Exclusive Content

    If you are a client, sign in below to access exclusive content.

     

    A new presidential era began last Friday with Donald Trump’s inauguration, and the market reaction was far more restrained than its response to his election. For weeks after the presidential election, we saw markets defy expectations and post significant gains.

    In the four days of trading last week, major U.S. indexes continued the sideways performance we’ve seen since December. For the week, the S&P 500 was down 0.15%, the Dow lost 0.29%, and the NASDAQ gave back 0.34%.1 International stocks in the MSCI EAFE also declined by 0.48%.2

    Despite these weekly losses, Friday’s market performance marked one milestone not seen since John F. Kennedy's election: index gains on inauguration day.3 Nonetheless, we still see a market that has been in a holding pattern for weeks. The S&P 500 has barely moved since the day before the Fed raised rates on December 14.4 And if you analyze this graph of the Dow’s performance, you see a similar scenario. The index grew sharply after the election, but the red box shows performance stalling since December.

    Why has the Trump Bump paused?

    The markets are incredibly complex and multifaceted, so one answer cannot fully explain their performance. However, after rallying in anticipation of Trump’s promises for lower taxes, decreased regulation, and increased government spending, investors are now waiting to see which policies will come to fruition.5 No one knows for sure what policy changes or political developments lay ahead. We must look closely at fundamentals to see beyond the headlines and find a clearer view of where the U.S. economy stands today.

    What are the fundamentals telling us?

    During the current corporate earnings season, 63 companies have reported their fourth-quarter results so far. Of these companies, 63% beat earnings-per-share estimates and 46% exceeded their sales estimates.6

    Last week, we also saw:

    • The Consumer Price Index increase by 0.3% for December7
    • Industrial production increase by 0.8% for December, erasing its November decline8
    • Housing starts rebound by 11.3% for December after dropping 39.4% in November9

    This week, three factors will give us a deeper view of economic performance: 1) fourth-quarter GDP reports, 2) consumer sentiment data, and 3) home sales figures. By analyzing data rather than focusing on hype and predictions, we remain committed to your long-term financial health.

    What should you focus on?

    No matter your political perspectives, moments of change can elicit emotional reactions from even the most rational investors. As always, emotions have no place in investing.

    Consider this: After former-President Barack Obama’s election in 2008, the S&P 500 dropped 15.5% by inauguration day, as his transition period coincided with the deepening financial crisis.10 Investors who allowed emotions to take over at that point and left the markets could have missed the S&P 500’s 12% average annual growth each year Obama was in office.11

    We believe now is the time to continue focusing on your unique risk tolerance, your long-term goals, and the economic fundamentals, not who is in office.

    We will continue to monitor economic and market evolution as it occurs, and we will closely watch the political division that seems to grip our country. In the meantime, we are here to answer any questions you may have and help you find the clarity you need.

     

    Sources

    1 2 3 4 5
    The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2014 Emerald Connect, LLC
    © Mahoney Asset Management

    INVESTING RISK DISCLOSURE
    Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money. Before investing, consider the funds’ investment objectives, risks, charges, and expenses. Contact Mahoney Asset Management for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

    IMPORTANT CONSUMER INFORMATION
    This web site has been prepared solely for informational purposes. It is not an offer to buy or sell any security; nor is it a solicitation of an offer to buy or sell any security.This site and the opinions and information therein are based on sources which we believe to be dependable, but we can not guarantee the accuracy of such information.

    Representatives of a broker-dealer or investment adviser may only conduct business in a state if the representatives and the broker-dealer or investment adviser they represent: (a) satisfy the qualification requirements of, and are approved to do business by, the state; or (b) are excluded or exempted from the state’s licenser requirements.

    An investor may obtain information concerning a broker-dealer, an investment advisor, or a representative of a broker-dealer or an investment advisor, including their licenser status and disciplinary history, by contacting the investor’s state securities law administrator.

    The financial calculator results shown represent analysis and estimates based on the assumptions you have provided, but they do not reflect all relevant elements of your personal situation. The actual effects of your financial decisions may vary significantly from these estimates–so these estimates should not be regarded as predictions, advice, or recommendations. Mahoney Asset Managment does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences.

    SECURITIES: ARE NOT FDIC-INSURED/ARE NOT BANK-GUARANTEED/MAY LOSE VALUE
    This information is intended for use only by residents of CA, CT, DC, FL,, MA, MD, MN, NC, NJ, NY, OH, PA, and VA. Ken Mahoney may only conduct securities business with residents of the states and/or jurisdiction for which they are properly registered.

    Securities offered through Newbridge Securities Corporation, member FINRA, SIPC.
    Investment Advisory services through NFSG Corporation an SEC Registered Investment Advisor.
    Office of Supervisory Jurisdiction: 1200 N. Federal Hwy., Ste. 400, Boca Raton, FL 33432. Phone 954.334.3450 Fax 954.489.2390

    Specific recommendations can only be based on review of a number of suitability factors including but not limited to the investors financial profile, investment objectives, risk tolerance and the investors review of appropriate offering documents. Past performance is no guarantee of future results. To help you make informed decisions, we provide you with essential disclosures, such as Regulation Best Interest (Reg BI), the Client Relationship Summary (CRS), and Form ADV. Linked sites are strictly provided as a courtesy. Newbridge Securities, Inc. does not guarantee, approve nor endorse the information or products available at the sites, nor do links indicate any association with or endorsement of the linked sites by Newbridge Securities.