November/December- Year End: Holiday Bash
First and most importantly, to all our clients, friends, family members, and the Good Lord, thank you. From a financial perspective, the yuletide that came this season started in November with an election. Many around the country were less than pleased at our choices for President of the United States, but I really don’t think that had anything to do with America’s vote. The November election was an economic vote for the capitalism that has made this country great since the times of our Founding Fathers. Annual GDP growth of 2% won’t touch our debt and the socialistic model of economics won’t help us become a happier more prosperous nation. The country voted for something different, and the current market run up is the “excitement” of what that kind of future that capitalism might hold. Will the President-Elect deliver, follow these principles, and not play Washington politics at the expense of all of us? Who knows? But as Tom Cruise said to Kelly McGillis in the 1985 blockbuster movie, Top Gun, “it’s looking pretty good so far.” President-Elect Trump seems to “get it,” but we will see. He must pay attention to our current debt as well as his other policies.
Second, the post-election rise in the stock market was unpredictable at best, but our clients have participated and have been rewarded. We have been blessed with proper insight into allocations for that kind of situation, and I am happy to report good tidings. Prior to the meteoric rise, we were hovering around the 3-5% pretax return range for 2016. This wasn’t bad, but given the capital markets’ gift, we like the current state of asset values better! What we will point out that is much more important is that the rise in values is a perfect example of why you “have to be in the market.” The market has been incredibly volatile over the past 8-10 years. This period is no exception. All the old statistics would show us that if an investor “missed” the best 10 days of the market over a roughly 20 year period, the difference in results was mind boggling. Business Insider, authored by Sam Ro on March 12, 2015 quoted from JPMorgan, “if an investor stayed fully invested in the S&P 500 from 1995 through 2014, they would’ve had a 9.85% annualized return. However, if trading resulted in them missing just the ten best days during that same period, then those annualized returns would collapse to 6.1%.” This is also why we think benchmarking is relevant to very few. Our point in giving you this information is NOT to suggest that it is right, or we believe all clients should be 100% invested in the S&P all the time. No. There are age, cash flow needs, and individual considerations related to access of the clients’ capital that would make this evidence as a hard and fast rule improper. What we are saying is that a “long, buy and hold perspective” on the markets is necessary, even though those nerve racking times are inevitable to achieve the client’s overall goal. Even as professionals, we find that this principle is easier said than done. People’s human emotions are bound to get in the way; however, it is our job to guide you and keep you primarily safe and on track to meet your needs. We take this fiduciary responsibility with the utmost of trust and responsibility.
Third and finally, none of us know what the New Year will provide. What we do know is that we as a nation need to follow our Founding Fathers precepts, heal, work hard, love effusively, and give joy and thanks to our friends, colleagues, and those less fortunate. I hope you all had a wonderful holiday and may your New Year be bright.
A.G. Campbell Advisory, LLC