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.
As of June 4th, 2018, the DOW Jones Industrial average is down for the year -0.34%, meanwhile our aggressive portfolio at TD Ameritrade is up around 6.5%, which is a nearly 7.0% outperformance in 5 months. Our more conservative portfolios are outperforming as well, despite the fact that most bond funds are down almost 3% this year (Source: https://finance.yahoo.com/quote/AGG?p=AGG). Any time you can make money in a down market, it’s great, in our opinion. Past performance is no indicator of future performance, but we’re going to continue our process of reviewing our TD Ameritrade managed portfolios daily.
As anticipated, withdrawing from the Iran Nuclear deal had no major short term negative effects on the economy or the stock markets. It did, however, potentially lead to an increase in energy prices. We purchased energy stocks in our TD Ameritrade portfolios back in February when the market was less stable in an effort to “buy low”, and that paid off very well in May, and helped lead to outperformance. We were also able to sell our small cap fund at its all-time-high last month.
Since then, we were able to repurchase our energy fund after a 6% dip from when we sold it. Because interest rates and bonds typically move inverse to one another we purchased a Banking and Financials equity fund after a sizeable correction and a floating rate bond fund for some of our more conservative portfolios in anticipation of our growing economy and increasing interest rates.
We caution all conservative investors to pay special attention to what fixed income instruments they are in and which direction interest rates are headed as they can wreak havoc on a bond dominated portfolio when interest rates are rapidly increasing. If you have been paying attention to mortgage rates, they are the highest they’ve been since 2013. If you are looking to purchase a home or refinance it may make sense to lock your rate in sooner than later.
The markets now turn their attention to many different major issues that are up in the air. How will the scheduled North Korea summit on June 12th go? Will adding tariffs to European and Canadian steel and aluminum hurt or help? Will China really agree to purchase more US goods to help reduce the trade deficit to avoid tariffs? Only time will tell, but we encourage you to remember that we’re reviewing our TD Ameritrade managed portfolios daily so if we believe action is necessary, we’ll take it.
One interesting market movement that we’ve noticed this year is that every month, the first two to three weeks are positive, and then the last week or two is negative. In our opinion, this is because the Federal Reserve is selling bonds to reduce their balance sheet. They bought bonds after the financial crisis to help support the economy, but the time has come to remove emergency measures. As a result, we’ve been trading around the Federal Reserve, and that has helped our bottom line overall so far this year.
Our short-term indicator is still green at this time. We will continue to do our best to buy low and sell high whenever possible. Even in a sideways market, we can potentially make money by buying low and selling high.
We will continue to take it one day at a time and let you know if there is a situation which calls for immediate attention. If you have any questions about taxes, your investment portfolio, our 401(k) recommendation service, or anything else in general, please give our office a call at (586) 226-2100.
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Bob, Ken, and Jim
Summit Financial Consulting
In March of this year, there were 6.55 million job openings, and 6.59 million people claiming unemployment, meaning there is now a job opening for nearly every unemployed worker in America. – Bureau of Labor Statistics, May 8, 2018
Kate Middleton’s cost of delivering their third child in a private luxury room which included an “en suite” bathroom, a refrigerator, and a menu of nutritious meals including a comprehensive wine list, was actually cheaper than the average cost of delivering a baby in the United States. – Marketwatch, April 29, 2018
Apple’s profits of $13.8 billion in the quarter ending in March of 2018, is more than Amazon has generated during its entire lifetime. – Techspot, May 14, 2018
“If you commit to nothing, you’ll be distracted by everything.” – James Clear
The U.S. government ran a $214.3 billion surplus in April, 2018- the largest monthly surplus in U.S. history. – Wall Street Journal, May 10, 2018
One in four graduating college seniors feels unprepared to enter the job market. – New York Post, May 1, 2018
Trains carry 90% of North Korea’s cargo and 60% of its passenger traffic, but the system is in such a state of disrepair that the fastest train- which connects Pyongyang to the Chinese border, runs at only 28 miles per hour. – The New York Times, May 10, 2018
A recent survey found that 36% of American women earn more than their partner. For men in their 20’s and 30’s, that’s just fine. More than 1 in 3 say that the relationship and romantic dynamics change for the positive when the person they’re seeing earns more than they do. – CNBC, April 25, 2018
Due to escalating tuition and easy credit, the United States has 101 people who owe at least $1 million in federal student loans. The number of those who owe at least $100,000 has risen to around 2.5 million. – The Wall Street Journal, May 25, 2018
Summit Financial Consulting LLC
43409 Schoenherr Road, Sterling Heights, MI 48313
Phone: 586-226-2100 Fax: 586-226-3584 E-mail: email@example.com
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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.