In the above titled article, the author states “The investment ideas of some of the greatest investors on the planet today are wrong most of the time, and yet they still make a lot of money. How can this be?
The answer is they have a plan”. (source: Raymond James & Assoc.)
This defines how I approach managing your investments. By having a plan and sticking to it, even when some of the actions called for in the plan don’t work, the outcome generally remains positive.
So far in 2017 the financial markets, both stocks and bonds, have generated positive results. Stocks, as measured by the S&P 500, gained 5.5% year-to-date through 3/31/17. While this is quite positive, the most recent trend has been slightly weaker, as the S&P 500 fell 1.6% from an all-time high on 3/1/17 into the end of the quarter. Bonds, as measured by the Bloomberg Barclays Aggregate US Bond index, gained 0.82% for the quarter.
Additionally, some of the sectors that where performing well early in the year, based on the enthusiasm for the Republican agenda (such as financials and industrials), gave back a significant portion of their gains towards the end of the quarter. Interest rates, as measured by the US 10 yr Treasury, jumped from 2.45% at the start of the year to 2.62% in mid-March, only to drop back to end the quarter at 2.40%. The reversal in sectors and interest rates reflect a growing uncertainty about when, and if, the Republican agenda gets implemented.
While I feel this uncertainty is likely to persist and lead to an increase in volatility in the financial markets, I remain confident that the US economy and the US consumer are doing reasonably well and will continue to do so, even without tax reform or more government spending. I realize there are families, and entire communities across the country that are still hurting since the 2008/2009 recession. But consumers, in general, are doing significantly better than they were just a few years ago. US household balance sheets in good shape, as assets (home, 401k, etc.) have grown while household debt has declined to roughly 15% of assets, the lowest level since the early 2000’s. Consumer confidence is at a level not seen since prior to the financial crisis.
Overall, US gross domestic product (GDP) was just revised up to 2.1% for the 4th quarter of 2016. Growth in consumer spending, which accounts for two-thirds of our economy, was revised up to 3.5%.
The combination of stable economic activity and improving corporate earnings should provide the necessary ingredients for the financial markets to improve slightly through the end of the year. I continue to monitor the economy and financial markets and will respond accordingly.
Please feel free to call me with any questions or concerns.
On a personal note, I just learned my oldest daughter Satya will be blessing us with a 4th grandchild in October and my middle daughter Ryan will be getting married in July. I am a very proud and excited dad.
April Calendar of Events (comments and additions for future months are always welcome)
- April is National Autism Awareness month. Let’s all get educated on this issue and works towards acceptance and inclusion of people dealing with autism.
- April is also National Financial Capability month. We at Directional Wealth Management commit to equipping individuals to lead better financial lives through an integrated framework of educational resources, collaborative tools, and personal one-to-one advice.
April 10th Christian’s wife Maecy birthday
April 11th Passover begins – wishing all our clients, colleagues, and friends of the Jewish faith a blessed Seder celebration
April 16th Easter – wishing all our clients, colleagues, and friends of the Christian faith a day full of hope, joy, and love
April 18th Tax Day. Remember to make those IRA or Roth contributions.
April 22nd Earth Day – let’s all recycle, turn out lights when we leave rooms, and do all we can for our environment
April 25th My daughter Satya’s birthday
April 26th Administrative Professionals day – remember your staff
I hope you find this report useful. Please share it with anyone who you feel would benefit from the information.
Sources: Raymond James & Assoc., Advisor Revolution.com, CNBC.com