A Registered Investment Advisor

2016 Is In the Books - The Year in Review, And What Lies Ahead

Remember when we used to write checks?  It always took me a few weeks into the new year to train myself to put the correct date on my checks.  This year is no different, it doesn’t seem like it can already be January.  Unless of course you live anywhere near where I live – sunny Antarctica, or, is it South Dakota?

There are a few things on my mind that I would like to communicate to all of you.

  • Significant investment events of 2016
    • January/February of 2016
    • BREXIT
    • The US Presidential election
    • Post-election investment results
  • Thoughts on the new year
  • The Planning bug

Significant Events of 2016

A year has passed in the blink of an eye.  Seems the old saying is true, the older you get the faster the hands of the clock turn.  Last January and February were not good months in the US markets.  The first week of trading started out in the hole and continued from there, consistently down through late February before finally recovering.

The Dow started in the mid 17,000’s and dropped almost 2,000 points by mid-February, an 11% decline, before turning positive for the first time in 2016.  Many of my strategies capitalized on that down turn by moving out of the way of the market.

Things got rather boring from March until just before the Independence Day holiday.  Remember “hash-tag BREXIT”?  What the heck does a vote in the United Kingdom have to do with us in South Dakota?  For a short shock at the end of Quarter Two, apparently quite a bit.

The market was down a little over 5% in three trading days in late June.  Investors determined that BREXIT maybe really didn’t matter so much in the short run, and the Dow returned to that 18,000 trading level by early July, remaining there for the rest of the summer, and into fall.

Then, (cue the Star Wars music), the upset of the year, possibly the century, happened in November.  The Apprentice star was elected President of the United States.  Does it still seem surreal to you, or is it becoming the new normal?

No matter your answer, it was an interesting week back in November.  You might recall the Dow futures were down over 800 points on Tuesday night (this is an after-hours indication of what the market will do at the next morning’s open).  I might be getting old, because as interested as I was watching the returns come in, I fell asleep before the final results were called.  Much to my surprise, I woke up Wednesday morning to the news that Mr Trump had won. 

I probably do not need to remind many of you of what happened in the markets after the election.  The Dow is approaching 20,000, more a psychological number than anything significant, other than the fact that our investments have been positively affected by the sharp rise. 

To summarize:  2016 had a little of everything to offer, shock declines, shock run-ups, and a lot of treading water.  In the end, we faired very well.  As 4th Quarter statements start hitting your mailbox from us, from your 401ks, and from other investments I hope you will be pleased with the results.  I continue to be pleased with the research I read and the very proactive way we can manage client portfolios.  It will be vitally important that we have that flexibility in the months to come.

Thoughts on the New Year

Out comes the crystal ball.  What do we expect in 2017, and how do we take advantage of it?  I laugh as I re-read that question – if I knew the answer I may be typing this note to all of you from a beach somewhere and not the cold dark morning of -5 degree Brandon.

Although no one can be sure, here are some thoughts on what I think will happen.

January marks the beginning of a seasonal decline that could last into March.  The strong run-up we have seen post-election is sure to take a little breather before going much higher. That said, I am looking to take profits and hide out where we can continue to grow while limiting exposure to stock markets that have peaked in recent months.

Looking further into 2017 analysts are generally bullish, meaning they think the US stock market will continue to grow.  If the Federal Reserve continues to raise interest rates that will help the financial sector (banks make more money when interest rates rise).  If the Fed can get away with raising rates that will mean the overall economy is doing better, which should be good for stocks. 

One outlier in all of this optimism is the soon-to-be President’s Twitter account.  If he says something or does something after taking office that has significant consequences we could be in for a quick back lash in the markets.  So far, his outlandish positions and comments have kept the American publics’ eyes rolling, his name at the top of the headlines, and gotten him elected President.  Nothing of real negative consequence has come of his remarks.  Hopefully that will continue to be the case.  If nothing else, it has been entertaining so far.

The Planning Bug

One closing thought for this note.  Last year I invested in some fairly expensive financial planning software.  As the old dog/new tricks saying goes, I’m a slow to adopt… I have not done nearly the work I should be doing in sharing this tool with all of you.

If you are at all like me, you take a little time to reflect over the holidays and make some goals for the coming year.  If you are not at all like me – that’s maybe good!  Job security for me!  Let Alternative Strategies Group coach you through the financial planning process.

Many firms charge a separate fee for this service to cover the cost of their time and their software.  As of this writing I have not finalized my fee schedule for this new service.  If I had to predict it will probably look something like this:

  • Initial plan fee of $500 (up to 8 hours of preparation and presentation of results)
  • Ongoing maintenance and update fee of $50/quarter that will give you access to an additional planning meeting up to four times per year in order to update and review your situation as things change

However, what I would like to do at this time is share this tool with as many of you as have an interest, for no cost.  My offer to you is to make the full scale planning tool available to you for no charge if you initiate our first meeting before May 1st, 2017.  This would apply to any friends or family that you refer to us that you believe would benefit from this service as well.

Young adult children just staring in life?  Friend or relative that recently changed jobs?  Parent that just lost a spouse or got divorced?  These are all stories we work with every day in my practice.

This time of year is a good time to accomplish some of these goals – tax preparation, financial goal planning, will and estate plan updates.  Start the year off right and call to schedule a time with us today.  If you are just back from the holidays and a friend or relative is looking for a fresh face to help with their finances, we are always appreciative of your referrals.

Have a great January everyone,

Jason

 

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