03 Apr 1st Quarter 2018 Review and Outlook
Be sure to call today to schedule your personal review of the first quarter as well as update your long-term planning. We can schedule your review either in person or online via our Go-To-Meeting, whichever is more convenient for you. This quarter we will want to focus on your tax planning for 2018 and how the new tax law may affect you this year moving forward. Call us today at 405-844-9826! Be sure to have your 2017 income tax return accessible for review as well.
Important Dates in April:
April 17th: Individual Income Tax Returns Due
Last Day to Fund 2017 IRA
Last Day to Fund HSA Account for 2017
April is: Financial Literacy Month
Make America Beautiful Month
If you want to fund your IRA before the April 17th deadline, be sure to make your check payable to: Trust Company of America and send to our office for deposit into your account. The envelope must be postmarked by April 17th or before. If you have any questions, please don’t hesitate to call.
The major U.S. stock indices dropped for the quarter, with the Dow Jones Industrial Average off approximately 2.5%. Stock indices have recently been testing their 2018 lows in the last few weeks. As of today, the broader based Standard & Poor’s 500 stock index closed at its February 8th level, still within the 10% “correction” off the recent high reached on January 26th. (Google Finance). It is fairly common for stock indices to test their lows in a correction before moving higher once again. This seems to be the case so far this year as of today’s market closing levels. Volatility has continued almost on a daily basis, and as we said earlier this year, we expected market volatility to return after being almost totally absent last year.
Interest rates rose in the first quarter with the yield for the 10-year U.S. Treasury ending in the 2.74% range. This compares with 2.41% at the beginning of 2018. When rates rise, bond prices decline. (MarketWatch) The average rate for a 30-year fixed mortgage is now at 4.27% and 3.69% for a 15-year fixed mortgage. (Bankrate.com)
Volatility has finally returned to a much more normal level after being compressed for nearly two years. Portfolios have experienced wider price fluctuations, with a strong January and then sharp movements up and down the last two months of the quarter, ending at the lower end of the year’s trading range. For our more conservative clients, the slight rise in interest rates has dampened the returns of most bond funds in the portfolios. As for the larger economic picture and investment environment as a whole, we remain optimistic with only minor near-term concerns.
We have begun to see a few general warnings in price performance and various trends that will prompt a move to more fixed income/bond holdings in client portfolios over the next several months. We would anticipate these signals to reverse by the end of the year, however, only time will tell. By mid-April most portfolios will only see equity exposure in the stock models with most allocation funds that are held moved into fixed income assets. This reallocation is not being done for any economic concerns, but rather it is being done to help control some of the potential volatility that could still lie ahead. We believe fixed income could perform well over the coming months, which should offset any foregone gains in the equity markets if we do see any substantial price increases for stocks. For our more conservative portfolios, this move has already occurred. Our moderate portfolios had very little additional equity exposure, however both growth and aggressive accounts had relied on additional equity exposure that will not be present in the second quarter of 2018.
We hope you and your families had a great Easter weekend. As always, don’t hesitate to call or email us if you have any questions or concerns, or if we can be of further service at any time.
Your TEAM at F.I.G. Financial Advisory Services, Inc.
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1 The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be
invested into directly. Past performance does not guarantee future results.
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directly. Past performance does not guarantee future results.