A Third Quarter Update From Our Firm

Markets Hit New Highs by The End of The Second Quarter

Stocks see-sawed through the last quarter, first rallying in April to new highs, then dropping over 6.4% in May due to trade war tensions. Changing course with prospects of a trade war agreement and Fed easing on the horizon bonds and stocks both appreciated in the last quarter to post new highs. Bonds beat stocks globally. Gold was the top asset class breaking out to a six-year high and energy was the only sector to post losses.  In the first half of the year, both stocks and bonds returned double-digit returns. This is only the 10th time going back to 1945 where both assets delivered double-digit returns over the same six-month period.

Since 2009 the financial markets have followed monetary policy’s lead and as investors, we’re celebrating the tenth-year anniversary of this bull market. Robust job gains, low inflation, lower corporate tax rates, and Fed easing have been good for the markets. The U.S. economic data does not point to a recession and we’re not likely to see a global recession soon. There are signs of fatigue with short term interest rates higher than long term rates and an uninspiring forecast of earnings growth. The biggest uncertainty is the trade wars’ impact on growth.

Second Half Outlook

According to Ned Davis Research when stock and bond returns are both up 10% or more over a six-month-period, stocks tend to perform better than bonds over the following 12 months.  Tactically, we’ll continue our cautious but optimistic allocation in the portfolios. We prefer growth over value, dividends over non-payers, short duration high quality fixed income, and tax-exempt fixed income for investors in high tax brackets. In our opinion, the market’s valuation is not unreasonable and this bull market is not over.  Valuations will rise, but at a choppier rate. We endure the volatility with high quality diversified investments.

Winners Circle

We invest your money using a combination of active and passively managed mutual funds and ETF’s to allocate money among different asset classes and to drive returns. Morningstar, a global investment research firm that rates investments, has chosen two of your active portfolio managers to receive the 2019 Morningstar Award for investing excellence. To qualify, the nominees distinguish themselves by delivering excellent returns to their investors. James Marchetti is a manager of Primecap Odyssey Growth Fund. He joined Primecap in 2005, as a biotech analyst following graduate school at MIT. His outstanding biotech picks have been a major factor in the outstanding performance of the fund. David Giroux has managed the Gold-rated T. Rowe Price Capital Appreciation Fund for the last 13 years. He is a two-time winner of Morningstar’s Fund Manager of the Year award and has also won 13 “Best Fund” awards from Lipper.

Practice News

With the economy doing so well and the market making new highs it’s a good time to review the progress of your children’s 529 education accounts. Often, funding college is a shared effort by parents and grandparents to systematically save for the future. The best gift you can give your children is an education with no debt to weigh them down as they enter adulthood.

Cash is An Asset Class

Earning a competitive interest rate on your bank savings is important and we’re seeing many instances in which banks are simply underpaying on savings and deposits. At Snow Creek Wealth Management, we have short-term fixed income investment vehicles that pay substantially more than what you may be getting at your bank. If you have cash reserves sitting in bank accounts we suggest you see what interest you are earning. Call us and we will be happy to see if you are receiving a competitive rate.

Financial Planning

We believe in holistic planning as an integral part of our practice. We like to hear from you as often as possible so we can integrate any life changes into your financial plan. A new baby, house, job, and changes in your expected retirement date are all opportunities to review your plan. It’s important to see and speak with our clients as often as possible. Please give us a call to schedule a time to meet.

We thank you for your trust and confidence.

David Goldberg & Larry Sacks