Disclaimer: These are the views of Summit Financial Consulting and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
Two Market Timelines
We constantly research market and economic data, and this analysis uncovered an interesting trend. From 1985 to 1999, the S&P 500 index increased by 15.59% annually on average. From the year 2000 until the end of 2015, the S&P 500 index gained on average 2.08% (Source: www.standardandpoors.com). This “new normal” does not typically beat inflation, and that is not enough for someone to live off of in most cases. The market had many good years, but a handful of bad years from 2000-2003 and during the financial crisis in 2008 which knocked down the average returns. Our point is simple: If you can avoid or directly profit from the large downturns, you can potentially profit handsomely.
The S&P 500 index hit the all-time high in May of 2015, and since then it has had many ups and downs, but it has lost money overall (Source: https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=S%26P+500) . When the stock market is trending down, we have to admit it is harder to make money. However, in our opinion, when the market is close to all-time highs, and the economic data is decelerating the way that it has for the past six months, there is potential to see large gains by investing in a way that profits when the stock market declines. That is how we have positioned our TD Ameritrade portfolios recently.
We are very confident in our process, and our research. Most financial advisors do not have the ability to profit in a down market, and considering the S&P 500 index is so close to all-time highs, they may regret not having that ability. We are excited about the opportunities in front of us, because we have so many “tools” in our investment “toolbox” at TD Ameritrade that we can potentially deploy if we need them.
At this point, after making some changes to our portfolios, we are slightly tilted toward the potential for profit from another stock market slowdown. If the market starts to tilt negative again, we aim to pursue a strategy that can profit in a down market, using our many investment tools. Our research is signaling the market is currently overbought, but it could potentially go higher. Therefore, we are being patient and waiting for opportunities if they arise.
In summary, we still believe another stock market correction is coming this year. At this time we do not anticipate a 2008 style recession, but a small dip in GDP and a corresponding further dip in the stock markets seems very likely.
Please remember that we review your TD Ameritrade holdings on a daily basis, and we will continue to do everything that we can to protect your principal in the case of what we believe to be a long-term down turn. We will also attempt to be opportunistic if our research points to a good “risk-on” or buying opportunity. For now, we’re watching and waiting, but rest assured we have an exit strategy in hand if we need it.
If you have any questions about your investment account, or if you would like to sit down for a review meeting to discuss your risk tolerance, please let us know. We are always here to help.
Summit Financial Consulting LLC
43409 Schoenherr Road, Sterling Heights, MI 48313
Phone: 586-226-2100 Fax: 586-226-3584 E-mail: info@summitfc.net
Securities offered through Gradient Securities, LLC (Arden Hills, MN (866)991-1539) Member FINRA/SIPC
Summit Financial Consulting LLC is independent and is not an affiliate of Gradient Securities, LLC. Investment advisory
services offered through Summit Financial Consulting LLC, a Registered Investment Advisor in the State of Michigan.
