Quarterly Client Newsletter

The positive momentum that overtook the market following the election continued into 2017. For the first quarter, the S&P 500 posted a price change of 5.53%. January and February were really strong, while March showed a little bit of a pullback as Healthcare Reform delays called into question the speed at which Tax Reform can get done.

Nevertheless, the market has been vibrant and optimism seems to be ruling the day. No matter which metric you look at, Consumer Sentiment or Consumer Confidence, people are excited about the business friendly policies that are being pushed by the new Administration.

However, things never go straight up forever. We are employing prudent portfolio management tactics and are attempting to capture as much of the upside as we can, while keeping safeguards in place to protect capital when the inevitable pullbacks come.

This is an exciting time for sure and you can feel the Animal Spirits in the air.

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1st Quarter 2017 Client Newsletter

I mentioned in the last newsletter that I thought the election results and earnings season could spell gains for the market and, HOLY COW, we got some gains!!! Since the election, the S&P 500 has shot up 4.64% on a price basis and that pushed the gains for the year to 9.54%.

Obviously, the market won’t just go straight up every single day for the entirety of the President-elect’s tenure. However, I do feel the Animal Spirits have been awakened and there could be a very strong run for the market for the foreseeable future.

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4th Quarter 2016 Client Newsletter

In a market full of twists and turns, we got thrown a HUGE curveball this quarter. And, oddly enough, that curveball was a very stable market! For the quarter the price change for the S&P was 3.31%. And the only real volatility we saw occurred before the Fed meeting in September when market participants decided to price in a rate hike that never materialized.

Thus far for the year, the S&P 500 has appreciated 6.08% on a price basis. And, even though I anticipate some market gyrations around the election, I think getting the results should have a calming effect on the markets. This could lead to a further reduction in volatility, but anything is possible. A Trump win could see Brexit like volatility, while Hillary winning should signal a continuation of our current policies and, therefore, calm the markets.

The big thing I am interested to see is how earnings come along. If they are strong, we could have formal proof that the earnings recession is over. Tie that to election uncertainty going away and that could spell gains for the markets.

Time will tell.

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3rd Quarter 2016 Client Newsletter

I mentioned in the last newsletter that you should keep your seatbelts fastened, as I expected the volatility to continue. Well, sure as can be, volatility reigned supreme again!! However, unlike the 1st quarter where the market got hammered and then came back, this quarter the market started off rallying and then Brexit introduced some wild swings.

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2nd Quarter 2016 Client Newsletter

Despite getting absolutely crushed in January, and then again in the beginning of February, the S&P 500 did an improbable about face and rallied very strongly to close the quarter. The final tally in terms of price change for the S&P 500 for the 1st quarter of 2016 was 0.77%, basically flat.

I hope the last research report I sent you all prepared you for this volatility, at least somewhat. But, to be frank, even I am shocked by just how crazy this market has been. In fact, I devoted an entire article in this newsletter to this market’s wild ride.

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1st Quarter 2016 Client Newsletter

Trendless Volatility; that is how you can accurately sum up 2015. We had all kinds of movement in the S&P 500 but when it all settled out, the market went nowhere.

To be precise, the S&P 500 declined 0.73% on a price basis for the full year. However, there were times when the index was up 3.7% and there were times when it was down 9.3%. But when it was all said and done, it ended basically flat.

We had a multitude of issues contributing to this flat performance; oil prices plummeted, political dysfunction continued, and geopolitical tensions increased. Frankly when you consider all the bad news, it seems improbable that the market wasn’t down more. I think that is because the mood of the average U.S. citizen is leaning more towards optimism than pessimism, as is evidenced by the current reading of the University of Michigan Consumer Sentiment Index.

With this, I think it is fair to say that the resiliency of the market was due to the good mood of the U.S. citizens. The key question is; will that continue in 2016?

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4th Quarter 2015 Client Newsletter

The 3rd quarter of 2015 saw a continuation of the volatility that has been the trend for the entire year. In fact, for the quarter the price of the S&P 500 dropped 6.94% and the peak to trough sell off in the quarter topped 12%. When you add this quarter to the rest of the year the S&P 500 price change is –6.75%.

Certainly the global economic concerns have been weighing on all markets, including the U.S. markets. We’ve seen Greece have its troubles, then China, and now Russia is dropping bombs in the Middle East.

But when you rationally look at the market, we needed some kind of sell off to keep the valuations from getting totally out of hand. So, this sell off does improve the fundamentals of the market. But living through the gyrations can be nerve wracking.

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3rd Quarter 2015 Client Newsletter

As we discussed in last quarter’s newsletter, volatility was expected. And guess what? We got it!

Year to date the S&P 500 has only appreciated 0.20% on a price basis. And for the 2nd quarter, the price move was negative. In fact, it was down 0.23% for the quarter.

So for all the ups and downs and moments of excitement and despair, we’ve essentially marked time in the market. Which, quite frankly, is not necessarily a bad thing. If we see an improvement in the underlying market fundamentals and the market is flat, then we are setting the stage for another upward move due to better market valuations.

Of course, the market needs to be monitored and portfolios managed due to the changes in the environment. But if we see solid economic data and an enthused consumer, then I believe this Bull Market will continue.

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2nd Quarter 2015 Client Newsletter

WHOA, Nellie!!! The first quarter saw a tremendous amount of volatility. In January and March, the S&P 500 went down by a good clip. However, in February the market shot up like a rocket. But by the end of the quarter, the market went nowhere. On a price basis, the S&P 500 was up 0.44%.

Moving forward, I’d expect more of the same as we are seeing a convergence of market influences (which I will discuss throughout this newsletter). The most important things to understand during times like this are your investment goals and objectives. If you are looking for growth, we will strive to use the dips to make profitable investments. If you are primarily looking for capital preservation, selling into the rallies makes sense.

During times of high volatility, having an iron clad Investment Policy Statement can be the key to goal achievement and peace of mind.

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1st Quarter 2015 Client Newsletter

Despite the pullback that spanned from the end of September to beginning of October, the S&P 500 posted another year of double digit returns. In fact, the total return for the index was 14.02%. That makes for 3 years in a row of double digit returns and 5 of the last 6, with the only break in that streak being the 2.11% total return posted in 2011.

To me, the most significant thing concerning the markets is the fact that U.S. Consumer Sentiment has broken out of the doldrums and is now registering positive readings. This says to me the U.S. consumer is now optimistic. Historically, this has meant good things for stocks.

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4th Quarter 2014 Client Newsletter