Q4 2016 Investment Committee Briefing

blog_investment_committeeWithout question the biggest story of the fourth quarter, in fact all of 2016, was the U.S. presidential election. Regardless of your political leaning, it is a fair bet that market performance during and after the election qualifies as what market analysts like to call “an unanticipated event.” In this fourth quarter briefing we will briefly examine how the presidential election seemed to reverse a slight decline of recent highs for the stock market (and also to accelerate declines in the bond market). Then, using events in this most recent quarter as a backdrop, we will take a much broader historical look at whether market reversals are predictable in and of themselves. Continue reading

Helping Your Clients Stay Calm Even When Markets Are Not

Since many of you may be getting questions about what the election results may mean for client portfolios, we have put together some resources to help educate clients and provide perspective.
 
The most important thing to keep in mind is that stocks have done well during the tenure of nearly every modern president, regardless of party affiliation. (See link below)
 
The results of the election, which caught most pollsters and pundits by surprise, are just one more in a long series of predictive failures this year, from the doom saying in January (“Sell everything”), to the failure of a peace referendum in Colombia, to Brexit.
 
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What Happened Last Quarter… and Why Does it Matter?

Source: Chart sourced from How The Election Will Really Affect Your Investments, Money magazine, June 22, 2016. Returns from Morningstar Direct 2016 returns represent S&P 500 annual total return. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. All investments involve risk, including the loss of principal and cannot be guaranteed against loss by a bank, custodian, or any other financial institution.

Source: Chart sourced from How The Election Will Really Affect Your Investments, Money magazine, June 22, 2016. Returns from Morningstar Direct 2016 returns represent S&P 500 annual total return. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. All investments involve risk, including the loss of principal and cannot be guaranteed against loss by a bank, custodian, or any other financial institution.

Curious about what happened in the markets recently and how that may impact your long-term financial plan? Watch our three, short Making Sense of Markets videos to find out.
 

  1. Performance: Remember the Royal Bank of Scotland’s decree to “sell everything” earlier this year? Hopefully you didn’t pay attention to it, as gains continued in Q3; only U.S. REITs declined marginally in value. The big reversal was solid gains from Emerging Markets Value, International Small Cap and International Value, which all outpaced the S&P 500.
  2. Continue reading

Presidents and Your Portfolio

This article is featured in the fall edition of our 360 Insights Quarterly Client Newsletter.
 
As we approach Election Day on November 8, there will be endless debate, prognostication and media hype. But even before a single vote has been cast, the potential results are already being priced into stocks around the world.
 
While elections do have real consequences and can certainly impact individual companies, in aggregate they tend to be less important than many of the other factors that drive stock prices.
 
How much influence will the next President have on the price of Apple’s phones and computers, Nike’s apparel, Disney’s entertainment or Starbucks coffee?
 
What matters more: who becomes president or whether a company’s product is any good?
 
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U.S. Presidential Elections and Financial Markets

This article is featured in the summer edition of our 360 Insights Quarterly Client Newsletter.
 
For those of us who have experienced more than one or two presidential election cycles, the 2016 campaign seems to be more heated and contentious than usual. The stakes are high for the economy and financial markets, as new political leaders will need to address a wide range of pressing issues.
 
While political decisions can and do have long-term impact on measures of U.S. economic performance, we need to remember what University of Chicago Professor and former chair of the President’s Council of Economic Advisors Austan Goolsbee said:
 
“I think the world vests too much power, certainly in the president, probably in Washington in general for its influence on the economy, because most all of the economy has nothing to do with the government.”1 Continue reading

Who is the Stock Market Voting For?

This article is from Loring Ward’s Winter 360 Insights Quarterly Client Newsletter.
 
As we enter into an election year, you are probably hearing predictions about what the stock market will or won’t do based on what happens in November. Don’t believe everything you hear. Let’s look at some facts…
 
Since 1926, Republicans and Democrats have each controlled the White House roughly the same number of years — Democrats 46, Republicans 43. The U.S. stock market (measured by the S&P 500 index) averaged an annual return of 15.3% when a Democratic president was in office compared to 8.6% when a Republican president was in office. Continue reading