Q1 Perspective: Spring Has Sprung!

Posted at 21st April 2017

We trust that you had a wonderful Easter weekend.  HE IS RISEN!  

Spring brings with it many things that tend to make us all feel good and put a little extra “spring” in our step.  (Ok, that pun was bad.   We just couldn’t resist.)  The change in our weather is always welcome. As we head into April and May, cold, frigid days are replaced with warm, sunny days that make us enjoy being outside. Flowers begin to blossom, trees regain their leaves, birds begin to sing, and God’s entire creation starts to show off its beauty. We can’t help but feel full of joy once Spring gets underway. Sure, there comes with it a few rainy, gloomy days, but even they cannot distract from the thought that tomorrow might be a wonderful sight once again. After all, April showers do bring May flowers.  We encourage you to take some time to notice and appreciate the miracle of nature’s rebirth.    

For investors, this first quarter of 2017 has been like a Spring season. Most broad market indices have been positive since the beginning of 2017.  Specifically, the S&P 500 continues a run that started about the time when the United States elected a new President. Much of this performance is due to strong sentiment around the new administration’s plans regarding taxes, infrastructure spending, and regulation. It also has been supported by a positive outlook for the U.S economy as the unemployment rate continues to fall while new jobs continue to be created. Positive economic indicators paired with positive investor sentiment has shaped a start to the year that has most investors feeling good.  

Like Spring, the market is certainly susceptible to its fair share of gloomy days, which is something all of us must continue to remember. Every week will not bring positive returns, just as every Spring day will not be sunny (no matter how much we wish it were that way). As you may have noticed recently, March 15th to 21st was one of those gloomy weeks. However, it is also important to remember that markets, just like flowers, need those rainy days to continue to grow properly. If the market never saw a rainy day, there would be no risk in investing and therefore no reward. To learn more about why the concept of risk is important to investing, we’ve included a link to an article written by Loring Ward, one of the voices in the investing world that we have come to appreciate.

Looking forward, two areas that might cause notable shifts in the US Market are President Trump’s policy actions and the federal reserve’s raising of the federal fund’s interest rate. The down week listed above was primarily caused by the stalling of President Trump’s healthcare reform. Should additional Trump’s economic policies suffer a similar fate, there could be a loss of positive sentiment as investors could begin to doubt the Administration’s ability to push through pro-growth legislation as anticipated. The Fed has also been raising interest rates slowly and steadily since the beginning of the year. Two times in fact since January. The Fed uses rates to help control things such as economic activity and inflation.  Increasing rates could be viewed as good news.  It means the Fed has a more positive outlook on overall economic growth and conditions after it has maintained rates so low for so long. Should the Fed continue only to increase rates marginally, it could weigh on investment analysts’ outlooks.  This could signal that the Fed is not confident enough in current growth to raise rates more substantially.

Stay tuned for many great things yet to come that will continue to amplify our service to our clients. We strive every day to fulfill our mission:

To help families experience PEACE, realize FREEDOM and maximize their IMPACT by providing WISDOM for life’s most important decisions.

Have a wonderful Spring!

Doug, Zak and the entire LifeGuide Team

ADDITIONAL INFORMATION:

Q1 2017 Market Segment Returns:

Click here for a more in-depth Market discussion.

Learn more about Risk and Return.