posted on January 18th 2017 in Market Commentary with 0 Comments /

2016 has come and gone. It started out in a very rocky fashion, with comparisons to 2008 that were too numerous to count.

Let’s be clear. As we’ve emphasized in past summaries, markets don’t always trade in a quiet and orderly fashion. But, just because we run into turbulence doesn’t mean it’s time to retreat into cash. Volatility has been and always will be part of the investment landscape. It’s how we manage and mitigate risk that is critical.

We’ve talked about the hazards of timing the market in the past. So here is another way to look at it. To successfully time the market, you have to be right twice getting out near the top and getting back in somewhere near the bottom.

There isn’t anyone who can accomplish such a feat and do it consistently.

We have just entered 2017 and markets are calm and near highs. That follows a year when the S&P 500 Index rose by 12%, including reinvested dividends. In fact, it’s the sixth year in eight that the closely watched index of large-company stocks rose by more than 10%.

Going forward, there is one thing I can promise you: we will run into another round of volatility.

We are always here for you. If you see something in print or on the Internet that causes you concern, please don’t hesitate to reach out to us. We are always happy to answer any questions or address any concerns you have.

Table 1: Key Index Returns


Source: Wall Street Journal,, MTD returns: Nov. 30, 2016Dec. 30, 2016

YTD returns: Dec. 31, 2015Dec. 30, 2016,*Annualized, **in U.S. dollars

Looking ahead

The year is starting in an upbeat fashion. The economy is moving ahead at a modest pace, interest rates remain low and odds of a recession are low.

Moreover, Thomson Reuters forecasts S&P 500 profit growth of 12.5% this year, and consumer and small business confidence is up sharply in wake of the election.

However, the economic skies never fully clear, and we are always monitoring the landscape.

For starters, the forecast for corporate profits is predicated, among other things, on continued economic growth.

The late-year optimism that pushed the major indexes to new highs was aided by optimism that tax reform, regulatory relief and infrastructure spending are on their way.

But what shape will tax reform and new spending take? Compromises will be needed and major new spending, if it passes the Republican Congress, could have huge lead times.

One thing that has been certain: Donald Trump has toned down his anti-free trade rhetoric, alleviating some worries among investors.

Of course, all his tough talk on trade may just be bluster, as he hopes to strike tough new trade deals.

But what if a miscalculation sparks a trade war? We learned from the 1930s that a breakdown in global trade has serious consequences. The infamous Smoot-Hawley Tariff Act passed as the Great Depression was getting underway, erecting new barriers to imports. Unfortunately, it was met by retaliation, and the trade war that enveloped the world worsened the Depression.

In no way are we forecasting a downturn of that magnitude, but instability among the nation’s key trading partners would likely create unwanted volatility.

That said, problems abroad that have not had a material impact on the U.S. economy have created temporary angst, slowing but not ending the current bull market. The evidence reveals that over the past 50 years, bear markets have been primarily associated with recessions.

A new recession and bear market are inevitable, as is an eventual economic recovery and new bull market. While changes to your personal situation may cause us to revisit your investment plan, a disciplined approach has historically borne the greatest dividends.

about the author: WorthPointe Wealth Management

Continue Reading

Other articles filed under Market Commentary

Don’t Tax Me

January 30, 2018 - “Don't tax you, don't tax me, tax that fellow behind the tree,” quipped Senator Russell Long, who chaired the powerful Senate Finance Committee from 1966 to 1981. Tax Reform is Here This past year, Halloween was barely over when House...
Continue Reading

10 Smart Planning Moves to Consider as Tax Reform Looms

January 16, 2018 - It’s hard to believe, but another year is almost behind us. With January just around the corner, now is a great time to review various items you may want to consider as you get set to enter 2018. Many of...
Continue Reading

Looking Back and Leaping Ahead

January 11, 2018 - The End of the Financial Year As we head into the final lap of 2017, it’s been a banner year for stocks not just in the U.S., but around the world. Investors have been focused on the upbeat fundamentals —...
Continue Reading

Avoiding 8 Big Mistakes in Retirement

December 10, 2017 - Tens of millions of Americans are looking forward to the day they retire. Others enjoy their profession and can’t imagine a life without work. Yet, even those folks recognize that one day they won’t wake up on a Monday and...
Continue Reading

5 Retirement Questions You Should Ask Yourself

October 25, 2017 - One topic that comes up often in conversations with our clients is retirement planning. While goals and dreams may differ, there is one common theme — financial security. More specifically, many ask the question, How much monthly income will I...
Continue Reading

Return to Blog Home