3rd Quarter 2017 Market Outlook

Personal: 

Earlier this month, I was fortunate to spend 11 amazing days with two of my three kiddos traveling through Upstate NY ending up in Boston by the end of our trip.  While the itinerary was largely dictated by my son Dawson’s hockey tryouts, my 12 year-old daughter Sabrina’s presence was the added “spice” that made this latest in a long, long list of “hockey roadies” extra special.  So many little moments during our time away revealed the strong bond of sibling love between brother and sister.  As a dad, I am so grateful for how my kids express their love for one another day in and day out.  On one free day, Niagara Falls was an experience to behold, then on a more personal side-journey, I had a chance to visit “hallowed ground” from my childhood – my grandparent’s lake cottage in Upstate NY.  While grateful for this opportunity, I came to discover that with memories from childhood it’s hard for the “re-visit” in adulthood to live up to the expectations…that when you remove your loved ones from the scene, then it just becomes buildings and houses.  The lesson shared with my kids?  Deeply appreciate the moments you are IN with your loved ones when you are IN them!  The memories ARE those moments!  Savor them!

On the Business Side:

This year, based on feedback, we’ve been working on different ways to deliver content our clients find most helpful.

This year we have introduced with many of our clients a rather robust financial planning tool we call Envision.  The output delivered through this tool helps to provide clarity to the one question most people want an answer to – “will my money last?”.  If you haven’t yet talked with us about completing the Envision process, give us a call to discuss further.

Also, we are well aware that statements and portfolio reports can, at times, be a bit overwhelming, confusing, and not inclusive of all holdings.  And, at the end of the day, what most people want to know is, “how am I doing?” and “am on track toward my goals?”.  With our tools through Albridge Wealth Reporting we are able to provide our clients with a one-page simple snapshot that helps bring clarity to these questions. 

With Portfolio Snapshot through Albridge coupled with the Envision Plan, we have seen clients exhale with relief with this “picture” in hand. 

As always, we will be asking for further feedback moving forward and would love to hear your thoughts.

Introductions:

As the overall markets have been creeping up with no major pull backs lately, many people lose focus on their investments.  Not us.  If you have a friend, family member, or co-worker who you think might benefit from a conversation with us, don’t hesitate to let us know.  Hey, I love to drink coffee and am willing to couple that past time with financial life conversations.

Online Access:

If you do not already have online access and would like to register, email Laura at Laura@familytreefs.com and she will be glad to help you. 

3^rd Quarter 2017 Outlook:

Well, let’s start with a fun (yet painful) factoid since the new school year is just around the corner (summer, where have you gone?).  The National Retail Federation estimates that back to school spending for K-12 and college students will total $83.6 billion this season, up over 10% from last year.  Of course, since I personally have one that is K-12 and TWO that are in college!  Thankfully in 2017, 16 states are hosting sales tax holidays for back-to-school shopping, with most of them located in the Southeast, according to MarketWatch.  So, we have that going for us!

As far as indexes go year-to-date, the Dow is up 10.67%, with the S&P 500 slightly ahead at 11.67%.  However, the MSCI EAFE (read, “international index” as EAFE stands for Europe, Asia, Far East) is up 16.51% with the MSCI Emerging Markets index leading the way with a gain of 24.74%.  For many of you, we began a portfolio shift toward greater weightings in the international space in the first quarter of the year.  (source:  Bloomberg)

Looking at just the S&P 500, we’ve seen sector results year-to-date range from -12.3% on the low end for Energy to 23.74% on the high end for Information Technology  (source:  Bloomberg)

As far as interest rates go, comments from Fed Chairwoman Janet Yellen suggest that soft inflation could slow the pace of rate hikes.  (source:  First Trust Weekly Market Commentary)

Back to the S&P 500 for a moment.  On the heels of another week of gains, it hit a new all-time closing high of 2,473.83.  And with earnings season well under way, no losses were reported from the 67 S&P 500 companies reporting second quarter 2017 earnings last week.  Over 80% beat their estimates, according to Bloomberg.  This week will give investors more earnings data with 186 S&P 500 Index members confirmed to release second quarter 2017 results.

View from the Observation Deck (source:  First Trust)

1. The current bull market in stocks, as measured by the S&P 500 Index, has lasted 3,055 days (3/9/09 – 7/20/17).  It ranks as the second longest in history, according to Bespoke Investment Group.

2. The longest bull market in history lasted from 12/4/87 through 3/24/00, or 4,494 days. That means the current bull market lags the longest ever by 1,439 days, or approximately four years.

3. The longest bull market generated a cumulative return of 838.47%, as measured by the S&P 500 Index, according to Bloomberg. In the current bull market, the S&P 500 Index was up 336.23% as of the close on 7/19/17. 

Takeaway:

According to First Trust, investors have some good reasons to be optimistic about the markets heading into the second half of 2017.  For equity investors, the potential for corporate/individual tax reform, as well as the chance for regulatory reform and infrastructure spending as some point in the near future are reasons to be upbeat, in their opinion.