View from the Chair: Windermere's Market Outlook (July 2016)

Summertime is filled with many wonderful things - including trips to amusement parks and spins on roller coasters.  Great fun for a family outing - but not so fun in the markets.  But, that is exactly what this year has felt like.  A continual roller coaster that when all was said and done, returned us to a platform pretty similar (if not a bit better) to the one we started from.  

We've had relatively sharp inclines up - due to above average corporate earnings, modestly higher energy prices, and an improving US employment picture.  However, we've also had jarring (and not fully anticipated) falls, most recently caused by the UK referendum to leave the EU.  And in between, the ride has been a bit bumpy, leaving its participants unsure it of exactly what is coming around the next bend.

Ignoring the ride itself, the end result for markets for the year is actually (and somewhat surprising to most) fairly positive.  As shown in this chart (click on image to open/enlarge it in a new window), as of June 30, the S&P 500 was up 2.69% on the year, and the Barclays Intermediate Credit Index was up 4.35%.  8 of 10 US sectors are positive for the year (only IT and financials are in the red). 

So, where to from here? The ride is likely to to continue.  Simply put, plan properly, remain convicted, know your surroundings - and then sit back and enjoy the ride

Plan properly - If you don't know where you are going, all roads (or rides) will get you there. You need a clear vision of what you want (and need) your wealth to accomplish.  With that in place, you can adjust your ride duration and intensity accordingly

Remain convicted - Events this year have clearly shown the perils that come from exiting the roller coaster mid-ride.  Sharp sell offs in Jan/Feb due to concerns over China slowdown and in recent weeks due to Brexit illustrate how quickly markets falls - and how equally fast they also rebound.  Stay the course and avoid the temptation to exit before it's wise to do so

Know your surroundings - There is a lot happening in the markets and the world around us - Brexit, concerns over the other EU members also leaving, historically low interest rates across the globe, improving US employment, the pending US election - the list goes on and on. Remaining up to date of these matters (or working with a team that is) is critical

Sit back and enjoy the ride - With a plan in place, strong conviction in your approach, and a trusted team at your side, you are well positioned for today's current market conditions.  The ride will continue to be bumpy and somewhat unpredictable, but try to view the accumulation of wealth as a privilege and do your best to enjoy the ride!

Invest on our friends.  We'll see you on the ride and will be hoping for a flat portion of track ahead!