To Our Valued Clients:Submitted by DSI Wealth Management on September 25th, 2015
Well, we are over half way through the year, and what a year it’s been so far! We’ve seen Greece on the brink of bankruptcy, we’ve seen China finally showing signs of weakness, we’ve seen Puerto Rico default on their debt, and everything else in between. Despite the International turmoil, US companies have continued to trudge along and continue growing, albeit at a very slow pace. We continue to produce over 9 million barrels of oil per day domestically, and the price of crude oil has taken a nose dive as supply far surpasses demand. Unless you are a resident of California, you have seen a significant savings at the gas pump each time you fill your car. We are only now starting to see US consumers injecting some of their savings at the pump back into our economy.
As we’re sure you have noticed, the market has been rather volatile the past few weeks. As we’re writing this, the major US indices are slightly negative year to date. With bad news coming out of China each day, the price of crude oil in a free fall, and the anticipation of what the Fed will do with rates this year, it’s hard to be optimistic about the next few months. HOWEVER… consider the fact that home prices are continuing to rise, employment is improving as well as wages, we are NOT in the midst of a financial crisis or any foreseeable bubble, and a rise in interest rates indicates that our economy is improving and on the mend. These are all positive things for us as investors. So when will these things translate to growth in our portfolios? As you have likely heard us say in the past, we do not have a crystal ball and thus cannot predict when the market will do what the market does. What we do know is that if we stick to our investment philosophy and stay invested and trust that our portfolios are properly suited for our risk tolerances and investment objectives, then we should be able to make it to the other side of this volatility just fine.
Please consider the following: “Going back to 1918, there are 11 instances of calendar years in which the S&P 500 was up or down by 3 percent or less, according to S&P Capital IQ. In the subsequent calendar year, the market rose an average of 13.3 percent and gained in price 82 percent of the time (nine of 11 instances), according to data from Sam Stovall, chief investment strategist at S&P Equity Research Services.” – CNBC, Article Titled “S&P 500 is having a dull year, and that’s good for investors” August 20, 2015.
One final note to consider… A rising interest rate environment has historically been positive for equities. We do expect that the Fed will raise rates before year end. If they do raise rates, we also expect that they will raise rates by .25% or less initially. Although the market has “priced in” this rise in rates, there will certainly be some more volatility following the announcement of the Feds decision. We are confident that once the initial jitters wear off, cooler heads will prevail and trading will resume as normal. All of this is to say that we are still optimistic about our economy and the overall investment landscape. There are some great opportunities out there and we work with phenomenal companies that we feel can navigate this environment comfortably. Needless to say, we are never happy showing you a loss in your portfolio, but we all know by now that from time to time it’s inevitable. Stick with us as you have in the past and we will get through this together!
As always, if you have any questions about your portfolio, questions about your statements, concerns about what you are reading or seeing on the nightly news, or you just want to bend our ears, feel free to call us. If you have had a life event update and feel that you need to adjust your objectives and risk profile, please call! And most importantly, thank you for your continued trust and confidence!
DSI Wealth Management Group, Inc.
The S&P 500 Index is an unmanaged index of 500 stocks that is generally representative of the performance of larger companies in the U.S. Please note an investor cannot invest directly in an index.
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.