• 21,000!?!? and March 28 Meeting

    21,000 on the DOW – what does it really mean? Clearly, it means positive things for the value of your accounts. Our investment allocations that typically include high levels of exposure to stocks are now fully participating in this rally. Our email at the first of the year expressed concern that the post-election rally in November and December was quite concentrated in a handful of companies in certain sectors where a Trump victory meant less regulation and more profitability. So far, in 2017, the rally has become much broader principally because the economic data continues to improve. Just last week, manufacturing activity in both China and the U.S. showed nice improvement. Meanwhile, sentiment among consumers and small business owners continues to hit levels not seen in many years.

    Coins & Calculator However, just as our counsel is to maintain perspective and not get too caught up in the constantly negative news cycle, we encourage the same behavior now. A 1,000 point increase on the DOW doesn’t mean as much as it used too. The simple math underscores that. When the DOW was at 10,000, a 1,000 point jump meant a 10% increase. Now, with the DOW at 20,000, a 1,000 point increase means a 5% improvement. This 1,000 point jump in just 24 days is not even record setting in market history – merely tying a record set in 2009.

    Clearly, there are reasons for cautious optimism ahead on the strength of consumer confidence and improvement in manufacturing activity. But in terms of percentage swings, this is nothing more than normal market behavior where on average swings of 5-10% occur about three times per year. We remain somewhat concerned about the continued inconsistencies of the Trump administration. In this global economy where corporate America makes nearly half of its profits (45% to be exact) from outside the U.S.A., a breakdown in international relations and trade could quickly undermine these results.

    All of this certainly sets the stage for our next client meeting on March 28. Our speaker will be Bill Cass from Putnam Investments. Bill returns to discuss the latest economic and market conditions and to provide a look ahead to the rest of 2017. Please join us on March 28 at 5:30 at the Country Club of Orlando, 1601 Country Club Drive, Orlando, FL. Please RSVP for you and your guests to this email or the office at 407-629-6477.

    Please stay tuned to our weekly radio show “Dollars and Sense” for our thoughts on the latest news. The speed of the news cycle these days is ever increasing and our live weekly show provides an opportunity to hear our take on the current headlines. The show airs at 9AM on Sunday at 102.5 FM or 540 AM and is available the following day on our website www.NelsonFinancialPlanning.com or our social media outlets on Facebook, Twitter or Linked In.

    Around the office these days tax season is underway. While we expect many changes for 2017, 2016 returns are generally running quite similar to the prior year for most people. The only exception to this is that mutual fund capital gain distributions appear to be lower from the previous year so that is helping to reduce the tax burden for some.

    On a personal note, my oldest son Nelson recently achieved the rank of Eagle Scout. So very proud of him and his accomplishments. Hard to believe he turns 16 later this month and then I will be constantly looking for my car keys!

    Look forward to seeing you at the meeting on March 28!