Dear Clients, Friends and Associates;
Though September was a little slow, we did end up with a decent quarter for growth. Most of the domestic stock indexes were up over 4%. International stock indexes were typically up over 6% and emerging markets indexes were up over 8%. Total bond indexes were basically flat to slightly negative. Yield on the 10-year Treasury bond was up a little which put some temporary downward pressure on bond prices.
The Federal Reserve is still pondering a rate increase in December, which keeps the markets unsettled. Uncertainty over the U.S. Fed’s decisions as well as that of the central banks overseas has kept market volatility up and will continue to do so for the time being.
Economic expansion is still moving forward, albeit slowly. GDP was up a slightly more than expected for the 3rd quarter. It is suspected we will see 1.4% growth for the year and perhaps 2% plus for next year. Unemployment is still favorable. For the housing market, more people are looking to buy a home, but the dearth of homes available will push up prices.
During an election year we typically see more market volatility just because of the uncertainty in the air. Presidential election results typically have very little effect on the markets. We see no need for tactical allocation adjustments due to anticipated election results.
In summary, July and August were unusually calm months for the markets, but volatility picked up in September as we close in on the election and the anticipated Fed action in December. During these periods it is important to maintain allocations that mirror our pre-determined risk tolerance. This diversification should smooth out the overall portfolio ride over time.
We remain alert to new investment opportunities as well as new risks we will need to manage over time.
We appreciate each one of you and welcome your questions or comments at any time.
Sincerely,
Max W. Smith, CFP®, CIMA®
Kent Forsey, CFP®