It is hard to believe that 2017 is half over and it was chock-full of drama. The stalemate on Capitol Hill, the Federal Reserve’s policy changes, North Korea’s ballistic missile antics, Amazon’s intent to purchase Whole Foods, and a rising stock market are a few of the major topics that dominated the news this past quarter. The S&P 500 Index of large U.S. based companies increased 3.09% for the quarter. Meanwhile, international markets finally accelerated with a 6.11% return as measured by the MSCI EAFE index. The bond market index, known previously as Barclays Aggregate Bond Index has been renamed to the Bloomberg Barclays Aggregate Bond Index and had 1.44% return for the second quarter.
The U.S stock market continues its steady climb with it plus or minus all-time highs. The second quarter saw the strong performance of the so called “FANG” stocks (Facebook, Amazon, Netflix & Google. These technology bellwethers have profited from steady US economic growth and the recent upswing in international markets. While this small selection of companies provided a catalyst for recent market movements, overall the stock market continues to move steadily up. How long can this continue? A simple question with a lot of variables for answers. The short answer is with the low interest rates, low inflation, low volatility, slow wage growth and steady profits from companies, the markets could continue their steady growth for a longer than anticipated time period.
However, market corrections can appear suddenly and unexpectedly. There is much to make the world uneasy at the moment such US Politics, North Korea, international terrorism and Central Bank policy changes to name a few. Interestingly that list of worries hasn’t terribly frightened the stock markets as yet. It seems there has been enough economic growth coupled with new money that is being invested into the market to offset the negatives. In light of all the above, the discipline of taking profits on assets that have appreciated and adding more money to areas that are undervalued continues to be a consistent long-term strategy.
All bull markets eventually end, sometimes with a bang and sometimes with a whimper. That is the short-term price for long term steady growth. Market volatility will eventually come, but when viewed as an opportunity it can be better tolerated. Please call me at any time to discuss your portfolio or any other financial concerns that you may have. Thank you for your continued trust and confidence.