Worst Quarter since 2011
The third quarter was a difficult one for the financial markets. September was just as grim as August. Overall for the third quarter, the Russell 2000 was -12.7%, the Dow Jones was -8%, the S&P 500 was -7.9% (Source: Zerohedge.com)
In the beginning of September we made moves in our TD Ameritrade portfolios to help avoid potential losses. In most of our portfolios we sold half of the stock in each and bought “inverse” positions that move in the opposite direction of the market. For instance, if the market goes down 1%, we make money and if the market goes up 1% we lose money. Basically, we bet against the market with a portion of our portfolios. By moving half of the stock portion of our portfolios inverse, it allowed us more stability within the portfolios while the rest of the stock markets were losing big.
As of today, we still hold the inverse positions in case the market continues to tumble. If we believe the market is headed higher, we will sell the inverses and buy stocks back. If we believe the markets will fiercely correct further, we may sell our remaining stock positions so we can potentially profit handily even though the market would be crashing. We will continue to implement our process, which is reviewing all independent research on a daily basis and then make trading decisions accordingly.
If you have any questions, or if you do not agree with our logic, please contact us right away. If you are not a client yet, now may a good time to discuss how our actively managed portfolios may potentially benefit you in up or down markets.
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.
Rough Times – “In times like these, it’s helpful to remember that there have always been times like these.” – Paul Harvey
Stock Market Correction – Going back to 1946, corrections have caused average declines of only 14% and have taken only 3.6 months for investors to make back their losses. In contrast, bear markets slice 28% off the value of the market, and it takes nearly two years to get back to even. – USA Today, August 9, 2011
Politically Correct – Seventy-one percent of people believe that political correctness is a problem in America today. – Rasmussen Reports, August 29, 2015
Recycling – Because the price of oil is so low, recycling is becoming unprofitable. Since plastic is made from petroleum, rock-bottom oil prices mean that it’s cheaper for producers to simply make new plastic than use recycled material. – Fortune, September 3, 2015
Pope says “No” to capital punishment – In California, more prisoners on death row have died of natural causes than have been executed. – The Guardian, September 3, 2015
Schools – SAT scores have sunk to the lowest level since 2005. The average score for students graduating high school in 2015 was 1490 out of a maximum of 2400 – down 7 points from last year. The mean math score of 511 was the lowest since 1999, and the mean reading score of 495 was the lowest since 1972. – The Washington Post, September 3, 2015
Jail Cost – Currently, there are about 480,000 people locked up in jails nationwide awaiting trial, many for infractions like traffic violations, because they can’t make bail. Keeping a half million people jailed, pre-trial, costs the United States about $17 billion annually. – Washington Post, June 11, 2015
Summit Financial Consulting LLC
43409 Schoenherr Road, Sterling Heights, MI 48313
Phone: 586-226-2100 Fax: 586-226-3584 E-mail: firstname.lastname@example.org
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.