The best part of the start of the fourth quarter this year is that means there are only 35 days left of listening to Donald and Hilliary insult each other. That’s the good news! Of course, the bad news is that we’ll have to listen to one of them for the next four years!
The usual question we get in a Presidential election year is who’s better for the market? Last week’s post “Donkeys, Elephants, Bulls & Bears Oh My!” provides an in-depth analysis to that question. I wrote this article last week and posted it on Facebook and Twitter so be sure to follow us on those social media sites as well. Bottom line: the historical combination that produces the best market results is a divided government. Regardless of who wins the White House, I suspect that we will continue to have gridlock in Washington!
The third quarter helped the markets get back on track for the year. Your quarterly statements that you will receive in the next week or so will show an overall gain of 4-6% for the quarter – all in the wake of Brexit. For the year so far the gains are about 7% which would put the year on track to be in line with long term historical market averages of 8-10%.
I still think there is a decent chance of being on the upper end of that range by the time the year ends because of continued low interest rates and gas prices which are encouraging consumer spending. Whenever I drive around the Winter Park area, I can clearly see this in the wait times at restaurants and the abundance of commercial construction projects.
Against these obvious signs of improved consumption, there seems to be a continued and heightened sense of impending market decline. This negativity is often a contrarian indicator as bull markets typically turn south in euphoric moods not pessimistic ones. In fact, history confirms just that. According to Barron’s, when market prognosticators predict little or no gain, the S&P 500 has traded higher 12 months later 95% of the time, with an average gain of 11%. On the other hand, when strategists are at their most bullish, there is about a 50% chance of a market fall. In other words, be optimistic when the world is pessimistic.
Our next client meeting is coming up on Saturday, October 29. This is our breakfast event and starts at 9:00AM at the Country Club of Orlando, 1601 Country Club Drive, Orlando, FL. David Hanna of the American Funds will be providing an overview of the year and a look ahead to 2017. David is always a dynamic speaker so be sure to attend this meeting. Please RSVP on our website or call the office at 407-629-6477. Feel free to invite your friends as well. Like the earlier meeting this fall, we will have some goodies available with our new name and logo so be sure to come.
If we have not seen you lately, please be sure to visit with us before the year ends. In the meantime, don’t forget to listen to the radio show “Dollars and Sense” every Sunday at 9AM on Newsradio 1025 WFLA. The radio show is a great way to hear my latest thoughts and reactions to the day’s headlines. If you miss the radio show you can always catch it at your convenience on any one of the social medial channels we use – Linkedin, Facebook, Twitter, Goggle & Soundcloud. Just click on any of the icons after my name below and you’ll be connected to be added as a follower.
Look forward to seeing you on the 29 th for breakfast.