2016 Fall Newsletter
Greetings! In addition to cooler weather, colorful leaves, and a plethora of sport viewing opportunities, the fall season 2016 has an added feature for us… a presidential election. While we go out of our way to be non-partisan in conversations with clients, it is safe to say that our two major candidates are far from awe-inspiring. That was kind, right? But that said, we still intend to vote and we encourage all of you to do so on November 8.
Staying on the topic of elections for a moment, we have been asked more than once how a new commander-in-chief could impact the market. Consider the facts and observations below. But remember, as we have frequently seen, markets tend to overreact to short term events such as elections. We must maintain our long-term strategies and focus regardless of what happens in November.
- 16 of the past 18 presidential election years have produced a positive total return for the S&P 500 index (BTN Research) So far, so good this year. (See Market Update)
- When the S&P 500 has been positive over the three months prior to the election, the incumbent party has retained control of the White House. (Strategas Research Partners)
- Between 1950 and 2015, the economy has performed best in years with the combination of a Democratic President and a Republican Congress. (Wallet Hub)
- Worst case scenario for the market historically? A republican president and a divided congress. (BTN Research)
Will these facts prove true again in 2016? Stay tuned! But again remember, there are far more important factors impacting both the economy and the stock market than which political party happens to occupy 1600 Pennsylvania Ave. We remain focused on big picture items and issues, how these might affect the attainment of your goals, and if adjustments are worthy of consideration.
~ The DeLong & Brower Team
Medicare & Health Care Updates
What we are able to do at DeLong & Brower is offer individuals, families, and business owners coordinated financial advice, financial planning, retirement income planning, tax management, accounting services, and insurance services under one roof. With the addition of Buursma Agency this year to the DeLong & Brower family, we want to highlight that Medicare Open Enrollment is underway from 10/15/16 to 12/7/16 and Marketplace Open Enrollment is 11/1/16 to 1/31/17 for health insurance.
If you are not already working with us, let Buursma Agency be a resource to help you navigate and choose your best health coverage for 2017, either on or off the marketplace. You can choose to work with them for 2017 at NO additional premium and gain their knowledge and professional advice. They can be contacted directly at (616) 392-2105 and their website is www.buursmaagency.com.
So how have the markets performed through three quarters of 2016? Here are the stats. Through September, the Dow is up just over 5%, the S&P 500 up just over 6% and the NASDAQ composite is also up just a fraction over 6%. The MSCI EAFE is down 0.85%, while the MSCI Emerging Market index is up 13.77%! The ten year US Treasury is yielding 1.595%, and the Barclays US Aggregate Bond index is up 5.8% (Bloomberg*). Overall, a pretty good year so far! So what lies ahead? Here are our thoughts.
Polls show that a majority of Americans have negative sentiments now about our country and the economy. Not too surprising given so much negative news in the media on a daily basis. Quite possibly as a result, Americans are holding much more “cash” investments (checking, savings, CDs) than is historically the case in spite of historically low interest rates and the resulting negative real returns after inflation that these “safe” investments offer. Consider the following: 5, 4, 3, 2, 1.
- Unemployment is now under 5%.
- 30 year mortgage rates are under 4%.
- Gasoline is under $3 per gallon.
- Inflation is currently averaging under 2%.
- We have had 1 recession in the last 15 years.
Is your response positive or negative to these facts? In our mind, these are positive facts. So is it financially smart for so much money to be sitting in “cash”? Of course there are extenuating circumstances, but our general answer is no. If you, or someone you know, would like to discuss timely alternatives to excessive cash holdings, please give us a call to review your individual situation.
*Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.
We are kicking off our Educational Series this quarter in November. Our first one is, “Social Security: What You Need to Know to Help Maximize Your Retirement Income.” Stay tuned for a date announcement and invite via our email newsletter (see “Connie’s Corner” below to sign up if you are not on our list).
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