The year 2017 is officially in the books, and what a year it was.
It started with a whimper (the flash crash in January), and ended with stock market records broken and experts saying the ride is far from over. Along the way we have endured a new administration in DC, a regime in North Korea that treats world affairs like a video game, controversy after controversy following the 2016 election, elections in Europe, Britain vacating the EU and a new tax law. It is amazing that the equity markets remained so stable through it all.
As we prepare this letter, the S&P 500, Dow and NASDAQ are breaking records again. There are so many reasons for continued optimism in 2018, below we mention a few of them . . . . . . .
Europe in full recovery mode – was lagging US recovery – represents opportunities in foreign stocks
A weakening US dollar – with Europe and emerging markets poised in recovery – good for US products
Low volatility in stock markets – brings more investors to the table – keeps stock values high Low Unemployment – wages stable and inflation manageable – more spending results Tax Reform – puts more money into the economy – businesses see sales increases
Re-patriated corporate earnings – brought back to lower US tax structure – jobs should follow
Low Interest Rates – as economy improves lending loosens up – businesses grow / hire more people
Of course nothing is guaranteed, but if we see in 2018 the kind of resilience that we saw in the markets in 2017, things should go well for investors this coming year.
As for the 4th quarter that just ended 12/31/2017, all of the major indices were positive. The Dow ended the quarter up 10.33% and up 25.08% for the year. The S&P 500 came in slightly lower with a gain of 6.12% for the quarter and posting a 19.42% rise for the year. The MSCI EAFE Index, a benchmark for international performance was up 4.23% for the quarter trailing both the Dow and S&P returns for the same period, but almost matching the Dow’s return at 25.03%. Fixed income returns continue to be low, as the Fed starts continues the process of unwinding from Quantitative Easing (QE).
Please find enclosed your quarterly management reports for the retirement plan that you sponsor.
This quarter we introduced a new practice of emailing all of our investment advisory clients a notice regarding our availability to do annual portfolio review sessions. This notice, along with a roll out of an easy-to-use online scheduling tool that will be made available to you this quarter on our website (under the Book Online tab), should help you to put us on your calendar more easily, and to maximize the value you receive from us. Preliminary feedback is positive, so we hope you will schedule a meeting in the coming months.