Before we begin our usual weekly commentary, we wanted to take a moment to honor the victims of Sunday's terrible attack in Las Vegas. Though details are still scarce, it is the most devastating mass shooting in U.S. history. Our thoughts are with the victims, their families, and with the community that now must cope with the aftermath of the tragedy. As we look for answers, let's also remember to be grateful for the ones we love.
Last week's final performance of Q3 saw the S&P 500 hit a new high and finish up 0.68%. Meanwhile, the Nasdaq beat previous records with a 1.07% gain, and the Dow notched a 0.25% increase to come within 0.1% of its all-time high. International markets, however, experienced a slight drop - the MSCI EAFE fell 0.19% for the week.
As the country continues its recovery from Hurricanes Harvey, Irma, and Maria, the economy keeps revealing positive strides. A few specific performance factors rounded out the week:
- Small Cap Gains Post Strong Returns
Small cap gains hit record highs last week. Some analysts think the gain is partially a result of President Trump's proposed tax code changes - which offers tax cuts to corporations and individuals. Because small cap companies often have limited international resources, they often benefit the most from tax cuts. That said, rising interest rates and a higher dollar are also factors to take into account.
- Dollar Is On the Rise
The dollar index fell on Friday, but the buck still points towards weekly and monthly highs. Despite dipping after news of slow consumer spending, the greenback responded positively to increases in consumer sentiment and the Chicago Purchasing Managers Index. The Chicago Purchasing Managers Index matters to investors because it measures manufacturing and non-manufacturing activity in the greater Chicagoland area. These numbers tend to closely mirror the rest of the country.
- Corporate Earnings Hit New Highs
Corporate earnings are a signifier of how well corporate stocks perform. Last week, earnings posted back-to-back double-digit gains for the first time since 2011. This performance helped push markets beyond geopolitical affairs and concerns from the recent devastation caused by hurricanes.
What Is Ahead?
Markets will continue to watch out for Harvey, Irma, and Maria's influence on this week's key economic reports. Analysts expect strong data from manufacturing to vehicle sales, though damages to ports may affect international trade.
Further, we are watching the Fed's decisions to shrink its balance sheet and raise interest rates. We will also continue following how President Trump's recent announcement to possibly replace Fed Chair Janet Yellen (whose tenure ends in February) affects the markets.
As always, we continue our focus on helping you meet your long-term goals. If you have any questions as to how last week's news may affect your portfolio, let us know. We are here to answer questions and help your investment process run smoothly.
Quote of the Week
"Determine that the thing can and shall be done, and then we shall find the way."
Golf Tip of the Week
Splash in the Sand to Improve Your Bunker Play
Cleanly getting out of a sand trap can be tricky, and many golfers consistently struggle to hit solid shots from a bunker. However, with some slight tweaks, you can improve your bunker shot and move beyond the sand. The key is having the right perspectives and choosing the right club for the job.
Avoid the Standard Approach
Golfers will frequently hit two inches behind the ball and then slam the sand so it explodes. While this technique may be common, that doesn't make it the best option. Doing so can cause you to tense your hands and cause you to bury your club in the sand - making you either blade your ball over the green or leave it in the bunker.
Correct Your Approach
- Disregard the sand for a moment and envision your normal, full swing and stance.
- Choose your club by the length of your bunker shot, which could be anything from a 60-degree wedge to a 9-iron. Two factors will affect this choice: your distance from the pin and how much green you have ahead.
- Focus on trying to "splash" your club into the sand, rather than explode or hit it. Control your hand's sense of feel and maintain constant pressure, and aim to create a splash divot of 6 to 8 inches and roughly ½-inch deep.
Note: Using the same swing technique, you'll want to use less lofted clubs for longer bunker shots, and swing softer for harder sand.
Tip courtesy of Randy Chang | Golf Tips Magazine
Financial Question of the Week
Should I change my investment mix when I retire?
Probably less than you think.
Many retirees think that they can put their savings into fixed income investments and live on the interest. Unfortunately, this strategy does not work unless you have so much money or such a short life expectancy that you do not have to worry about inflation.
Most retirees live well into their eighties. If you retire at 65, that means you may live to see the cost of living double or triple, even if inflation averages 4% a year or less. You must invest for growth as well as for income.
You may want to re-balance your portfolio to achieve a somewhat less aggressive mix, however. Without earned income, you are more vulnerable to the ups and downs of the stock market.
Determining the correct investment mix for you is a major part of portfolio management and something we review with clients on a regular basis.
Please let me know if you or someone you know would like help determining your investment mix.