A segue from our last newsletter 'Delineating Short-term and Long-term. Stock Market ... successful long-term results by
QUARTERLY NEWSLETTER
MARKET COMMENTARY - BY MATTHEW ROGERS
Careful What You Read
FALL 2017
MARKET COMMENTARY WHAT MAKES OUR TEAM DIFFERENT? ON THE HOMEFRONT TRIVIA
Matthew J. Rogers Senior Vice President, Investments Managing Director
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Christopher Norton, AAMS® Vice President, Investments
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Adele L. Jacques Senior Registered Sales Associate
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We have said “we live in a sensationalized world” many times and have written it previously, but it is worth repeating. It seems everywhere we turn we see someone on television, hear someone on the radio or see a book or publication with headlines either preaching doom and gloom or euphoria. They are doing this for one reason: to sell something. Their sales tactic is to prey upon human emotion. We need to do our best to adhere to our set discipline and continue to work through things with logic and discipline. Information technology can be an amazing and helpful tool or it can be a debilitating hindrance. To quote Dickens “It is the best of times and the worst of times” in that respect. As always, there is plenty of news that is very troubling including and not limited to North Korea, Hurricane Harvey, Hurricane Irma, ongoing terrorism, national debt as well as political tensions. However, we continue to believe that long-term stock market cycles are driven by THREE main components: interest rates, inflation and corporate earnings. *Interest rates remain low and the Federal Reserve continues to show patience as well as being very accommodative. Easy money policies still exist across the globe and there are few alternatives to owning equities for many investors. *Inflation continues to be under control and the U.S. economy is “only” expected to grow 2%-3%. The Federal Reserve is likely to continue a slow and gradual rate increase pace. *Corporate earnings are very healthy. S&P 500 earnings have increased the last 4 quarters. In all three cases, the news remains very good. Also, there is one thing to keep in mind if you are worried about our debt and/or our currency: one thing the U.S. can do that other governments cannot is simply print more money. For that reason, the U.S. will never default.
Our Opinion on the Global Financial Markets We believe that the underpinnings of the domestic equity markets remain positive and healthy. We also believe international markets will be strong (see tactical portfolio adjustments below). While we remain bullish long-term, we feel there will be a short-term pullback at some point in 2018. This pullback may be caused by the proverbial ‘Black Swan’ (something that is unpredictable) or for the simple reason that we have not seen a significant pullback for a long time. The challenge with this is that we do not feel the weakness will be sustainable long-term nor will it stop this cyclical bull market. Thus, if your timeframe for your portfolio is long-term (5-7 years or more), it is usually prudent to either stay the course during market weakness or conceivably add to your portfolio during these times. Tactical Portfolio Adjustments Our clients know that we occasionally make minor changes to allocations in our model portfolios. These changes are based upon our belief in reversion to the mean within ‘macro’ and ‘micro’ asset classes globally. In 2017, we added emerging market exposure and increased our overall international equity allocations. Both of those moves have been beneficial to clients as emerging markets and broad-based international equity markets have outperformed domestic markets. International equities represented by the MSCI EAFE (Europe, Australasia, and Far East) Index has underperformed the S&P 500 Index the previous 8 years. We believe international equities will continue to be strong in 2018. We are still rigorously researching and analyzing investment alternatives for a rising rate environment for the future.
What Makes Our Team Different? We were recently asked this question and wanted to share our answer with you because we are SO PROUD of our firm and our team. *WHY do we do what we do? We genuinely love to help people. We have told numerous people over the decades that we are happy to help, educate and guide them regardless of whether or not they actually do business with us. Our hope is that every person makes the most informed and educated decision for their situation and their family. *We truly pride ourselves on our SERVICE (both pro-active and re-active). We contact our clients on a regular basis and are always available if our clients need anything. Clients will always know how they are doing relative to their goals, the risk they are taking AND relative to how the global markets are performing.
We go above and beyond to help our clients, their families and friends because we genuinely care about them. *We own what our clients own. We manage portfolios for hundreds of clients. Matt, Chris and Adele are proud to say that we own the same holdings that our clients own in the model portfolios. Allocations may differ, but we own what our clients own. *What we do, why we do it, and how we do it does not change. We are CONSISTENT. Our team has been managing portfolios for families for nearly four decades. We maintain strict disciplines and are here for our clients to coach and council through good times and bad.
ON THE HOMEFRONT Matt, Stacey, Nate and Liza had a wonderful summer full of family activities, fun at Sebago Lake and sporting events. They hosted Sea Dogs players for the 10th year and sent another player off to Boston (Rafael Devers). Amazingly, Nate and Liza are now both in High School (sophomore & freshman respectively)! Matt is already seeking support groups for when they go to college…….or considering moving in with them! Nate is playing golf, basketball and baseball. Liza is playing volleyball, basketball and softball. They are planning their next family mission trip and will share details after that occurs. Chris enjoyed a great summer of boating and fishing on Casco Bay and the surrounding areas, and has been logging hours to eventually work toward a Coast Guard Captains license. He is looking forward to a family fly fishing trip in Colorado this fall. Adele, Jim, Samuel and Charlie had a fun summer. They spent most of it at Popham Beach in Phippsburg, ME. Samuel and Charlie are very excited to be in 5th grade and the oldest kids in their school.
TRIVIA QUESTION Where did Jack-O’-Lanterns originate?
PREVIOUS QUARTER Q: What U.S. President was arrested while in office for running over a woman while on his horse? A: President Franklin Pierce
The S&P 500 is an unmanaged index of 500 widely held stocks. The MSCI EAFE (Europe, Australia, and Far East) index is an unmanaged index that is generally considered representative of the international stock market. These international securities involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. It is not possible to invest directly in an index. This is not a replacement for the official customer account statement and trade confirmation from Raymond James. There is no assurance that any investment strategy will be successful. Investing involves risk and investors may incur a profit or a loss. International investing involves additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. These risks are greater in emerging markets.
