A Note from Our CIO

So many have asked...What direction is the market going in next?

Well, that is certainly the $50 million question, right?

Let's look at it practically in the following way:

CURRENT HEADWINDS:

North Korea

Political policies not fulfilled

A stall in economic growth due to factors such as rising interest rates, etc...

CURRENT TAILWINDS:

Positive outcomes in political and economic policies

 A continuation of earnings growth

Tax reform and repatriation of trillions of dollars of overseas money

Health care reform and deregulation of some policies

There are certainly other details not captured here but we will focus on the big picture.

With this said, we feel that stocks are "fairly valued" at this level.  However, we also feel that the rise in markets can continue. The biggest catalyst (which has been the case for months) is the promise of tax reform and the repatriation of overseas funds. The general thought process is that once overseas money from US companies comes back into the US (repatriated), it will fuel corporate buybacks, corporate expansion, and job creation.  If this gets stalled into next year, we believe that there is a good chance that the market could pull back some.  To what extent would be anyone's guess.  It is very natural to think that the market could correct.  We know it certainly will eventually.  We just do not know when or how quickly it will occur.

Geopolitical events such as the issues in North Korea could correct the market but may ultimately create buying opportunities.  At RAA, we have always believed that volatility in the markets is what creates opportunities.  Although we remain "cautiously bullish", it is more important than ever today to be diversified and ensure that money touches several different areas...not just stocks in and of itself.

We also feel that the Fed will, in the near term, start to unwind their balance sheet which can be good news for banks and energy.  Additionally, we have favored healthcare particularly in the medical devices space as we feel that some sort of conclusion will come to the repeal and replacement of Obamacare.

These are all sectors we currently own and continue to regularly research.

If policies in the White House are successful that can help to fuel a rise in commodities.

As discussed, the final "elephant in the room" of course is healthcare.  Next week will be very interesting to see what the outcome of the healthcare reform package will be.

This could be a win for corporations if the strain of the current healthcare initiatives are released.

Our take is that the White House is working hard to remove "Burdensome" regulations that were set in place from the previous administration.

In summary, we feel there is more positive in the news then can be negative. As always, we welcome your comments and questions

Financial Planning Tip of the Month

Happy Fall Y'all

 Wow! This year has flown by. It’s time to prepare your finances for the fall season.

Here are 10 tips to get your finances in shape before year-end:

1. Increase your retirement contributions. Try to max out your IRA or 401(k).  We always encourage our clients to "save as much as you can for as long as you can". Why not give your savings a boost today?

2. Make sure you are spending your flexible spending account.  You have to use it or lose. If you happen to have one, go get new glasses, dental work or approved over the counter items.

3. If you have a non-retirement account, consider selling some of your losing investments. If you are losing money on a stock or bond, now might be a good time to dump it.  It will allow you to offset some of your gains from the rest of the year.

4. Review your health insurance. Most employers have open enrollment around October and November. Take a look now, your employer could have made changes due to health care reform.

5. Review your insurance coverage. Along with health insurance, take a look at your life insurance, homeowners, auto, etc…  Coverages should be reviewed about once per year.

6. Review your budget for this year and start on a new budget for next year.  Now might be a good time to think about what you plan on spending for the holidays as well.

7. Plan for vacations and holidays. Planning now will help you save money and avoid building up credit cards balances.

8. Winterize. Fall is a great time to start getting your home ready for colder weather. Consider checking your furnace now before service costs skyrocket.  

9. Donations. Fall is also a terrific time to gather up summer clothing you don’t need and donate to charity. Get the stuff from the basement and garage and take it to your church or Good Will and get a tax deduction.

10. Meet with your advisors.  Fall is a great time to review our plan.  Lots of financial planning is done toward the end of the year and beginning of the following year.  We would love to speak with your accountants and attorneys to ensure we are maximizing tax benefits and keeping on track to accomplish financial goals.  

We look forward to seeing you soon!

We will be teaching an adult education course next month.  If you are interested in attending, please let us know.