For the first quarter of 2017, we picked up right where we left off. Trump Trade is in full effect as the hope for a more business friendly environment post election fueled a run of domestic equities. This current equity run can be pinned down being due to the possibilities of tax reform, a rollback of the current heightened regulatory environment, and meaningful infrastructure spending. Though it’s important to keep in mind that there is no guarantee that the new administration's agenda may come to fruition. Expectations are being reset as the Trump Trade has been stalling, but we’re about to enter earnings season which is always the most important data for stocks.
Below we have listed the returns of five major indexes, through the first quarter of the year:
BarCap US Agg Bond +0.82%
S&P 500 +6.07%
Russell 2000 +2.47%
MSCI EAFE (Europe) +7.25%
MSCI EM (Emerging Markets) +11.45%
Going forward we are predicting another solid earnings season. Strong support for the stock market coming from corporate guidance will be full of optimism. The markets are sitting at all time highs, thus making investors nervous, but it’s important to remember that the markets tend to disappoint the majority.
Our firm Sloy, Dahl & Holst, Inc. have stuck to four main themes in the last four years with our allocations. These themes are: to protect against a rising rate environment, the attractive upside potential of Financials and Energy, long term value for investors within international markets than domestically. Patience will be rewarded, and those who have been patient thus far and beginning to see these themes turn together.
While the S&P 500 has been the best performing index for the last seven years, it’s vital to keep in mind that this run is on the heels of a decade of being negative year over year. As we know, investment cycles can take many years to play out, and reversion to the mean is real. SDH, Inc. will continue to act contrarian while other investors may continue to chase the S&P. When the herd goes left, we go right. The overblown move into Passive investing will in the end bode well for active management and the allocations of our portfolios.
We sincerely thank you for your continued confidence and support. Of course feel free to reach out to us directly for further questions.