January 2018 Market Update


The 2017 financial markets closed out the year much like they started, reaching higher. The DJIA finished the year at 24719, 25.08% above last year’s close of 19763. The S&P 500, a broader market index, finished 2017 at 2674, a gain of 19.43% for the year. The S&P started the year at 2239. The NASDAQ Composite finished the year at 6903, besting 12/31/17’s close of 5583 by 23.64%. Our final benchmark is the Russell 2000, which is an index of 2000 companies who’s market caps are less than 1 billion dollars each, making this an index of small companies. It started the year at 1357, ended at 1536, and gained 13.19% for the year. So, by the Dow winning in such a convincing way, and it being made up of only 30 ultra-large companies, 2017 was the year of the mega-company. Looking back may be fun, but we all want to know what’s ahead of us. What does 2018 have in store for the normal retail investor? I can tell you in two words; nobody knows! As much as I think I can tell what the direction will be, the short-term stock market has always acted like a squirrel in the middle of the road, you never know which way it will run, or if it’ll just sit there and get run over.

Our job, here at ProVest, is to observe the stock market, let it tell us which way it’s running and invest in the momentum it creates. That means we’ll never beat the market when it heads straight up, but we will rarely get caught fully invested when stocks crash. The research we purchase gives us daily updates regarding market moves. We make adjustments to our managed portfolios based on the research we receive. We believe that long-term, our dynamic, risk-managed portfolios will provide a smoother ride for our clients. This may help them stay invested by not panic selling when the future looks bad. In 34 years as an advisor, I’ve seen the devastation that a full-blown bear market can wreak on a fully invested portfolio. I’ve known people who were about to retire (or who had already retired) who had to continue to work (or go back to work) because their nest egg shrank to the point it could not produce the income it needed to, to provide enough income to sustain the retiree. My purpose is to try to make sure that doesn’t happen to my clients. Our less-than-stellar returns have caused a few of our clients to question our methods of investing. And I don’t blame them. Their job is to make and invest the money. My job is to take care of it. And keeping a portfolio fully invested and watching its value shrink by half in a market crash in not my idea of taking care of it. But the market hasn’t crashed, has it? So our cautious approach doesn’t look too smart right now. However, give us one bear market and our skeptics should see what we’re talking about. I’m ready to begin 2018! Let’s go!

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