Stock options are financial contracts that give the holder the right, but not the obligation, to buy or sell a specific stock at a predetermined price (the strike price) within a set time frame.
There are two main types of stock options:
Call Options – Give the holder the right to buy a stock at the strike price before the option expires. Investors buy call options when they expect the stock price to rise.
Put Options – Give the holder the right to sell a stock at the strike price before expiration. Investors buy put options when they expect the stock price to decline.
January’s strong equity market performance carried over into the first few weeks of February. Since then, we have seen a strong pullback in U.S. equities, despite some modestly good inflation news. One factor is the uncertainty created by the Trump administration’s tariff policies. It is no surprise that Trump would use the threat of tariffs as a negotiating tool (weapon?). However, his on-again/off-again tactics have created problems for businesses, large and small. It’s difficult to invest in growth initiatives when you have no idea what future costs will be. More worrisome is the increasing sense that he favors tariffs as a long-term revenue generator and a means to encourage domestic production by increasing the cost of imports. There is an argument for wanting to level the playing field: other countries impose tariffs on goods imported from the U.S. while they export to the U.S. without penalty. Nonetheless, history has shown that tariffs are not a good idea in the long run as they can be recessionary.
Artificial Intelligence (AI) - by now, we’ve all heard of it. Some readers are using generative AI tools like ChatGPT. Others are familiar with the high-flying AI stocks that pushed the market to new highs in 2024.
The reality is that AI has been around for a long time, particularly in the financial world. Leading financial planning software platforms have leveraged Artificial Intelligence for years to improve speed and accuracy, and our preferred software solutions are no exception.
What is financial planning software?
Financial planning software generates projections based on an individual’s circumstances and goals. Key inputs include income, assets, debts, and spending plans. Just as important are the qualitative factors that shape financial decisions - retirement timing, life expectancy, and estate planning objectives.
Using this information, the planning software models long-term scenarios, creating a foundation for discussion, action, and adjustment in a person’s financial journey.
What questions can financial planning software answer?
Artificial Intelligence (AI) refers to the simulation of human intelligence in machines, enabling them to analyze data, recognize patterns, and make informed decisions.
In wealth management and financial planning, AI plays a critical role in data analysis, risk assessment, and personalized recommendations.
Financial planning software leverages AI to model retirement scenarios, predict cash flow needs, and automate investment strategies. Other AI-driven tools can assess spending patterns, market conditions, and tax implications to optimize long-term financial plans.
While AI tools can enhance precision and efficiency, human advisors remain essential for interpreting insights.
A financial advisor is better at addressing emotional factors, ensuring a balanced and personalized approach to wealth management.
Bottom line: Tools can be good. But tools are better when keeping competent professionals in the loop. Output can then be balanced and adjusted for each scenario.
