Ohio Building

2017 Client Appreciation Event

On November 14th, we had another successful client banquet.  The food was delicious, the meetings were informative and the entertainer, Matt Iseman, was terrific!  He shared stories of his time on Celebrity Apprentice and working on American Ninja Warrior.  It was a great evening of fun and entertainment.

Click on the video to see the news story on Matt and this year’s charity, Team of Mercy.

October 2017 Monthly Summary

The S&P finished up over 2.3% for the month of October as we continue to break stock market records on almost a weekly basis.1 Those who would have heeded the theory of “Sell in May” would have missed out on 7.5% market gains over the last five months. Corporate earnings have been strong for the most part, but probably most of the optimism in the equity markets had to do with more specifics coming to light on how tax reform legislation will be taking shape. In particular, the tax legislation is geared to reduce the corporate tax rate and allow corporations to repatriate cash sitting in foreign banks.

Investors continue to be blessed with a great 2017. Our economy is never perfect, but we have much to be thankful for. Unemployment dipped down to 4.1%, a level not seen since 2000 and GDP estimates are coming in pretty strong.2 Fittingly, we find ourselves in November, a time to count our blessings and give thanks.

I just returned from my family’s routine trip to Phoenix, where we act like kids for a weekend playing baseball on the Major League spring training fields. Our team played great, I’m sure we will have details in a newsletter article soon. The real news is that I’ve finally wised up and realized the true purpose and meaning of it all. What a ruse I have been a part of! Until now, Phoenix has always been about playing baseball and trying to get that championship ring. It has also been a great time to reconnect with my Minnesota brother and his family, and now that my son has been out of the house at college, it has become a great opportunity to catch up with him as well.

This year the light went on. We all work hard and play hard, but families often don’t take the necessary time to just be together. During one of our ball games I was playing third base and thought to myself, “I have a 73 year old father playing first base right now and my son is pitching on the mound. How lucky am I?” Definitely a memorable moment, but the special times come afterwards while talking over dinner, eating pizza by the hot tub of our hotel, or having long talks while waiting on our plane at the airport.

Make no mistake, I want that championship ring next year, but the family time is what I will truly cherish. Enjoy this month of Thanksgiving. May it be full of blessings and good cheer with your loved ones.

 

1 Thomson Financial

Bureau of Labor Statistics

 

IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.

Ohio Building

2017 Client Appreciation Banquet

Client Appreciation Event

Tuesday, November 14, 2017

Market Review 4:00-5:15

Mary Holland, Fidelity Advisor Funds

With Volkers Group Advisors

Meet and Greet 5:30-6:00

Dinner 6:00-7:00

7:00-8:00 Matt Iseman

Comedian and Host of American Ninja Warrior

Matt’s first love and the thing that convinced him to give up a career in medicine to move out to LA is stand up. He’s been a national headliner for over a decade… it’s also taken him around the globe performing forthe troops. He rode the ramp on a Chinook helicopter and sat in Saddam’s throne while giving his unique insight on the world, molded largely from 80s movies and a reluctance to become a fully responsible adult. His enthusiasm always shines through, whether he is talking about the geopolitical threat of nuclear war being resolved by Rocky Balboa or being dumped by a girlfriend for pursuing his dreams . . . and giving up being a doctor.

RSVP to Ashley Orndorff, ashley@volkersgroup.com or call our office, (812) 232-5822 or (888) 655-3774.

 

IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.

 

THIRD QUARTER 2017 – What Inning is It?

Fall is one of my favorite times of the year. The temperatures are mild, the leaves are changing colors and America’s favorite sports are in full swing. This is the only time of year you will see baseball, football, and basketball all playing at the same time. Tis the season of a sports fanatic.

Yogi Berra was quoted as saying “It ain’t over ‘til it’s over”. He was talking about baseball, but that quote has translated into a powerful statement pertaining to many aspects of life. Looking at the stock market, many are wondering when will the current bull market be over. Although it is impossible to guess when this 8 + year bull run will ultimately end, can we at least know what inning we are in?

Although we pride ourselves on our advisory skills, we don’t claim to have any prognostication abilities. With that said, we believe we are somewhere in the 7th or 8th inning of this bull run. This doesn’t mean too much, because in the stock market, innings can last for years and declaring something “over” can simply mean the start of a brand new game.

Here is what we do know. This past quarter, the S&P 500 was up 4.5%, putting us on pace for the ninth consecutive calendar year of positive growth when reinvesting dividends1, a feat not achieved since 1999. We also know that unemployment is staying low (currently at 4.2%) and inflation is creeping up (currently at 1.9%)2. This will most likely lead the Fed to increase interest rates again in December.

The Fed3 has also laid out its plan on unwinding the QE-laden balance sheet that totals $4.5 trillion of Treasury bonds and mortgage-backed securities (MBS). When you have a portfolio this large, you can’t sell ANY substantial part of it without flooding the market and driving up interest rates. According to the September 20th Fed announcement, they plan on slowly letting billions of dollars simply mature into the ether each month. The gradual dissolving of billions of dollars will eventually run down the balance sheet without too much market turmoil for bond prices. It will be a delicate operation and will probably have many revisions along the way. At least there is a plan, which by itself, helps keep investors calm.

Lastly, in our July monthly summary we mentioned that stocks are approaching an overvalued level compared to bonds. 

We aren’t at that point yet, but as interest rates increase, the target gets closer. However, it is important to realize that markets are driven by greed and fear, so stocks can be overvalued (by our measures) for several months or years before 

retreating.

When should we expect the next stock market correction? With all these moving parts, I lean toward Yogi’s perspective, “When it’s over”. Until then, enjoy all that fall has to offer.

 

 

1 Thomson Financial

2 www.bls.gov

https://www.wsj.com/articles/how-the-feds-balance-sheet-unwind-will-ripple-through-banks-1505934565

 

IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.

August 2017 Monthly Summary

 

August gave us hurricanes and missile launches, but the streak of positive returns for the S&P 500 index continued. This large cap index was up a meager 0.31% while most small, mid, and international equities were actually negative for the month.1 Euphoria in the markets was absent, so the nervous money went into treasuries. The 10 Year Treasury rate dropped from 2.30% down to 2.12% as a result2, helping the Barclays Aggregate Bond Index jump 0.93% in August.

We had second quarter GDP revised to 3%, up from 2.6% and unemployment still hovers near decade lows at 4.4%.3 However, inflation has been coming in below the Fed target. Some wonder if the Fed will have enough reason to make a third rate increase this year with all the conflicting evidence regarding the economy’s health.

This will all be figured out in time. What is really weighing on our hearts and minds right now is the onslaught of hurricanes hitting the southern states. Gas prices have risen particularly since roughly one third of the US refineries are located in Texas and Louisiana. The cleanup of Hurricane Harvey in Houston and adjoining areas are still ongoing, but is expected to be one of the most expensive hurricanes in history. The total costs haven’t been quantified yet and we already have Hurricane Irma anticipated to hit southern Florida in just a few days with potentially even stronger forces.

From an investing perspective, these types of events can affect stocks in a variety of ways. Some insurance company stocks will suffer from the high flood related claims coming down the chute. Some oil stocks will drop if their production capability is hindered, while others will cash in on the higher energy prices. Home improvement stocks have already seen a jump in anticipation of increased revenue.

Our primary concern right now is for the people in the path of these hurricanes. This is obviously a stressful time for those living, or who have friends and family living, in the Texas, Louisiana, and Florida areas. We hope everyone remains safe and out of harm’s way.

1 Thomson Financial

2 www.treasury.gov

3 PMC Weekly Market Review, September 1, 2017

 

IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.

July 2017 Monthly Summary

All-time highs continue to be surpassed with stocks as the S&P 500 was up another 2% in July.  Interest rates held steady while the Barclays Aggregate gained another 0.46% last month.1  The pattern of positive economic data continues, although there hasn’t been a catalyst of tax reform or legislative changes to justify a continuation of the Trump Bull Run.  We aren’t concerned just yet.

From a fundamental analysis of the markets, we believe that prices are a little above fair value.  Unless we have a large increase in corporate earnings, our economic models might indicate that the market is over-valued if we see another 10% jump in the markets.  To put this in perspective, our economic model hasn’t declared stocks being over valued since the dot-com markets of the early 2000s.  Rest assured, we will continue to evaluate market conditions and suggest changes based on your personal risk tolerance and circumstances.  Remember, those “animal spirits” we discussed in the April Summary could keep this market moving well beyond what any analysis can predict.

It is hard to pinpoint when the indicator will turn from stock maximum to minimum because there are a lot of moving parts when analyzing valuations at the macro level.  Interest rate movements in today’s environment will be a strong influence, but with the US Dollar showing weakness, corporate earnings will be just as important.  One disturbing trend with interest rates is how bond values have increased in interest sensitivity.  The chart below shows that the Barclays Aggregate has averaged a 4.8 duration, but is currently at 6.  This means that an increase in interest rates will have a more profound negative effect on bond values than we have seen in decades.  This makes for quite a challenging investment quandary as we look for non-stock investment alternatives.  Bonds may not be the safe haven they were once thought to be.

As I sent the kids off to begin another year of school, I was reminded that summer is nearing its end.  Before we know it we’ll be surrounded by fall colors and holiday decorations.  If you haven’t taken the opportunity to get a vacation in this year, consider doing it now.  Just a quick weekend trip to recharge your batteries can do wonders!  We have had great markets and a solid economy. Seize the opportunity before the dark and dreary temperatures fall upon us!

Enjoy the moments!

 

1 Thomson Financial 

IMPORTANT DISCLOSURES
Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
Securities and investment advice offered through Investment Planners, Inc. (Member FINRA/SIPC) and IPI Wealth Management, Inc., 226 W. Eldorado Street, Decatur, IL 62522. 217-425-6340.

Second Quarter 2017 – Playing the Long Game

Last night I watched the MLB Home Run Derby contest. I always find it the most entertaining part of the All Star festivities. Last night I saw the rookie, Aaron Judge, crush one home run after another, seemingly for the entire 5 minute time allotment. The 6’ 7” athlete was doing it effortlessly, with 500 foot bombs and shots that bounced off the roof. . . It was impressive.

It doesn’t feel like the market has been hitting home run after home run, but stocks hit the bottom of the Financial Crisis over eight years ago and really haven’t looked back. We have hit some slumps along the way, but our batting average since 2009 has been pretty impressive overall. This last quarter was no exception, with the S&P 500 up over 3%.

That truly differentiates the spectacle of the home run derby from a real baseball game. The derby gives you one goal, put the ball over the fence and hit home runs because anything else hurts your ability to win. The true game of baseball is so much more complicated and involves both offense and defense. While some batters might be wishing to hit home runs, most are hitting for singles and doubles or simply trying to move runners into scoring position.

This translates to investing as well. Far too often we hear stories of stocks doubling or tripling and wonder “if only”. In truth, it takes the entire portfolio working in a diversified allocation to weather the good times and bad. You can’t rely on just one stock to carry you through to retirement.

When the Volkers Group opened its doors in December of 1996, many clients owned shares of a local pharmaceutical company. It was trading around $15/share ($89 before adjusting for splits). With the help of a couple very successful drugs, the stock price shot up 200% in two short years—definitely a home run that truly blessed a lot of our clients’ portfolios and retirement plans. However, the trend for this stock reversed after that and it has never gotten back up to those historic prices. Although this one “home run” stock helped some dreams come true, it has been the diversified portion of their portfolio that has allowed those clients to achieve their goals for the past 18 years, because life didn’t stop after 1998.

As we continue to follow the markets the second half of this year, we will continue to focus on asset allocation. We might hit a home run or two, but we are hoping for consistency with singles and doubles to get us through the rest of this year. Enjoy the rest of your summer!

May 2017 Monthly Summary

This is beginning to sound like a broken record. The S&P 500 was up for the seventh consecutive month. In May, it was up 1.41% with technology continuing to lead the way. Energy was the worst performing sector, plagued with more concerns of a supply glut. On the bond side of the equation, the Barclays US Aggregate Bond index was up 0.77% in May and up an uninspired 2.38% so far in 2017. (1)

Around this time of year, we take stock in what the markets have provided thus far. It is interesting to note that since 1950, any time the S&P 500 has been up over 7.5% after the first 100 trading days of the year, the market has always ended the year positive. In fact, the average annual return of the 23 times this has happened is 23.4%. (2) Although the past can’t predict the future, this is somewhat optimistic that we may hold onto the gains achieved.

Although politically, little has been accomplished, I believe the markets are hopeful of stock-friendly policies down the road like tax reform. After all, this latest bull-run coincides directly with the election results of November. Whether we see increases in earnings or progress in policy changes, there are reasons for the markets to continue rising.

Speaking of policy changes, there are some regulatory rules put in place this June by the Department of Labor (DOL) that will soon change the landscape of financial advisory services. We will update you more as the rules become more defined, but the general intent of the changes are to better protect investors (our clients). In true regulatory fashion, the government-endorsed methods to ensure investors are protected are akin to shooting a housefly with a shotgun. However, we welcome the challenge with our clients’ best interests always in mind.

Our firm has always made recommendations for our clients with their goals and investment objectives as the primary determining factor, so we don’t anticipate significant changes in how we determine which investments or strategies are appropriate for our clients. “Fiduciary” is a term that will be more commonly used after the regulatory changes take place. With the term fiduciary comes greater responsibility for advisors, so we may need to change the way we implement investment strategies going forward. We are looking at solutions that provide better transparency for our clients and continue to allow us to provide the great service that you expect.

There are changes coming, but changes are what keep us young! We will continue updating you in future newsletters or summaries. Of course, call us with any questions or concerns. Until then, don’t forget it is summertime!

1 Thomson Financial

2 First Trust, Talking Points, May 2017