October 10, 2017
Dear Clients & Friends:
Hard to believe we are coming into the final quarter of 2017. This year has flown by. Wanted to reach out with some updates, housekeeping items and a market summary. First the easy items;
First Clearing transfers, those of you that owned Direct Participation Programs in your First Clearing IRA, those assets should have been registered now to National Brokerage Services (NFS) or Community National Bank (CNB). If you received a statement from First Clearing still showing those positions reach out to Emily and she can confirm those assets have been moved. First Clearing has two systems that need updated on these and sometimes the back-office systems that generates statements takes a little longer. We will be happy to confirm those assets have been moved. Secondly, if you received a First Clearing statement showing any positions or cash we need a copy to get those assets moved. We do not want any clients to go into 2018 with any assets on the books at First Clearing. Also, if you have moved this past year, you will need to contact First Clearing direct to update your address for any tax documents for 2018. Their number is 800-603-1584.
SEI accounts, if you have not already signed up for account access to view your SEI accounts please contact the IT Help Desk at 866-444-7775 they can assist you with registering. We recommend however, that you use our Emoney platform. This is a consolidated summary of all accounts held through our office and you can link up personal accounts. This is a one website, one log in to view everything and we can assist you with this, not a help desk. If you would like to set this up and have not done so, please contact Steven.
Long time readers will recognize the name Brian Wesbury, chief economist with First Trust Portfolios. I have visited with Brian in person and heard him speak a few times over the years. Of all my reading and research, I have found Brian to be accurate, calming and providing a perspective not found elsewhere.
We are at the ten-year anniversary of the start of the last deep recession and market collapse. According the Brian, if this expansion lasts another 18 months it’ll be the longest on record. He goes on to explain it’s not the best expansion: “From the recession bottom to the expansion peak, real GDP expanded 39% in the 1980s and 43% in the 1990s. So far, eight years in, this one is only up 19%. That's why we've been calling it the Plow Horse Economy.” Source: www.ftportfolios.com
Historically, market declines like the one we suffered through from October of 2007 through March of 2009 occur mainly in recessions. So the real question is; are we headed into a recession? My answer for now is no. According to Brian, interest rates are still at historical lows, home builders haven’t overbuilt, consumer debt is near the lowest share of income since the 1980’s and bank capital ratios are higher than before the crisis. Hopefully, Congress can get something done regarding tax cuts/reform which may continue this expansion.
Although the expansion continues and may into the near term in my opinion, the US market is relatively expensive versus global markets. I am concerned about the valuation levels of some technology stocks such as; Facebook, Amazon, Google, Microsoft and Apple. According the CNBC these five stocks represent 12% of the S&P 500 index overall weight and 40% of the index’s market capitalization gains so far this year. Visions of the tech bubble in 2000 or the nifty fifty stocks of the 60’s and 70’s?
My father once asked me what I thought the market would do? My answer was; it will go up and down. I stole that line from somewhere but wasn’t trying to be cute. In reality this, is what the market does day to day, month to month. What I believe is more important is; what is the trend? Since March of 2009 the trend has been positive. As of now I don’t see anything to change the trend. I attended SEI Private Trust Company and our new broker dealer Securities America conferences this year and came back with a similar take away; increase international allocation and stay on the shorter end of fixed income maturities.
Thanks for taking the time to read my insight. If you have any questions or concerns please don’t hesitate to call.
G. Pete Fields, CLU, ChFC
Chartered Financial Consultant
The opinions and forecasts expressed are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.