View from the Chair: Windermere's Market Perspectives (May 2017)

Narrow.  That's one word to describe the trading range of US markets in recent weeks, or even months.  It seems any downward movement in markets are quickly reversed and any upward swing retreats (at least slightly) in a short time.  This is healthy market movement and the results have been favorable, as shown in the latest market returns.


Why are markets behaving this way?  Despite the headlines and the seemingly incessant overhang of pessimism and worry, markets have several things going for them, including:

1.) Return to fundamentals - the companies that make up the equity markets are on stronger footing than they were, even a year ago.  A recent report from Thompson Reuters reports that first quarter earnings are expected to be up almost 15% year over year and that of the 412 companies in the S&P 500 that have reported, 75.2% have beat analyst expectations (historical average is 64%).  

2.) Certain sectors lead the way - there are certain sectors that are outpacing others and helping to bring the broader markets with them.  Technology and consumer discretionary are chief among them and show no signs of retreating anytime soon

3.) Supply and demand - as we discussed last month, there is still an overwhelming amount of money (think trillions) that has left US equity markets throughout this epic bull run.  And as markets offer slight corrections, some of these funds are coming back in - bringing prices right back up (as demand rises, prices rise).  We anticipate this trend to magnify as interest rates trend upwards and fixed income investors rotate into equities in increasing number

4.) Relative stability at home and abroad - we do not overlook or discount the potential for instability and black swan events that remains around the world (especially in North Korea and Syria).  We have a new political regime at home and that too introduces new risks and unknowns.  These risks will always remain to some extent and cannot be completely hedged. However, recent developments (such as the French election results, US administration making some progress of tax reform and healthcare) give some current peace of mind to markets and allow forward progress to continue.

We know we continue to say this, but it remains a great time to be invested.  Markets may be in a narrow band, but you are already on board and can continue to enjoy the ride.

Invest on,


Top of Mind (Q1 2017)

Each quarter, we will share three things that we are keeping Top of Mind

Here's our latest list:

1.)Airlines - times they are a changing

Airlines are officially back on the map.  With positive cash flow, actual earnings, and investment interest from many, even the Oracle himself Warren Buffett, it is a new day for airlines.  The business model is truly fascinating.  

No, we aren't going to discuss the United Airlines situation.  The media has that covered!  What is interesting is that literally the morning that story was released, I came across this article, detailing how one family took advantage of a difficult travel weekend and netted $11,000.  Yes, $11,000.  As capacity is at all time highs and PR nightmares can go viral in seconds, airline passengers will be increasingly able to monetize travel disruptions and inconveniences.

Also, this recent Bloomberg article further reveals a hidden gem lying within airlines financials - loyalty programs.  Millions of frequent fliers (myself included) pay painstakingly close attention to the credit cards they select and the associate airline and travel bonuses.  And the banks in turn pay millions to the airlines for these programs.   

Times have changed for airlines - and passengers and investors need to adapt along with them before they take off!

2.) A new approach to higher education

Several years ago, I became familiar with Adam Braun in his capacity as the founder of Pencils of Promise - a nonprofit organization building schools around the world.  Recently, I received an email newsletter from Adam's distribution list, announcing his new venture - MissionU.   MissionU is an organization set to disrupt a storied institution in the US - 4-year universities (and the associated student loans).  MissionU is a one year program, laser focused on a skill set needed in the market place, and paid for as a % of future earnings (free tot he student during the actual schooling period).  I found it highly intriguing and interesting - check it out and let me know what you think.  

3.) Chart your own course

Recently, a friend shared this article with me, discussing how certain successful people start and end their workdays.  I'm LOVE articles like these - finding myself intrigued by the tips and rushing to read what the "magic" strategies are and mentally awarding myself gold stars for those that I follow (get up and work out first thing - check; avoid screen time in advance of bed - check - you get the idea).  But I am not blind to the foolishness in this pursuit.  Because the fact of the matter is - routines and best practices are hugely dependent on the individual. What works for me may completely backfire for someone else - and vice versa.  

So now, when I read these articles, I gather tips and tricks and then experiment with my life.  As an example, I recently gave up social media for lent (40 days). I quickly discovered that I had become somewhat addicted - as identified in the early days by my reaching for my phone without even knowing I was doing it and quickly looking for something to scroll thru.  Yikes!  And by the end of the 40 days, I realized I was much happier without it and have adjusted my routine going forward as a result.  This is one small example but a good reminder that we control a major part of our life's experience and need to be sure your are maximizing it at all times.

We need to learn other's habits and tricks of the trade.  But we don't need to mimic them.  We can test, experiment, adjust, and use all that information to chart the best path forward for us.

Check back next quarter to find out what we're keeping Top of Mind