From Brexit to Trump, 2016 produced unexpected results that made it a particularly
difficult year to navigate. While our returns were positive for the year
with overall results up about 7-8%, market performance particularly the
Dow made headlines moving to the 20,000 level. Unfortunately, this performance
was driven by a handful of companies which undermined our diversified
approach in the short term.
These concentrated results occurred in a handful of financial, healthcare
and energy companies who saw their fortunes reverse dramatically on election
night in anticipation of a looser regulatory environment under Trump.
The broader markets in 2016 saw minimal earnings and revenue growth (0.1%
and 2.2 % respectively) for businesses. Diversification – just like
being consistent on your holdings – is a strategy that works well
over time to reduce overall portfolio risk. While providing consistent
returns, it is not 100% perfect all the time.
It has been a while since we have seen this type of phenomena –
17 years in fact. In 1999, a handful of tech companies drove the market
to new highs only to fall back to earth in 2000 and 2001. While I don’t
believe we are in a 1999 scenario these days, there are certainly some
parallels. Regardless, don’t be alarmed by your quarterly statement
that you will get next week that will show minimal growth for the quarter.
In addition, the international and bond portion of your allocations also
worked to undermine the domestic performance. The silver lining there
is that your investment allocations are lighter on those asset classes
these days. Overall, the year was decent in terms of results and that’s
our overall investment goal.
Looking ahead to 2017, the consumer appears to be less pessimistic than
in prior years based on the past few months of consumer confidence data.
This is crucially important for broad economic and market growth as consumer
spending accounts for 70% of our economy. In fact, corporate earnings
are expected to grow by 12% for 2017 with top line revenue growth of 6%.
Meanwhile the average consumer has less debt, more cash and has finally
started to experience real wage growth (nearly 4% in 2016) for the first
time in years. For these reasons, we are particularly positive for the
overall market in 2017.
2016 was a busy year at the office. Our main efforts involved a successful
rebrand to Nelson Financial Planning along with continued efforts to ensure
the cyber security of your information. We also became active on social
media so be sure to follow us on Facebook, Twitter or Linked In. These
outlets also provide an opportunity for broader dissemination of our weekly
radio show “Dollars and Sense.” Hearing it live at 9 AM on
Sunday at 102.5FM or 540AM can often conflict with church schedules but
now it is always available the next day on our website at
Tax season and our client meetings for 2017 will start very soon. In fact,
our first one is coming right up on January 19. This meeting will follow
our usual dinner format starting at 5:30 at the Country Club of Orlando,
1601 Country Club Drive, Orlando, FL. Our speaker will be Joe Valencia
from the American Funds. Joe’s 2017 Outlook presentation should
make for an informative meeting. Please RSVP for you and your guests to
this email or to the office at 407-629-6477.