Third Quarter InsightsSubmitted by MidWestOne Investment Services on October 2nd, 2017
The last few weeks have been a (likely) final visit from summer. But recent days have welcomed fall to the Iowa landscape. Now here we are at the end of September and the end of the third quarter. I was considering an early look back at 2017 and after reading Burt White’s letter, it seemed like the perfect topic.
As I write this today, the equity markets have seen strong gains in 2017. In reality, the rally extends at least two months longer than that, starting with President Trump’s upset victory, a headline shocker. That was the first step in this unusual rally that has now seen the markets go 10 straight months without a 3% correction. Hearing that, you would think it has been a smooth and easy ride. However, in the first quarter, the Dow rose above 20,000 for the first time ever, and housing and jobless claims provided good news, but the first quarter provided the longest Dow losing streak since 2011, along with the Fed raising interest rates. In the second quarter, continuing strong corporate earnings and a perceived beneficial political environment offset scary political news from the offices of FBI and general unrest in the White House. The third quarter has seen wild weather events and saber rattling from North Korea, but yet our markets have found a way to not only survive, but thrive. I know I am missing a ton of good material, but you get the idea!
What does all of this mean? Plan ahead! In a quick Google search, I can probably find 50+ headlines in 2017 that loudly proclaim a market top. I could likely find hundreds of similar headlines from 2015 and 2016 when various events threatened to knock the markets down a peg (or two or ten). Eventually, these headline predictions will be correct, but it only underscores the impossible nature of market timing. The most important financial task you can accomplish is building a financial plan that allows you to remove as much emotion as possible from your decision making process. Risks to your plan include the obvious market and political risks, but the more subtle ones like inflation an
d interest rate risks can provide as much pain. Finding the right balance of risk in your asset allocation goes a long way toward winning the planning game. We can help there J
Thank you very much for taking a short walk down memory lane with me. Have a great weekend!!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.