At the time of this writing, the Dow 30 industrial Average today is trading above 20,000 for the first time in history. When I started in this business in 1986, I recall when the Dow 30 was trading above 1,500 for the first time. As I tell many clients in my office meetings, there will be a time when the Dow 30 will be trading above 100,000 and most say “wow, when will that be?” “Ah, I say, there’s the catch, we just don’t know when that will be in advance”.
So, that is the catch – we don’t get to know in advance when that next Bull or Bear market will be. We know that equity markets over time generate impressive returns, but we don’t get to know how volatile the ride will be or how long it will take for the next cycle to begin or end. That is why we do our best with each client to invest their funds in a manner that allows them to stay invested regardless of what the markets do short term, knowing that over time, the process works and that patience is, truly a virtue.
We now have president Trump in office for only a few days and he has acted quickly. He has approved the Keystone Pipeline with the stipulation they use American pipe for the construction and he has terminated our participation in the Trans – Pacific Partnership although this withdrawal still requires congressional approval. He has frozen Federal Government hiring of new employees, while exempting the U.S. Military. Promises of deregulation, lower taxes and repatriating corporate funds that are overseas are being discussed as important agenda items and it seems that Wall Street for the moment, is attracted to his work pace. As I said in last month’s letter, most occurrences have only been words so far, but the street is watching with great interest as events unfold.
The questions that are obvious right now are trade and international relations, especially with China, Russia and Europe. At the moment, we don’t know what these relationships will look like a year from now. We hope they are cooperative and productive, but we know that President Trump is sensitive to trade imbalances that we have with China and Europe and while he is hopeful to get along with Putin in Russia, it has yet to be put to any test. That is why we are cautiously optimistic. We are invested, yet defensive.
Tax season is beginning to come upon us again. Remember, LPL Financial attempts to get your 1099’s to you by mid to late February. Every once in a while, a corrected 1099 goes out to clients in early March, but it usually isn’t a significant enough event to cause worry if you have already done your taxes. You can bring this change to your next year’s return, but check with your tax advisor to be sure. As always, feel free to contact us with any questions – Mark
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Economic forecasts may not develop as predicted. Some of this research material has been prepared by LPL Financial. All indices are unmanaged and may not be invested into directly. Approved Tracking #: 1-576042