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Sound Financial Summer 2018 Market Update

What a year for the markets! On the surface they appear to be having a fabulous year. U.S. stocks are on the verge of surpassing their longest running rally. This is confirming a rebound in the market that began shortly after the financial crisis and continues to defy the odds. The S&P 500 is doing especially well, as it flirts with getting back to its all-time high from January 2018. That means this index has more than quadrupled in price from where it was in March 2009 when it hit a low of 666.

Anytime there are abnormal market trends, one should consider if it is sustainable. Are the markets as a whole healthy, or are there outliers that are skewing the numbers? Based on the data, it appears the latter is the situation we find ourselves in. According to the Wall Street Journal (market commentary 8/21/2018), four companies—Amazon, Microsoft Corp., Apple and Netflix Inc.—account for 40% of the S&P 500’s nearly 7% gain for the year, according to S&P Dow Jones Indices.

Sound Financial CEO Chris McAlpin stated, “this in Sound’s opinion, dangerously over-weights the index to the tech sector. This can set up the index for a major correction similar to what happened in the “tech wreck” of 2000-2002. We are measuring these and other trends, then utilizing this information in our rules-based models. We believe this allows us to make the best decisions possible in both the ups and the downs of the stock markets, these measurements give us an exit strategy to follow. However, we are not ‘calling the market’ in any way. We let our rules-based decisions making process along with our clients’ risk tolerance and investment objective dictate investment strategy.”

With a market that many are saying is currently overvalued, and a significant portion of growth coming from a single industry, investors should take pause. From our perspective, it is clear that now is not the time to take an abundant amount of market risk. These are the times when having a rules-based strategy can help an investor stay on course for their long-term plan. Contact us today to learn more about our rules-based strategy and it can be utilized in navigating your retirement plan.

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. 

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