“The political and commercial morals of the United States are not merely food for laughter, they are an entire banquet.” Mark Twain
Saturday Night Live has been in rare form these past few weeks. Alec Baldwin and Kate McKinnon are so good imitating the candidates that if you’re not laughing…then you’re not watching. Of course, this election is really no laughing matter. Please be sure to vote next Tuesday, November 8th.
Investors seem to be in a relative holding pattern until the big election is over. In the third quarter, US equities performed well and the S&P advanced by 3.9%. Lately, it’s one day up, one day down…and not much volatility. The cloud of an interest rate in December hangs over the markets…so risk and volatility may likely increase as we get closer to the end of 2016. The best sectors through October 31st have been Energy +16.6%, Utilities 14.9%, Technology 12.4%, and Telecom10.3%. Small Cap Value +11.3% and Mid Cap Value +10.5% are the year-to-date style leaders.[1]
Thanks to a powerful display of client loyalty, confidence, and trust, we were able to move 99.8% of our investment accounts to our new Registered Investment Advisor, Pacific Sun Financial Corp, in less than one month. This change will create more efficiency for us. We greatly appreciate your responsiveness.
The Chicago Cubs are in the World Series for the first time in 100 years! Their opponents, the Cleveland Indians, haven’t won the World Series since 1948. If the Cubs can take the series by winning the next two games in Cleveland, it would be their first win since Teddy Roosevelt was President in 1908.
“How will the election affect your money?” Even though the U.S. President cannot sign bull markets into law or veto bears, economists and historians enjoy analyzing the impact of politics on stocks. Ned Davis Research has the S&P 500 posting its weakest returns in the first year of a four-year election cycle. Since 1900, stocks have gained just 3.4% on average in the post-election year compared with returns of 4.0% in the mid-term year, 11.3% in the pre-election year, and 9.5% in an election year.[2]
You may feel strongly about one party or the other when it comes to your politics…but when it comes to your money, it really doesn’t matter much which party wins the White House. Conventional wisdom suggests that the GOP is more business-friendly than Democrats…and more beneficial for your stock holdings. In fact, looking back to 1900, it’s been the opposite. The DOW has gained an average of nearly 9% annually with the Democrats in control…compared with nearly 6% per year during Republican administrations.[3]
“All politicians should have 3 hats – one to throw into the ring, one to talk through, and one to pull rabbits out of if elected.” Carl Sandburg
Bob Dylan had quite an October. Fifty years ago he shocked the world by plugging in an electric guitar to bring his folk music into the modern era. He has now been honored with the Nobel Prize in Literature, redefining the literary world and elevating him into the company of Hemingway, Steinbeck, Camus, Churchill and Pearl Buck. Keeping with his enigmatic and confounding personal style, he barely acknowledged the award. Like his music and lyrics or not…Dylan influenced the world in many ways… and surely he should be considered the poet laureate of rock and roll. Just prior to the Nobel announcement, Bob was playing a baby boomer’s fantasy concert in Coachella with some of his pals: The Rolling Stones, Paul McCartney, Neil Young, the Who and Pink Floyd’s Roger Waters. It should be noted that the average age of the four core members of the Rolling Stones is 72. McCartney is 73, Waters is 72, Young (no pun intended) was the event’s youngest headliner at age 70. Bob (Zimmerman) Dylan was born May 24, 1941.
As a reminder, you will not receive a monthly statement from Schwab if there is no activity in your account. This would include dividends and transactions. You can request monthly statements if you feel that you need them. With online access, you can view the details of your account at any time…night or day.
Tax planning and IRA distributions are very important topics to tackle now, well before we arrive at year end. If you haven’t already withdrawn your Required Minimum Distribution (RMD) for the year, you have until the very last day of 2016. We prefer to have you distribute before December 15th in order to avoid the 50% IRS penalty. I urge you to be proactive and to meet with your accountant. Ben Franklin said it best, “Failing to plan is planning to fail.”
We will be contacting most of you to have our year-end financial check up. Please make it easy or beat us to the punch. We can do a phone call, Skype or Face Time, or a personal meeting in the office. I look forward to catching up with you and planning a successful finish to 2016.
Today’s the day,
Mitch Fisher
[1] J.P. Morgan Asset Management 10/31/16 [2] ABC News 10/30/16 [3] Kiplinger’s 2/1/16