As we celebrate our independence this week, we can proudly wave the flag over our stock market’s first half results for 2017. The DOW and the S&P 500 indices gained 9% each…and the NASDAQ flew 14% higher. This is the strongest first half showing for the S&P 500 in 4 years…and for the NASDAQ since 2009.
The positive start to this year is the opposite of the troubled beginnings of 2016. Last year, it was consternation about the economic slowdowns in Europe and China rubbing off on the US economy. Today, despite the health care and tax reform stalemates in Congress, most of our American businesses are thriving…and borrowing money at low interest rates.
“We are an astounding country,” exclaimed Jim Bowen, CEO of First Trust at a recent financial symposium. “We work the problem in America. We are 4.5% of the world’s population and we generate 24% of the world’s GDP. 60% of our electricity is now produced by natural gas and we have supplies for the next 50 years. We’re delivering medicine in Africa using drones and UPS. Our manufacturing output continues to increase. We’ve cracked the DNA codes. We make livers, kidneys, and lungs in laboratories. We print 3D vertebrae pictures. Our cancer deaths are down 25%. Every MBZ sold in Beijing is manufactured in Alabama. UBER has displaced taxis. America has not lost its way…and we are not running off the rails!”
A few market stats year-to-date: The best sectors in the first six months of 2017 were Technology +17.2%, Healthcare +16.1%, Consumer Discretionary +11.0%, and Industrials +9.5%. The Energy sector is down 12.6%, Telecom is off by 10.7%, and Real Estate is 6.4% higher overall YTD. Small, medium, and large cap growth outpaced their value-oriented counterparts. A 10-year Treasury will yield you 2.3% and a new, 30-year fixed mortgage interest rate today is 4.1%.1
Can you believe this is only the 10th anniversary of the I-Phone? Think of how much these smart phones have changed our world. Many people hardly talk anymore…they text or tweet. Everyone is a photographer. We can always be current and connected to news, people and things. Information is at our fingertips about everything from local restaurants to dating to how to fix things. Directions to our destination via satellite are in the palms of our hands. It is truly incredible how our lives have been changed in just a decade. Imagine explaining this device to Cleopatra or Benjamin Franklin sitting next to you as you click on an app.
On the edge of popular investment classes for socially responsible investors, we have Environmental, Social, and Governance (ESG) aka Impact or Sustainable Investing. This is not a new arena for investors…or for us. Many people want their money to have a positive impact on human rights, climate change, nuclear energy, corporate ethics, natural resources, employment diversity, animal welfare, and consumer protection. We have used many established mutual funds and ETFs comprised of these sentiments.
A new trend of cannabis investing has recently created quite a buzz. This past week, Nevada joined several states in legalizing marijuana. Please…I’m not making any political or moral judgment on the issue…I’m only addressing the many client calls and inquiries of late that have traversed my computer screen. In 2016, cannabis sales grew 34% to $7 billion. 2 Growth in this commodity is assured. We have 100’s of companies, both public and private, who are lining up for this modern day gold rush. There is a Canadian exchange traded fund devoted to this industry. However, in my opinion, it is just too early to pick the winning companies which will come out with sustainable profits.
“Pacific Sun Financial has had a robust first half of 2017. In addition to our 100% client retention and new client acquisitions, our growth and financial strengths have surpassed expectations. We thank the Department of Labor’s latest ruling to elevate and enforce the fiduciary law. To all financial advisors and institutions working with retirement plans, the DOL rule simply says that your “client interests come first”. The commissioned-oriented big dogs (Merrill Lynch, Morgan Stanley, UBS, Edward Jones, etc.) have been running for cover by reshuffling or abandoning their retirement plan clients in the face of more government scrutiny. So…if you’ve had recent correspondence from these investment houses and you are being asked to make changes or move your retirement accounts…please get in touch with us.
There is a great transfer of wealth on its way between the Baby Boomers and the Millennials. In contrast to most Baby Boomers who wanted to move rapidly into the workforce, find a spouse, and buy their own home…today, 33% of adults between age 18 and 34 are living with their parents.3 According to Bernie Clark, head of Charles Schwab’s $1.3 Trillion custody divisions: “Financial service, at its core, is a relationship business. Advisors need to take care of current clients and make sure the next generation has a path to prosperity. The advisor role is shifting to include estate planning, tax consulting, legal services, plus family and retirement planning.” Thanks, Bernie, but this is not really a “shift” for our firm. These services have been part of my “DNA” since 1974. We also have a new Investment Advisor and Attorney with us, Ryan Fisher, who works directly with our clients in these areas. It is a welcome challenge to help direct this conduit of wealth and to educate the next generation.
Our Aliso Viejo office will be physically closed on July 28th and July 31st. We will be working remotely, so the phone calls and emails will be answered…as always…within 24 hours.
We would like to thank Jeanne, Richard, Brenda, Paul, Lisa, Chris, Vanissa, Jackson, Amy, and Sabrina for introducing us recently to new clients and to some very fine people.
Today’s the day,
Mitch Fisher
Pacific Sun Financial Corp (PSFC) is a Registered Investment Advisor with the SEC. PSFC provides fundamental investment management services. The views expressed may contain certain forward-looking statements. PSCF believes these forward-looking statements to be reasonable, although they are forecasts and actual results may be meaningfully different. Actual events may cause adjustments in portfolio management strategies. This material represents an assessment of the market at a particular time and is not a guarantee of future results. This information should not be relied upon as research or investment advice regarding any security. One cannot directly invest in an index. Index performance returns do not reflect any management fees, transaction cost or expenses. Indices are unmanaged. S&P 500 Index is an unmanaged index of 500 common stocks chosen to reflect the industries in the US economy. DOW Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange. The NASDAQ is a global electronic marketplace for securities as well as the benchmark for U.S. technology and biotechnology stocks. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. Investment Advisory Services offered through Pacific Sun Financial Corp, an SEC Registered Advisor. Pacific Sun Financial Corp does not offer any legal or tax advice. One should consider consulting with a legal or tax professional before implementing investment strategies.
1 J.P. Morgan Asset Management 7/3/17 , 2 Arc View Group Research, 3 Pew Research Center