Quarterly Market Review: July-September 2017

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Trading during the summer months is customarily slow, and the summer of 2017 proved no different. July kicked off the third quarter with equity markets enjoying noteworthy gains over their June closing values. Both the Dow (2.54%) and S&P 500 (1.93%) posted significant gains, as did the Global Dow (3.13%). The Nasdaq posted a very favorable 3.38% monthly increase. The yield on long-term bonds changed very little from June as investors seemed to focus on surging equities. Crude oil prices reached $50 per barrel by the end of July after closing June at $46 per barrel. The national average retail regular gasoline price was $2.269 per gallon on July 31, down from the June 26 selling price of $2.288.


©2017 Broadridge Investor Solutions, Inc.

Newsletter Q2 2017

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As of this writing, the gridlock in DC has remained strong. The markets seem to celebrate this fact daily as Republicans have been unable to accomplish much of anything with their majority-on the legislative front – no border wall, little success on immigration laws, no repeal or replacement of the Affordable Care Act, no tax cuts (personal or corporate), no repatriation of dollars abroad, and no signs of an infrastructure spending plan. These are massive, complex goals with myriad of potential results and consequences. While some of these initiatives could prove a boon to the market if enacted (corporate tax reform, repatriation, infrastructure spending) there is no way to know how this might play out.

We do know, however, that owning a diversified portfolio of quality assets at reasonable prices has proven to be a successful investment strategy over the long term. We will use market/stock volatility to add to higher quality stocks – companies that have a durable competitive advantage, solid balance sheet, robust cash flow, strong returns on invested capital and are attractively valuated. In addition, we will continue to have an allocation of the portfolio devoted to contrarian companies (i.e. value stocks) that in most cases have underperformed the general equity market in the short-term. Overall, Shorepoint intends to stay the course, looking for and taking advantage of opportunities as they arise and generating attractive returns to help our clients meet their goals.

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Newsletter Q1 2017

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We will focus on a long term, disciplined approach and will not overreact to the current political landscape and/or short-term financial market events. Our firm tagline is Identifying Opportunity, Navigating Risk. Our focus is on both, but at this time we are placing risk management at the top of our priority list on behalf of our clients.

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Newsletter Q4 2016

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Where does that lead us? As contrarians, we have added to dividend paying stocks especially the beaten down and vilified healthcare sector.  We are also positive on technology, mid and small cap stocks and international equities.  As for bonds, we continue to have a diversified allocation and think much of the anticipated interest rate hikes are factored into municipals, leverage loan funds, etc. Although a stock market correction (10% pullback) is not out of the question, we will use it, and normal day to day market volatility, to upgrade portfolios into higher quality companies that are attractively valued, with solid balance sheets and that are strong cash flow generators.

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Newsletter Q3 2016

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As contrarians, we maintain an overweight to equities and will continue to allocate to weak areas within the equity market. We are using equity volatility to upgrade portfolios into either higher quality dividend-paying companies and stocks with a margin for safety. We continue to favor higher quality companies that are attractively valued, with solid balance sheets and that are strong cash flow generators.

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Newsletter Q2 2016

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We remain vigilant and ever watchful but also hopeful. The market has climbed a wall of worry as it always does when it rallies. Will it get through the new highs this time or simply be another failed test? We don’t know; no one does. But we will keep ensuring that every position in our clients’ portfolios are carefully thought out as best we can and give our constituents the best chance for success in this anxious, low interest rate world without precedent.

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Newsletter Q1 2016

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There were two very different eighths to the quarter that made up the first three months of 2016.

January started with a plunge, the worst start for U.S. stock markets in more than eight decades. Fears included: a hard landing/significant slowdown of the Chinese economy, the Bank of Japan’s pursuit of negative interest rate policy, domestic recession concerns, further Federal Reserve (“Fed”) interest rate hikes, a sudden and huge drop in world oil prices, global economic and geopolitical strife, and U.S. election jitters.

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Market Update – January 8, 2016

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It has been a tough start to 2016 – the worst ever as headlines have reported. The selloff in this past week has been sharp and unrelenting. We are off almost 9% from the market’s recent highs. Even the most seasoned investors find these types of corrections upsetting and daunting.

The last time we sent an email like this one was late August when markets were down 10-15% in a short period of time. As in August, one of the catalysts for this correction has to do with China, whose young and illiquid stock market is being tested daily by rampant selling and reactionary government regulation. The potential slowdown of global economic growth and the recent “bomb” test by North Korea has added to investor angst.

In addition, the price of oil has undergone a shock- but not in the way many prognosticators had imagined. The price of oil has tumbled and remained lower for longer than ever expected. Surprises like this, though welcome for us as consumers, have other implications that are negative which we will discuss in our quarterly commentary forthcoming later this month. As of now, we have not retested the stock market lows of August and September, although it would not be unusual to do so.

As we have stated in the past, long term financial plans and thoughtful investment objectives shouldn’t be abandoned when markets behave irrationally. Markets are made up of millions of people and the range of their anxieties and passions rule in the short term. Those of us who stay the course and are disciplined, or those who buy into and through the fray, are often those most rewarded over the long term.

We appreciate your patience and resilience during this time and are available to talk, meet, or review your specific situation or that of someone close to you as needed.

We will get through this together.

Newsletter Q4 2015

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After several years of the Federal Reserve (“Fed”) maintaining a zero interest rate policy, it elected to raise the federal funds rate by 0.25% this past December- the first hike in a decade. The move was widely anticipated and telegraphed by the Fed. Conversations turned quickly toward anticipation and timing of the next raise. We think we will be having this conversation for months, if not years, to come. However, that doesn’t mean it has imminent bearing on our overall investment strategy decisions.

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Newsletter Q3 2015

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Volatility returned to the equity markets in the third quarter, impacted by economic stress in China, the world’s second largest economy, and Greece, coupled with underwhelming corporate earnings reports and falling energy prices. Some parts of the economy that offered favorable news were housing and unemployment; others, including exports and wages, showed little in the way of positive movement. As a result, the Federal Open Market Committee once again declined to raise interest rates, noting that inflation still hadn’t reached the committee’s preferred target rate of 2.0%.

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