January 2017 Market Update

The stock market ended on a high note in 2016. These are the numbers for December, for all of 2016, and since the election on November 8th.

December 2016 Since Election Dow +3.3% +13.4% +7.31% S&P 500 +1.82% +9.54% +4.63% NASDAQ +4.86% +11.50% +7.51% Russell 2000 +2.65% +19.45% +13.56 How wrong did the media get the election? Mark Cuban, owner of the Dallas Mavericks and star on the show Shark Tank predicted the market would shrink 20% IF Donald Trump were elected. The financial media fell right in line with that thought in expecting the market to tank as the nation came to realize that we’d elected an “idiot,” “buffoon,” “mentally unstable person.” But instead the voters started seeing Trump as a well-spoken, thoughtful man who had actually built a company and made his own money. They saw him choosing brilliant people, not just political hacks, as members of his cabinet. And every time the media tried to skew the news to fit their agenda, the people saw Trump fight right back against them. The media, which had been held in low esteem by most of the population, sank even further in their eyes. And the optimism Trump has shown since the election has rubbed off on a broad swath to the nation’s citizens. And he hasn’t even been sworn in yet. So what happens now that Trump is sworn in? Does the fence on our southern border start to go up immediately? Does the D.C. swamp begin to dry? Does the stock market kick into high gear and grow continually as it has since the election? Of course, I don’t know, but I suspect not. First, Washington is a place where the power is deeply entrenched and they will not give it up without a mighty struggle. So expect the Trump locomotive to start looking like its running in molasses. On the stock market front, we are in near record territory. The Dow just crossed the 20,000 mark the other day. Valuations are at historical highs. Earnings per share are way down. And while investors have been willing to accept lower earnings with interest rates at rock bottom, that may not hold as interest rates start to rise. Because we do our own management, we are ready to make changes to our portfolios as our research changes, either for the positive or for the negative. Hang in there with us. 2017 is going to be an exciting year!