This October, we experienced more of the same with the market ticking upward and achieving new all-time highs. In this environment, it’s important to remember that we haven’t seen some typical market moves in quite some time—namely a correction. A correction is a drop in market values of at least 10%. Historically, this has happened almost once each year. It’s hard for investors to remember what a correction looks like, since we haven’t experienced a single market correction since 2007-2009. Corrections are usually seen as healthy for the market. They help pull back stocks that are over-valued, provide great buying opportunities, and rarely last long. Make sure to keep this in mind and stick to your long-term plan when the next correction comes around. Don’t forget one more fact about corrections: although they are inevitable, they are not predictable.
Part of the continued run in the market is due to the expectation that some version of tax reform will take place. Both the House and the Senate have passed tax bills in order to proceed on this issue. All eyes will be on the progress here. As anticipation of tax reform gets priced into the market, we expect some increased market volatility. There’s still a lot of work to do for tax reform to become a reality.
Now that the most recent wave of earnings have come in, we’ll be keeping an eye on the growth of the economy, inflation numbers, and if the Fed will raise rates one more time in 2017 as expected.
Please let us know if there’s an unexpected change in your financial situation so we can keep you engaged in your long term investment plan while providing any upcoming income needs.
May you enjoy the coming holiday season with your friends and family! We are extremely grateful for the opportunity to serve you in 2017.
|Index||October 2017||YTD 2017|
|S&P 500 Composite (Large Cap)||2.33%||16.91%|
|Russell 2000 (Small Cap)||0.85%||11.89%|
|MSCI World Ex-Us||1.37%||20.79%|
|Barclays US Aggregate Bond||0.06%||3.20%|