Most Recent Letter

April, 2017

 

Dear Clients and Friends:

It has been a long, cold, and wet winter that we have endured here in Portland.  It was starting to seem as if we might not get a Spring this year, but finally the sun has come out a few times and the cherry blossoms are blooming outside our office window.  They are beautiful!  Lindsey and I have been able to spend more time outside with Sebastian, showing him flowers and green shoots on the trees.  He loves taking in the sights and sounds while hiking in our local forested park, and we are excited to take him on some wilderness hikes soon.  Hopefully some of your next birthday cards will include waving pictures with three generations of Haleys! 

The political climate in these last few months has mirrored our Oregon winter: stormy.  However, for the most part, the financial markets have been calm and sunny since the U.S. presidential election last year.  Stock markets are up significantly, and it has now been over eight years since the bottom of the bear market of the Great Recession. 

At the beginning of 2017 there was a focus in the financial press on the Dow Jones Industrial Average*, referred to as the DJIA or “The Dow,” and discussion about whether or not it would grow above 20,000 for the first time in history.  After the stock markets were up so much last year, some people felt that the Dow would break through that milestone and continue up, others felt that 20,000 would be too high a level and that it would peak before crossing it, then fall back to more “reasonable” levels.  As it turned out, the DJIA closed above that mark on January 25th of 2017, and has even gone on to surpass 21,000! 

Looking beyond the Dow and the U.S., stocks around the world are also up strongly.  There is no doubt that “the market” has been doing well.   (I was recently quoted in a news publication about what “the market” means, you can see the article here <http://money.usnews.com/money/personal-finance/saving-budget/articles/2017-02-16/say-what-decoding-ubiquitous-financial-jargon>).  Where it will go from here is as uncertain as ever.  And, as always, we do not believe it is possible to predict when the markets will go up or down, or how much they will move. 

As we know, the market cannot go up forever, and declines and even crashes are a necessary part of our economic system.  However, our goal is to work with you to position your investments and your financial plan in such a way that the eventual drop in stock market values will not materially affect your progress towards your long-term financial goals.  By not relying on predictions we can take the guesswork out of investing. 

In fact, you may remember us discussing with you why a drop in your account values could actually be a good thing, especially if you will not be withdrawing a large amount from your accounts in the near future!  This may sound strange or counterintuitive.  However, if you have a balanced investment portfolio with allocations to both stocks and bonds, then a drop in the stock market offers a chance to rebalance and buy more stocks for a lower price.  This concept of rebalancing is especially important for people in retirement or whose accounts are not receiving ongoing contributions.  If you are adding to your investment accounts, then a drop in the stock markets means that your ongoing contributions are buying more shares for lower prices, which would benefit you if/when stocks return to their pre-drop levels.  These are important ideas to understand, so please give us a call if you want to discuss this or review how your investment accounts are positioned.

We hope that you and your families are well and enjoying the beginning of Spring!  While we won’t guess where the markets will be at the end of 2017, we do predict that we will talk with you again soon and help you understand how changes in the world may or may not affect your financial life! 

Sincerely,

Theodore R. Haley, CFP®, AIF®
President

 

All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges, or expenses. Past performance does not guarantee future results.**DJIA: A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including stocks that trade on the New York Stock Exchange.