April 2018 Monthly Outlook – “Free Ride”

Well the 1st quarter of 2018 is over and what a wild ride it was.  It reminds me of the lyrics from an Edgar Winter song from the 1970’s  Free Ride – “The mountain is high, the valley is low, and you’re confused on which way to go.”

During the 1st quarter we saw the stock market hit an all-time high (the mountain), then plummet over 10% in less than two weeks (the valley), and since then bounce up and down (confused on which way to go).  Through it all, we broke a streak of 15 straight quarters (almost 4 years) with positive quarterly equity returns.

4.2.2018_MONTHLY_OUTLOOK_CHART_1

Economic activity, on the other hand, continued to remain positive.  GDP (gross domestic product) for the 4th quarter of 2017 finished at 2.9%, and over the last 3 quarters has averaged a tick over 3%.  While GDP is a backward-looking metric, leading economic indicators continue in an upward trend.  As such, I see no signs of a slowdown in the economy on the horizon.

4.2.2018_MONTHLY_OUTLOOK_CHART_2

April brings the start of 1st quarter 2018 corporate earnings.  I think this may be the catalyst to stabilize the stock market.  Corporate earnings are estimated to continue on a solid growth trend, and this earnings cycle will be the first which reflects the impact from tax reform.

I continue to favor stocks over bonds as stocks offer a better value, especially after the recent pullback in stock prices.  Also, stocks have some tailwinds that include:  1) solid global growth;

2) accelerating domestic activity; 3) capital spending improvement; 4) real household median incomes jumping with strong employment; and 5) inflation remaining below 2%.  Source: Tony Dwyer

In addition, April has been a positive month for stocks in 9 of the last 10 years. Going even further back, since 1950 the benchmark has posted an average 1.5 percent gain in April. Source: CNBC.com

As such, I see no need for any significant adjustment in our investment plan.  I am making some small adjustments between industries/sectors related to tax reform and the announced tariffs.

I hope you find this report helpful.  Please share it with anyone who you feel would benefit from the information.

 

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 12 & 13th            We adopted our 4-legged children Coco (2010) and Buddy (2013)

April 17th                     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 25th                     Administrative Professionals day – remember your staff

 

Sources: Yardeni Research, Inc., Tony Dwyer, Raymond James & Assoc, CNBC.com

 

 

 

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

 

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

 

Please consider the charges, risks, expenses and investment objectives carefully before investing. Please see a prospectus containing this and other information. Read it carefully before you invest or send money.

 

Information provided should not be construed as legal or tax advice.  You should discuss any tax or legal matter with the appropriate professional.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s