Stock Market

Planning for Retirement: Stock Exposure and Volatility

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investment chart review

Planning for retirement – Stock exposure and market volatility?

Preparing for and transitioning into retirement can be an overwhelming task. Over the last three decades, the responsibility to plan for retirement has shifted from employers to the employees and people are living longer, a lot longer. Most retirees will now have to make investment decisions on their own, instead of relying on a pension from their employer. So what is an appropriate amount of stocks for a retiree? The old adage of subtract your age from one hundred and that number is the percentage of stocks your portfolio should have, could be detrimental to your retirement plan.

What’s the best portfolio mix?

When people approach retirement the instinct is to get more conservative, or have less stocks in their portfolio. Every retiree’s situation is unique and people are living much longer, meaning their retirement savings will need to last longer. If people need their retirement savings to last longer, then growing their investments will be a necessary key to success. Many factors play a role in determining the best mix for you. Some retirees will rely more on the portfolio for income needs, while others may have more flexibility. Determining the best portfolio mix will depend on a person’s long term goals, risk tolerance and withdrawal needs from their investments.

older couple hike in woods
Senior couple embracing

How to deal with volatility in retirement?

When a retiree is relying on their investments as a paycheck, it can be emotional when stock markets experience volatility or have huge fluctuations. Investing comes with risk, but not all stocks are equally risky. Retirees can use many different strategies to try and lower the overall risk in their portfolio while still maintaining a certain expected return. In today’s investment arena, low volatility ETF’s are accessible. These funds try to invest in stocks that have less risk than the broader market. Another strategy may be investing in companies that pay a dividend. The dividend helps provide income regardless if the stock is up or down. When relying on a portfolio in retirement, it is important to balance both growth and risk.

Planning and investing for retirement is challenging. If you need help determining the best mix in your investment portfolio for your retirement plan, take advantage of Sharkey, Howes & Javer’s complementary consultation.

The History of the American Stock Market (Part II)

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In Part I we looked at the beginnings of debt markets, and the early days of company stock ownership and trades. The 20th Century saw huge changes in the world’s economies, political systems, and population growth. The History of the American Stock Market both reflects these changes and used them to develop into what we see today. Next we will explore the New York Stock Exchange, NASDAQ, and S&P 500.

The New York Stock Exchange

As we saw in Part I, what was called the New York Curb Market moved indoors into a new building on Greenwich Street in Lower Manhattan. By now, it had established codes of conduct and listing requirements. By 1930, despite the Great Crash of 1929, The Curb Exchange was the world’s leading stock market, and listed more foreign issues than all of the other U.S. securities markets combined.

Radio was developing, and in the 1950s, Radio Amex began to broadcast stock prices and market changes so investors and traders could have up-to-the-minute information. Between 1950 and 1960, the share value traded on the American Stock Exchange had more than doubled to $23 billion.

In 1971, the NYSE and Amex brought many of its informational and other services together to form the National Securities Industry Automation Corporation, or SIAC. One result of such a development was educational services on, for example, options trading. Trading stocks had become a much more complex process, so the intention was to help investors learn more about markets and make more informed decisions.

Trading options and futures are two such examples. Options give buyers and sellers the right, should they choose, to trade an asset at a given price at some point during the life of that contract. Futures trading is similar, but buyers and sellers must trade at that price. Making profitable decisions now about what someone may or must do in the future demanded reliable information.

In 1993, Amex introduced derivative trading. A derivative is a security whose price is based on and depends on or is derived from, the value of underlying assets. These underlying assets include stocks and bonds, commodities, currencies, interest rates, and overall market indices.

In 2008, Amex was bought by and merged with NYSE Euronext. Euronext was a European stock exchange that traded in cash and the derivatives markets. It also produced market data for traders to use. The world, indeed, became more accessible when these major exchanges and market analysts merged across the two continents.


“NASDAQ” stands for the National Association of Securities Dealers Automated Quotations System. Beginning in 1971, it was the first electronic exchange, where investors could buy and sell online, without having to meet on a trading floor. NASDAQ is, today, a world-wide provider of financial technology information and trading services. It operates in 26 countries around the world. NASDAQ’s online services have enabled the world’s stock markets to evolve dramatically. Because it is an all-electronic service, it attracted companies such as Apple, Microsoft and Dell.

Today, NASDAQ services many thousands of clients and publishes approximately 41,000 global indexes covering all kinds of industries and market sectors. This data enables trading professionals to analyze markets in detail and to advise their clients accordingly.

NASDAQ major business segments all use its technology and software to generate and publish the data. The technology then enables approximately 3,100 companies, representing approximately $10.1 trillion in market valuation, to list with NASDAQ. The listings bring buyers and sellers together so they can trade in the many different asset classes offered. As a result, the NASDAQ Stock Market is the largest single pool for trading in US equities.

S&P (Standard and Poor’s)

The company began as the Standard Statistical Company in 1923, when its indicator included only 233 publicly traded companies. It merged with Poor’s Publishing in 1941, resulting in the index showing 416 companies.  It was on January 1, 1957 that it hit the famous 500 mark.

It is, now, an index that tracks the value of 500 large companies, currently representing approximately $7.8 trillion of corporate valuation, that are listed on the NYSE and on NASDAQ, hence “S&P 500.”

S&P now does more than publish corporate indices. It also publishes indices on small, mid, and large cap companies and groupings including the S&P Composite 1500, and the S&P 900. It also publishes financial market intelligence across the world, and calculates credit ratings for companies, cities, states and provinces, and entire nations.

Final Comment

The history of the American stock market is rich in fact and action. It enables individuals, institutions, and corporations to invest, raise capital, spread risk, and to speculate on individually listed corporations as well as on company groups and entire market sectors.

Standard and Poor’s
First Sub head includes info from the links in Part I:

The History of the American Stock Market (Part 1)

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The first stock markets got their start as kings, merchants, and adventurers traveled to new, unexplored lands in search of new riches. But it was the development of new technology that helped transform early markets into the exchanges we all know and recognize today.

A Brief Introduction to the Markets

The first exchanges were for debts, rather than assets. Medieval kings and crusading lords had to borrow money to fund their expeditions and wars. They borrowed the money from wealthy merchants by selling part of the debt to other merchants in exchange for a share in the profit when the debts were repaid with interest. Today, we call this trading of debt “bond markets”.

In order for the great shipping nations of Europe to explore and discover new lands and resources such as gold, spices, raw materials, and other luxuries, the fleets of ships being used had to be funded. In some cases, the monarch funded the exploration. Ferdinand and Isabella of Spain funded Columbus’s voyage of 1492, for example. In other cases, the funding came from merchants. Rather than merely lend the money and trade the bonds to reduce the risk, merchants began to join together to form a company that funded their own venture. They were, literally, the first venture capitalists.

Initially, a new company would be formed for each voyage and be disbanded when the fleet returned. As the process evolved, the same company with the same jointly held stock (hence joint-stock company) owned by the same merchant adventurers would fund new trading ventures. Many companies grew wealthy, and their stock became a valuable, highly sought after asset in its own right.

Instead of buying stock shares for cash, they could simply be traded. Because not every ship would return to port, laden with goods for sale, merchants would spread their risk by exchanging stocks in one business venture for stocks in another.

The regular trading of stock certificates in the sixteenth and seventeenth centuries grew into an official, formal, and controlled element of modern-day finance. The world had become a larger place with international trade.

Now let us jump ahead and look at the more recent history of the stock market.

The First Stock Exchanges

Great Britain was the center of one of the greatest empires as well as the center of trade, commerce, and industrial output in the late 18th century. London saw the world’s first official stock exchange open in 1773. The London Stock Exchange (LSE) could not actually trade stocks at the time: unscrupulous business owners had caused so much financial damage that the speculative trading of stocks was illegal until 1825. Outside financing was needed for new ventures, so investors bought stock in these new companies (they just could not trade existing stock certificates among themselves).

In 1792, the New York Stock Exchange (NYSE) opened its doors. New York was the center of America’s domestic and international trade, banking, and manufacturing. The NYSE was America’s second stock exchange, the first one being the Philadelphia Stock Exchange, which began in 1790. Both markets were able to speculatively trade in stocks. The NYSE quickly outgrew its Philadelphia competitor and is, today, the largest stock market on the planet.

NYSE’s Early Days

Stock traders used to meet on the open street, and were known as “curbstone brokers”. As they formalized their role and location, 24 of America’s leading brokers met under a buttonwood tree to sign “The Buttonwood Agreement” which created the NYSE, and they moved their location to Wall Street.

The brokers established rules and set fees for trading. They copied many European practices, and the NYSE became a wealthy organization. The most important regulations the NYSE established were “listing requirements.” For a company to be quoted and traded on the NYSE, it must meet certain standards.

Listing requirements cover, for example, a company’s size (its annual income or its market value) and its liquidity. Liquidity essentially means how quickly its stock can be traded at a given value. Any stock can trade quickly at a bargain price, but overall stability is needed for owners who buy and sell the stocks. Today, if a company wants to be traded on the NYSE, it must have issued at least 1.1 million shares for public-trading, and they must be worth at least $100 million.

As America’s economy and its place in the world grew, so did the power and authority of its stock markets. New stock exchanges opened in other major economic areas. For example, Chicago in the Midwest and Los Angeles on the west coast.

Existing industries grew and new industries began. Rules and regulations developed to cope with both business complexity and the expanding world of international trade brought on by the rise of technology. Traders and owners (including pension companies) and other institutional investors needed new clear and trusted methods of stock valuation and comparison. New trading floors opened their doors to address the needs of the new marketplaces.

In Part II of this blog, which will be posted in a few days, we will look at how the stock market has changed to meet the demands of both growth and these new industries.

NYSE Timeline and General History
Buttonwood Agreement
Listing Requirements

The Pros and Cons of Owning Stock Where You Work

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Many companies offer stock options and stock bonuses to their employees, but is owning stock where you work a good idea? The short answer: it depends. Below are our thoughts on the pros and cons of owning stock where you work.


One ‘pro’ to owning stock in the company where you work is the added motivation you have for the company to succeed. As an ‘owner’ in the company, your success is tied to their success. This holds true for the employees you manage as well.

More than the incentive to work hard, owning stock in the company you work for can pay off quickly. Often companies offer their stock at discounted prices to employees. Buying stock at a discount can pay off if the company does well. In general, you may want to limit your company stock exposure to 10% of your net worth (or less) to maintain diversification.

stock charts in office
stock charts


Your paycheck is already tied to your employer and tying more of your investment portfolio to the company where you work could significantly increase your risk. While being motivated to help the company grow can positively benefit your investment, it doesn’t mean the company is destined to be successful. Their downfall can mean a big financial loss for you. Remember General Motors, Enron and Lehman Brothers?


Owning stock in the company you work for can be a beneficial part of your financial plan. Talking to your financial advisor before making a decision to invest where you work is a good idea. Call 303-639-5100 for a complimentary consultation.

Stock Market Recap with Joel Javer, CFP®

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Sharkey Howes & Javer: Stock Market Recap with Joel Javer, CFP®

Volatility is increasing in the U.S. markets making it more difficult to determine what direction your investments should take in 2015. When Oil slid from $100 to $50/barrel, the U.S. stock market rallied in anticipation that lower gasoline prices would allow consumers to spend this windfall somewhere more interesting than the pump, but that hasn’t happened yet. So far, all we’ve seen are layoffs in the oil patch and more price swings in the S&P 500. Europe is justifiably concerned about Greece and its willingness to resolve its debt crises. They keep talking and positioning as well as negotiating via the media with the Germans, but nothing significant has happened yet. So far this year, international markets have had some gains even slightly more than the U.S., but the structural problems outside the U.S. make us remain cautious. Over the past 6 years, the best place to invest your money has been the S&P 500. This index is likely a bit overvalued right now, and perhaps the international markets are a bit undervalued, but no one knows when the trend will change. It appears that the U.S. dollar will maintain the dominant currency for the foreseeable future making our exports more expensive. This does however, allow foreign companies to increase their sales to the U.S., likely making them more profitable. The U.S. has seen substantial job growth but minimal wage growth over the past year, which is encouraging news for corporate profits. We have yet to see consumer spending rebound to its pre great recession levels, but as more people get reemployed and old debts are repaid, the outlook for the U.S. appears to be the brightest around. How does this translate into your portfolio design? A large part of your portfolio will remain invested in the U.S. with some allocations hedged to the U.S. dollar in International stocks and bonds. Bond positions will remain primarily in U.S. corporations with some international exposure, but the U.S. looks like the place to be right now.

Sharkey, Howes & Javer is a Denver-based financial planning and investment management firm. For additional market updates and financial news, please follow our LinkedIn page.  If you are interested in setting up a complimentary consultation with one of our Certified Financial Planners™, please call 303.639.5100 or visit