Business Update:

Save the Dates:

D3 Will Be Observing our 20 Year Anniversary in 2017: To Celebrate this milestone event for D3, we will be chartering a yacht for our clients to watch the 2017, Chicago Air and Water Show.  So save the date; Saturday, August 19th, 2017 for a delightful afternoon.

Annual Client Appreciation Dinner: We will be having our annual thank you dinner on November 19th, 2016 at the University Club in Chicago.  You will be receiving your invitation by October 15th.

Affordable Family Office Insurance Review: During October we will be completing our annual insurance review for all of our affordable family office clients.

If anyone is having any issues logging onto or navigating your new client portal or completing our Portfolio Risk Tolerance Analysis, please give the office a call. Any of our staff will be able to assist you.  

Market Insight:

We have received a few updates regarding the presidential election and the impact on the markets and the economy.  As we said last month, “We continue to invest based on the premise that the economy and the markets will move forward despite the concerns of how ineffective our government has been and will be. We expect slow, yet fragile economic growth. Demographics may be the most important force driving our economy in the future.”

Don attended a Fidelity conference last week where Jurrian Timmer, Fidelity’s global strategist, gave a presentation on his most likely scenarios for the next two years. He reviewed 5 different probable scenarios and his weighted average expected return was 8% for the U.S. stock market. His perspective was that neither candidate will be able to get much done unless it is backed by popular demand, i.e. tax reform, infrastructure spending etc.

Adam listened in to a market update from JP Morgan’s Dr. Kelly. Their outlook was that the stock market was appropriately valued and that although there is limited opportunity in fixed income, it remains an important component to a portfolio that is looking to reduce stock market risk.  He also pointed out that negativity sells, especially in politics, but from an economic standpoint, things are not that negative in the United States.

Both of these market observers think that corporate earnings have bottomed (primarily because of reduced oil and dollar impacts) and both are concerned that worldwide, over 77% of government issued bonds are yielding less than 1%.   Both anticipate that the Federal Reserve will raise interest rates by .25% in December. So what does this all mean for you?

Investment Strategy:

Expect short term market volatility to pick up for two reasons:

  1. Uncertainty regarding governmental policy
  2. Interest rates rising

As you all know, our long term perspective drives our investment thesis.  As stated above, our investment thesis remains slow, fragile economic growth.  Until fiscal stimulus comes into vogue or Millennials start spending more money, the catalyst for faster growth is missing. Even so, we continue to evaluate the risks of too much fixed income duration with the prospect of rising U.S. interest rates.

Diversified portfolios focused on long term risk adjusted returns remains a logical approach to achieving your financial goals.  Because we are long term asset allocators, and not short term market timers, our strategy to manage volatility in these times of uncertainty is to ensure that your portfolio is invested for the long term, matches your risk tolerance, and has enough cash for your cash flow needs.  If you have not updated your risk profile, now would be a good time to complete it. 

Final Thoughts:

Uncertainty is never pleasant. Not knowing or not liking who will be the future President of the United States is an uncertainty that the U.S has dealt with for over 200 years.  The only solution to this uncertainty is to get informed about the candidates and go out and vote.

Don’t hesitate to give us a call if you have any updates or concerns.  As always, thank you for your confidence in D3 Financial Counselors.