Home / Education

An Open Letter to our Clients

Dear Clients:

The past year has been difficult for investors in the stock markets. The dollar strengthened against other currencies last year which had a negative effect on our international investments. This year the S&P 500 has struggled to remain positive while bonds (Barclay U.S. Credit – source…Barclays Bank PLC Aug 6, 2015) are slightly negative. Volatility seems to be the norm.

We believe the U.S. Stock market as measured by the S&P 500 is in a “topping process.” This means it is potentially reaching the top of a market cycle and is therefore subject to a correction. How severe, we cannot predict.

In addition to the topping process there are at least three major issues that will come up in September. The first is the “debt ceiling” which will require Congress to raise the federal debt limit allowing the government to borrow more money to keep it running. This occurred in 2011 and caused a temporary drop in stocks due to the fear of shutting down the government. The second issue is the need for Congress to approve new funding for highways. This affects revenues to all states and could impact jobs. The third is a US Federal Reserve meeting in which they could decide to raise interest rates. While markets tend to react positively to this in the long run, in the shorter term they can react with more volatility.

It is our opinion that either of these issues combined with a potential topping process presents the opportunity for the market to react negatively. If Congress gives any indication of shutting down the government again (which may or may not occur) then it will add more fuel to the fire of a correction.

We think the biggest risk in reducing our stock exposure would be that the markets increases in value in spite of these issues and one misses a short term gain prior to moving back into stocks. Either way we expect volatility in the stock and bond markets.

Our plan is to reduce stock exposure in the month of August for all fee based accounts. Other accounts will need your authority to make changes.

Please call your advisor to discuss any questions you may have about these issues.


Sound Financial Strategies Group, Inc.

Investment Advisory Services offered through Sound Financial Strategies Group, Inc. (“SFSG”), a Registered Investment Adviser. Certain representatives of SFSG are also Registered Representatives offering securities through APW Capital, Inc., Member FINRA/SIPC, 100 Enterprise Drive, Suite 504, Rockaway, NJ 07866 (800)637-3211. SFSG and APW Capital are separate and unrelated companies. 

The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by APW Capital.

Powered by ID digital