Market Commentary: 1st Quarter 2017
By: Lisa Thuer - Senior Trading and Research Specialist
The dust is still settling in Washington as the new administration takes office. The markets started like gangbusters in January and February, which was based on the upbeat news that a Donald Trump presidency would result in pro-growth policy changes, which is good for the stock market and businesses as well. However, in March the markets hit the brakes when the new Healthcare Bill failed to be brought to vote. This is being viewed as, perhaps the Trump administration will not be able to get all their policies and their campaign promises passed as quickly as anticipated. Failure of the Healthcare Bill, contributed to the March stock market being a relatively flat month.
LetiĚs review the positives that we saw in the first quarter of 2017. The technology sector was a top performer, and we were pleased that we made the decision to add to our current positions in this sector at the end of 2016. Other areas that have done well are consumer discretionary, staples, and utilities. The financial and industrial sectors continue to hold their own, as decrease in regulations will benefit the financials and infrastructure spending will be beneficial to the industrial sector. The worst performers were energy and telecommunications. However, we are underweighted in those two sectors, but our minimal exposure in those sectors are holdings that have a significant dividend yield. Small companies have had some mixed results this quarter but the forecasted future is still pro- growth. Fixed income continues to show mixed results, nonetheless we continue to hold investments in the fixed income sector that are non-traditional, income generating holdings.
Any pullback in the markets that we have seen recently can be viewed as a pause in the markets, because bull markets often take a breather. As much as we would all love to see the markets continue to go up, we also know it is not realistic. Investing on political noise at home and abroad can be detrimental to a portfolio. We know that there are many good things happening here in the U.S., Technology innovations, medical breakthroughs, and oil production, just to name a few, but the good tends to be overshadowed by all the noise in Washington. As we have mentioned before, the media tends to focus on the negatives.
There will come a time in the future for us to start dabbling in investments outside of the U.S. as we continue to watch and monitor other areas of the world. For the last several years, we have been reluctant to any foreign investment because of their uncertainty.
Our outlook continues to be relatively optimistic, especially if Washington can put some of this political gridlock aside and focus on getting something done. It would be positive if we could see some, Tax Reform, the easing of some regulations, as well as some type of Healthcare Reform, and it would be best if it came sooner rather than later. Good things are already happening with a pickup in business as well as consumer confidence, along with job creation and wage increases. Regardless of what happens in Washington D.C., companies will continue to innovate and produce, life will not come to an end.
As always, should you have any questions, comments or life changing events that you need assistance with, do not hesitate to contact one of the KFA team members. It is always good to review your own risk tolerance that may change overtime. Are you able to weather the markets ups and downs and focus on your goals? LetiĚs talk about it, please give us a call, Mike Kabarec has been doing this for 35 years. He has seen lots of different markets through his career, he might not have all the answers, but he does have a lot of answers.