LRIA 2nd Quarter Market Commentary

  • U.S. stocks were positive and hit new all-time highs for the fourth consecutive quarter
  • Non-U.S. stocks were also positive and outperformed U.S. stocks
  • Stock volatility remained near record lows. The S&P 500 hasn’t had a 5% correction in over a year
  • The U.S. economy had positive but slow growth. It is currently the third longest economic expansion since 1900
  • The Federal Reserve raised short term interest rates to 1.25%

 

 

Market Summary

Similar to last quarter, conditions for stocks were relatively positive illustrated by low volatility and positive economic growth. U.S. stocks, as measured by the S&P 500, reached all-time highs for the fourth consecutive quarter despite lingering concerns about healthcare and tax reform. International stocks also saw positive performance and continued their recent trend of outperforming U.S. stocks.

The U.S. economy entered its 97th month of expansion. This has been the third longest expansion since 1900, although it has also been the slowest expansion since 1950[1]. Slow but positive economic growth continued in the second quarter, inflation remained relatively low and stable, and the U.S. labor market continued to strengthen. International economies saw a pickup in growth this past quarter after two years of mediocre economic growth. The Eurozone grew particularly fast, thanks in part to a weaker currency and rising confidence.

With the U.S. economy approaching the Federal Reserve’s targets of unemployment and inflation and the global economy generating fewer worries than in recent years, the Federal Reserve raised short term interest rates by .25% to 1.25% in June. This was the fourth time the Fed raised interest rates since the economic crisis of 2008-2009. Barring any significant negative shocks or fiscal stimulus, the Fed will likely continue to raise rates at a slow pace.

Below is a summary of returns for the major indexes[2] and a summary of global headlines throughout the quarter[3]. It is important to note that investors should view daily events from a long-term perspective and avoid making investment decisions based solely on the news.

US Large Stocks

(S&P 500 TR)

US Small Stocks

(Russell 2000 TR)

International

(MSCI EAFE)

Emerging Markets

(MSCI EM)

US Bonds

(Barclays US Agg Bond TR)

2nd Quarter 2017* 3.09%

2.46%

6.12% 6.27% 1.45%
2017 YTD 9.34% 4.99% 13.81% 18.43% 2.27%
3yr annualized* 9.61% 7.36% 1.15% 1.07% 2.48%
5yr annualized* 14.63% 13.7% 8.69% 3.96% 2.21%
10yr annualized* 7.18% 6.92% 1.03% 1.91%

4.48%

 

Current Trends

41 of the 46 largest stock markets in the world delivered positive returns during the quarter (See graph below)[4].

Despite U.S. stocks being one of the worst performing countries for the quarter, they continued their uptrend and hit another new all-time high. U.S. stocks have significantly outperformed international stocks since 2009, so the recent shift to international stock outperformance has been notable.

One major positive for international stocks was that the U.S. dollar weakened during the quarter, which has the effect of increasing returns for U.S. based investors in unhedged non-U.S. stocks. In addition, the political and trade risks that were present at the beginning of the year faded as Europeans elections favored more moderate candidates.

U.S. earnings in the next 12 months were expected to be at a record high. However, earnings in both Europe and Emerging Markets remained far below their 2011 peaks. A long cyclical recovery in Europe and an improving banking system could lift European earnings while Emerging Market profits could rebound on firmer commodity prices. Both European and EM earnings appeared to have more room to grow earnings than in the U.S.

Low Volatility Continued

With strong earnings, low inflation and low interest rates, stocks remained calm for the quarter. The Volatility Index (known as the VIX), shows the market’s expectations of 30-day volatility. The VIX finished the quarter in the lowest 4% of all periods (see chart below[5]). The VIX had seven days below 10 so far this year, which is the same number of days below 10 as all prior years combined since inception in 1990[6].

In addition, the S&P 500 hasn’t experienced a 5% correction in over a year, which has only happened six other times since 1950[7]. Since 1950, the average yearly correction for the S&P 500 has been 13.6% (See graph below)[8]. Low volatility doesn’t mean that a correction is imminent. However, there is always the potential a larger correction could occur sometime later this year.

 

Broad Economic Growth

U.S. economic data was mostly positive and indicative of an ongoing expansion (although a slower than average expansion). Consumer confidence remained high and both manufacturing and service sectors remained strong throughout the quarter[9]. Unemployment data continued to be strong and inflation remained stable and low. One of the benefits of this slow growth environment is that it has helped keep inflation in check and the Federal Reserve accommodative. Both these factors have assisted in keeping the bull market going.

The positive economic data led to the Federal Reserve to raise short-term interest rates by a quarter point to 1.25% – their fourth rat hike since December 2015. One more interest rate hike was expected by investors for this year.

Economies outside of the U.S. had one of their best years in more than a half decade. All of the world’s top 20 economies were growing so far this year. This broader global growth boosted overall global trade, particularly in emerging market economies where exports are a large share of their economies. In fact, world trade was on track to post the best growth since 2010[10]. In addition, all of the world’s top 20 economies were on track to grow in 2017[11] (see chart below).

In recent months, there have been a few pockets of weakness in the cyclical sectors. Both Light vehicle sales and housing start slowed down this past quarter[12] (See charts below). This will be something to watch going forward.

If you have any questions or would like more information on how this affects your accounts, please contact us.

 

 

 

 

IMPORTANT DISCLOSURES

Leonard Rickey Investment Advisors, PLLC (“LRIA”), is an SEC registered investment adviser located in the State of Washington. Registration does not imply a certain level of skill or training. For information pertaining to the registration status of LRIA, please contact LRIA or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov).

This newsletter is provided for general information only and contains information that is not suitable for everyone. As such, nothing herein should be construed as the provision of specific investment advice or recommendations for any individual. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. All performance referenced herein is historical in nature and is not an indication of or a guarantee of future results. All indices are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Your experience may vary according to your individual circumstances and there can be no assurance that LRIA will be able to achieve similar results for all clients in comparable situations or that any particular strategy or investment will prove profitable.   As investment returns, inflation, taxes and other economic conditions vary, your actual results may vary significantly. There is no guarantee that the views and opinions expressed herein will come to pass. This newsletter contains information derived from third party sources. Although we believe these third party sources to be reliable, we make no representations as to the accuracy or completeness of any information prepared by any unaffiliated third party incorporated herein, and take no responsibility therefore.

Stock investing includes numerous specific risks including the fluctuations of dividend, loss of principal, and potential illiquidity of the investment in a falling market. International and emerging markets investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Small cap stocks may be subject to a higher degree of risk than more established companies’ securities. The illiquidity of the small cap market may adversely affect the value of these investments. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. This newsletter should not be regarded as a complete analysis of the subjects discussed.

Any projections, forecasts and estimates, including without limitation any statement using “expect” or “believe” or any variation of either term or a similar term, contained here are forward-looking statements and are based upon certain current assumptions, beliefs and expectations that LRIA considers reasonable or that the applicable third parties have identified as such. Forward-looking statements are necessarily speculative in nature, and it can be expected that some or all of the assumptions or beliefs underlying the forward-looking statements will not materialize or will vary significantly from actual results or outcomes. Some important factors that could cause actual results or outcomes to differ materially from those in any forward-looking statements include, among others, changes in interest rates and general economic conditions in the U.S. and globally, changes in the liquidity available in the market, change and volatility in the value of the U.S. dollar, market volatility and distressed credit markets, and other market, financial or legal uncertainties. Consequently, the inclusion of forward-looking statements herein should not be regarded as a representation by LRIA or any other person or entity of the outcomes or results that will be achieved by following any recommendations contained herein. While the forward-looking statements here reflect estimates, expectations and beliefs, they are not guarantees of future performance or outcomes. LRIA has no obligation to update or otherwise revise any forward-looking statements, including any revisions to reflect changes in economic conditions or other circumstances arising after the date hereof or to reflect the occurrence of events (whether anticipated or unanticipated), even if the underlying assumptions do not come to fruition. Opinions expressed herein are subject to change without notice and do not necessarily take into account the particular investment objectives, financial situations, or particular needs of all investors.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values and yields will decline as interest rates rise and bonds are subject to availability and change in price. The risks associated with investment-grade corporate bonds are considered significantly higher than those associated with first-class government bonds. The difference between rates for first-class government bonds and investment-grade bonds is called investment-grade spread. The range of this spread is an indicator of the market’s belief in the stability of the economy.

The fast price swings in commodities and currencies can result in significant volatility in an investor’s holdings.

There is no assurance that the techniques and strategies discussed are suitable for all investors or will yield positive outcomes. The

Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time.

The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

For additional information about LRIA, including fees and services, please contact us for our Form ADV disclosure brochure using our contact information herein. Please read the disclosure brochure carefully before you invest or send money.

 

INDEX DEFINITIONS

  • The Barclays Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment-grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.
  • The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.
  • The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. It cannot be invested into directly.
  • The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices of approximately 800 stocks and is designed to measure equity market performance in 23 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, , Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates.
  • The MSCI EAFE (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization index of approximately 900 stocks and is designed to measure equity market performance in 21 developed market countries outside of North America.
  • MSCI ACWI Index (All Cap World Index) is a market capitalization weighted index designed to provide a broad measure of equity-market performance throughout the world. It is comprised of stocks from both developed and emerging markets.
  • The MSCI World ex USA Investable Market Index (IMI) captures large, mid and small cap representation across 22 of 23 Developed Markets (DM) countries*–excluding the United States. With 3,508 constituents, the index covers approximately 99% of the free float-adjusted market capitalization in each country.
  • The MSCI USA Investable Market Index (IMI) is designed to measure the performance of the large, mid and small cap segments of the US market. With 2,473 constituents, the index covers approximately 99% of the free float-adjusted market capitalization in the US.
  • The MSCI Emerging Markets Investable Market Index (IMI) captures large, mid and small cap representation across 24 Emerging Markets (EM) countries*. With 2,687 constituents, the index covers approximately 99% of the free float-adjusted market capitalization in each country.
  • The Nasdaq Composite Index is the market capitalization-weighted index of approximately 3,000 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests.
  • The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold future. The index is designed to be tradable, readily accessible to market participants, and cost efficient to implement.
  • The S&P 500 Cons Discretionary Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® consumer discretionary sector.
  • The S&P 500 Cons Staples Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® consumer staples sector.
  • The S&P 500 Energy Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® energy sector.
  • The S&P 500 Financials Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® financials sector.
  • The S&P 500 Health Care Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® health care sector.
  • The S&P 500 Industrials Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® industrials sector.
  • The S&P 500 Materials Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® materials sector.
  • The S&P 500 Telecom Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® telecommunication services sector.
  • The S&P 500 Technology Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® information technology sector.
  • The S&P 500 Utilities Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® utilities sector.

 

 

 

[1] J.P. Morgan Asset Management

[2] Morningstar. Through March 31, 2017. All returns are in U.S. dollars (USD)

[3] Dimensional Fund Advisors. Graph Source: MSCI ACWI Index [net div]

[4] Dimensional Fund Advisors. Country performance based on respective indices in the MSCI World ex US IMI Index, MSCI USA IMI Index, and MSCI Emerging Markets IMI Index. All returns in USD [net div]

[5] StockCharts.com

[6] LPL Research

[7] LPL Research

[8] LPL Research, Factset.

[9] ISM Manufacturing Index, ISM non-Manufacturing Index

[10] J.P. Morgan Asset Management

[11] Schwab. Factset

[12] J.P. Morgan Asset Management

First Annual Leonard Rickey Founders Scholarship

Ben Rickey was honored to present our first annual Leonard Rickey Founders Scholarship through the West Valley Dollars for Scholars at West Valley High School in May.  Leonard was one of the founding members of the West Valley Dollars for Scholars in 1994. This years recipient is Jack Warren.

At the event, WVDFS awarded just under $60,000 in scholarships to youth in our community. The scholarship recipients were selected by the board with the help of class ranking, teacher appraisal, community activities and two short essays. It is a great organization to empower kids with the resources needed to tackle higher education.

We are proud to partner with this great organization and happy for our first recipient. Congratulations for your hard work and best of luck in your future endeavors!

NAPFA Conference

Last year, I joined the National Association of Personal Financial Advisors (NAPFA).  It is the country’s leading professional association of fee only financial advisors.  It requires substantial continuing education as well as adherence to a Code of Ethics and a yearly attestation to a Fiduciary Oath. It has been a tremendous resource for our entire Firm.  When they announced their National Conference was going to be in our backyard (Bellevue), I didn’t think I could pass it up.

The first day was dedicated to investor behavior.  We had professors from Kansas state and the University of Georgia run a workshop on how our behavior can get in the way of making good money decisions.  It was no surprise to me that they listed money as the number one stressor in America since 2007.  Felt good to know that the number one way to cope with that stress is to create a plan and number two is to implement it.

I had a great educational session on College planning and the benefits of deeply integrating tax planning with your investment management.  While neither of these topics are new by any means, it is always beneficial to sharpen the mental saw and stay on top of new developments.  There was also an excellent session on cyber-security.  We are planning on adapting it to a classroom session we intend to offer to clients and post on our website.

My favorite key note speaker was Vivek Wadhwa.  His talk centered on how America is re-inventing itself through innovation.  He spent time talking about the concept of exponential growth.  It is hard to think of things getting twice as good at the same time that they get half as expensive, but the examples are numerous – from computer memory to cell phones.  A very exciting look at the future with implications in the investment world as well as the economy in general.

I also like to take these opportunities to deepen my peer group.  By sharing ideas, we not only have the ability to have better outcomes for our clients, but we also have the ability to help advance the whole industry.   I was certainly not disappointed.  It is refreshing to see so many folks committed and truly passionate about offering fiduciary financial advice.  People committed to not just disclosing conflicts of interest, but doing everything they can to avoid them.  I had some great conversations on different tools and techniques to keep Leonard Rickey Investment Advisors at the forefront of the financial planning community.

For more information about criteria for NAPFA membership, please visit NAPFA.org

Rotary Friendship Award

Dirk Bernd received the Rotary Friendship & Fellowship Award for SW Rotary. The Rotarian Moto is Service Above Self. Dirk received this award in recognition for his many hours of volunteer work, including organizing a yearly blanket drive in the Yakima Valley. Dirk was nominated by his fellow club Rotarians and was presented his award along with a check for $105,000 for the new Chesterly Playground in Yakima.

We love when our Leonard Rickey Team gives back to our communities. Congratulations Dirk and thank you for your service!

Susan Completes Masters Program

Susan Van Tress recently completed the requirements to receive her Masters of Science Degree in Management and Leadership. The program was over 30 credits and included courses in Management Communication, Ethical Leadership, Data-Driven Decision Making and more.
Susan completed the program in under 2 years while juggling home life and the excellent work she does for our company. We strongly believe that education not only provides individual growth but provides experience and skills that help us continue to provide excellent care for our clients.

Congratulations Susan on this huge accomplishment!!

1st Quarter 2017 Commentary

Leonard Rickey Investment Advisors

Market Summary

The rally from the fourth quarter of last year continued into the start of the first quarter as investors continued to bet on the Trump administration’s policies to cut taxes, reduce regulation and increase infrastructure spending. U.S. stocks, as measured by the S&P 500 Index, were up over 6% and reached another new all-time high in the first quarter. Midway through the quarter, the S&P 500 pulled back after the failure to repeal and replace the Affordable Care Act (Obamacare). Investors’ doubts grew that the Republican majority in Congress could unite and enact other major policy changes.

Despite the political uncertainty, consumers and business around the globe seemed significantly more positive about the outlook than they were this time last year. In Europe, business surveys rose to their highest levels in over five years and consumer confidence recovered to pre-crisis highs[1]. This helped both international stocks and emerging market stocks outperform U.S. stocks last quarter. However, both still significantly trail U.S. stock returns over five and ten years. U.S. bonds traded in a tight range throughout the quarter and finished positive despite the Federal Reserve hiking short term interest rates by .25% to .75%. Here is a summary of returns for the major indexes[2]:

US Large Stocks

(S&P 500 TR)

US Small Stocks

(Russell 2000 TR)

International

(MSCI EAFE)

Emerging Markets

(MSCI EM)

US Bonds

(Barclays US Agg Bond TR)

1st Quarter 2017* 6.07% 2.47% 7.25% 11.45% .82%
3yr annualized* 10.37% 7.22% .5% 1.18% 2.68%
5yr annualized* 13.3% 12.35% 5.83% .81% 2.34%
10yr annualized* 7.51% 7.12% 1.05% 2.72% 4.27%

*Through March 31, 2017. All returns are in U.S. dollars. Source: Morningstar

 

Current Market Trends

Stocks continued their uptrend in the first quarter, although signs of weakness started to appear as the “Trump rally” started to fade in March. Both non-U.S. developed and Emerging Market stocks outperformed U.S. stocks for the quarter, with Emerging Market stocks leading the way. The change in the relative performance of Emerging Markets versus U.S. stocks was notable as they have significantly trailed U.S. stocks for the past six years. Below is a chart that compares the S&P 500 (U.S. stocks) index to the MSCI Emerging Markets index[3]. When the line goes up (from 2004-2011) it means Emerging Market outperformed U.S. stocks, when the line goes down (2011-2016) it means U.S. stocks outperformed. While the trend certainly hasn’t turned completely, the relative performance bottomed in early 2016 and again late last year.

 

Another notable trend during the quarter was the low stock market volatility. At one point during the quarter there was more than 100 days without a single one percent down day.  This was the longest such streak since 1995[4].

Finally, many of the so-called “Trump trades” that were hit hardest in the fourth quarter last year rallied in the first quarter as uncertainties grew over his policies. For example, emerging market stocks were down over 4% in the fourth quarter compared to up 11% this quarter; Mexican stocks were down over 9% last quarter compared to up 16% this quarter; U.S. Healthcare stocks were down over 4% in the fourth quarter compared to up over 8% this quarter; and Gold was down over 13% in the fourth quarter compared to up over 8% this quarter.[5]

Economic Update

While U.S. political issues dominated the headlines during the quarter, the economy continued to grow at a positive but slow pace. Economic data like inflation, unemployment, wage growth and manufacturing were generally strong during the quarter. The strong economic reports led to the Federal Reserve to raise short-term interest rates to .75%. This marked the third interest rate hike in the last 16 months (See chart below)[6]. The Fed indicated that they will raise rates slower than past cycle. Another two rate hikes were expected by investors for this year.

While the economic backdrop showed signs of improvement, the “soft” data derived from surveys of consumers and producers that indicate how they feel, was a lot stronger than “hard” data. “Hard” data, such as employment, durable goods orders, and housing starts numbers revealed the actual levels of economic activity. These were generally positive during the quarter but not as strong as “soft” data such as consumer sentiment readings, which were near multi-year highs (see chart below)[7].

One notable positive indicator in the “hard” data category was the Leading Economic Indicators Index (LEI), which made a new all-time high during the first quarter. This topped the previous peak from March 2006[8]. The LEI looks at 10 diverse economic indicators and has historically provided early warnings of recession.

The soft data includes the ISM Manufacturing Index and the Consumer Confidence Index, which both came in strong during the quarter. The ISM Manufacturing Index is obtained from a survey of manufacturing supply executives, and the Consumer Confidence Index is a survey that attempts to measure consumers’ assessment of current business and economic conditions. The Consumer Confidence Index finished near 15 year highs while the ISM Manufacturing Index was near it’s high of the past 7 years (See charts below). However, questions remained if these high readings will lead to higher economic growth or if expectations are too high.

Corporate Fundamentals

U.S. stock market valuations remained high during the quarter. Below is chart showing the Price to Sales (P/S) ratio of the S&P 500 over the last 60 years[9]. The P/S ratio is a popular metric that compares current prices to revenues. The higher the ratio the more an investor pays for the revenues of the S&P 500 companies. During the quarter, the P/S ratio was well above its historical average and near its all-time highs. When the P/S ratio is this high, future stock returns have historically been well below average (see yellow highlighted area).

Corporate balance sheets remained strong as many companies had a high cash balance as a percentage of their assets[10].

However, recently we’ve seen companies take on significantly more debt which may make them more vulnerable to rising interest rates. Debt isn’t necessarily a bad thing as long as interest rates remain low. However, if rates rise corporate interest expense will likely rise and cut into profit margins. In addition, a high debt balance may make it more difficult for a company to refinance and could increase the likelihood of bankruptcy.

Below are two charts showing the increasing debt on company’s balance sheets. The first one measures debt against Earnings[11] (EBITDA stands for Earnings Before Interest Taxes Depreciation and Amortization) and the second chart measures debt against U.S. Gross Domestic Product[12].

If you have any questions or would like more information on how this affects your accounts, please contact us.

 

IMPORTANT DISCLOSURES

Leonard Rickey Investment Advisors, PLLC (“LRIA”), is an SEC registered investment adviser located in the State of Washington. Registration does not imply a certain level of skill or training. For information pertaining to the registration status of LRIA, please contact LRIA or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov).

This newsletter is provided for general information only and contains information that is not suitable for everyone. As such, nothing herein should be construed as the provision of specific investment advice or recommendations for any individual.  To determine which investments may be appropriate for you, consult your financial advisor prior to investing. All performance referenced herein is historical in nature and is not an indication of or a guarantee of future results. All indices are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Your experience may vary according to your individual circumstances and there can be no assurance that LRIA will be able to achieve similar results for all clients in comparable situations or that any particular strategy or investment will prove profitable.   As investment returns, inflation, taxes and other economic conditions vary, your actual results may vary significantly. There is no guarantee that the views and opinions expressed herein will come to pass. This newsletter contains information derived from third party sources. Although we believe these third party sources to be reliable, we make no representations as to the accuracy or completeness of any information prepared by any unaffiliated third party incorporated herein, and take no responsibility therefore.

Stock investing includes numerous specific risks including the fluctuations of dividend, loss of principal, and potential illiquidity of the investment in a falling market. International and emerging markets investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Small cap stocks may be subject to a higher degree of risk than more established companies’ securities. The illiquidity of the small cap market may adversely affect the value of these investments. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. This newsletter should not be regarded as a complete analysis of the subjects discussed.

Any projections, forecasts and estimates, including without limitation any statement using “expect” or “believe” or any variation of either term or a similar term, contained here are forward-looking statements and are based upon certain current assumptions, beliefs and expectations that LRIA considers reasonable or that the applicable third parties have identified as such. Forward-looking statements are necessarily speculative in nature, and it can be expected that some or all of the assumptions or beliefs underlying the forward-looking statements will not materialize or will vary significantly from actual results or outcomes. Some important factors that could cause actual results or outcomes to differ materially from those in any forward-looking statements include, among others, changes in interest rates and general economic conditions in the U.S. and globally, changes in the liquidity available in the market, change and volatility in the value of the U.S. dollar, market volatility and distressed credit markets, and other market, financial or legal uncertainties. Consequently, the inclusion of forward-looking statements herein should not be regarded as a representation by LRIA or any other person or entity of the outcomes or results that will be achieved by following any recommendations contained herein. While the forward-looking statements here reflect estimates, expectations and beliefs, they are not guarantees of future performance or outcomes. LRIA has no obligation to update or otherwise revise any forward-looking statements, including any revisions to reflect changes in economic conditions or other circumstances arising after the date hereof or to reflect the occurrence of events (whether anticipated or unanticipated), even if the underlying assumptions do not come to fruition. Opinions expressed herein are subject to change without notice and do not necessarily take into account the particular investment objectives, financial situations, or particular needs of all investors.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values and yields will decline as interest rates rise and bonds are subject to availability and change in price. The risks associated with investment-grade corporate bonds are considered significantly higher than those associated with first-class government bonds. The difference between rates for first-class government bonds and investment-grade bonds is called investment-grade spread. The range of this spread is an indicator of the market’s belief in the stability of the economy.

The fast price swings in commodities and currencies can result in significant volatility in an investor’s holdings.

There is no assurance that the techniques and strategies discussed are suitable for all investors or will yield positive outcomes. The

Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time.

The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

For additional information about LRIA, including fees and services, please contact us for our Form ADV disclosure brochure using our contact information herein. Please read the disclosure brochure carefully before you invest or send money.

INDEX DEFINITIONS

The Barclays Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment-grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. It cannot be invested into directly.

The MSCI Emerging Markets Index is a float-adjusted market capitalization index that consists of indices of approximately 800 stocks and is designed to measure equity market performance in 23 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, , Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and the United Arab Emirates.

The MSCI EAFE (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization index of approximately 900 stocks and is designed to measure equity market performance in 21 developed market countries outside of North America.

The Nasdaq Composite Index is the market capitalization-weighted index of approximately 3,000 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests.

The MSCI Mexico Index is designed to measure the performance of the large and mid cap segments of the Mexican market. With 27 constituents, the index covers approximately 85% of the free float-adjusted market capitalization in Mexico.

The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold future. The index is designed to be tradable, readily accessible to market participants, and cost efficient to implement.

The S&P 500 Cons Discretionary Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® consumer discretionary sector. 

The S&P 500 Cons Staples Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® consumer staples sector. 

The S&P 500 Energy Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® energy sector. 

The S&P 500 Financials Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® financials sector. 

The S&P 500 Health Care Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® health care sector. 

The S&P 500 Industrials Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® industrials sector. 

The S&P 500 Materials Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® materials sector. 

The S&P 500 Telecom Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® telecommunication services sector. 

The S&P 500 Technology Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® information technology sector. 

The S&P 500 Utilities Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® utilities sector. 

[1] JPMorgan Asset Management

[2] Morningstar

[3] StockCharts.com

[4] LPL Research

[5] Morningstar

[6] JPMorgan Asset Management

[7] Bloomberg, Morgan Stanley Research

[8] LPL Research

[9] Ned Davis Research

[10] JPMorgan Asset Management

[11] Thomson Reuters, Barclays Research

[12] JPMorgan Asset Management

Ben at LINC Conference

 

Pictured above, Ben Rickey with former Prime Minister, David Cameron

Ben Rickey recently returned from the LINC TD Ameritrade conference held in San Diego, California. This conference provides advisers with opportunities to learn about the latest industry trends and business solutions. Keynote headliners included former Prime Minister David Cameron and cybersecurity expert Keren Elazari. In addition, Ben attended breakout sessions that gave insight into new technology and planning solutions that we believe will help us continue to provide excellent service to our clients.  

4th Quarter 2016 Commentary LRIA

 

·       President-elect Donald Trump’s election win had a big effect on the financial markets

·       U.S. stocks hit to new all-time highs while other classes like gold, bonds and non-U.S. stocks suffered after Trump’s win

·       The trend in U.S. stocks remained positive. Non-U.S. earnings started to pick up and investors expected increased earnings growth in 2017

·       Investors sentiment was bullish suggesting that stocks may be more vulnerable to a correction

·       The current U.S. economic expansion is the fourth longest in our history. The expansion has been one of the slowest on record but there were few signs of imbalances in the economy

Market Summary

U.S. stocks, as measured by the S&P 500 Index, reached new all-time highs in the 4th quarter. Investors were hopeful that President-elect Donald Trump will implement pro-growth policy changes including lowering taxes, reducing business regulation and increasing government spending. This quarter marked the third quarter in a row that U.S. stocks hit new all-time highs. Non-U.S. stocks have not fared as well recently and underperformed during the quarter. This was the fourth year in a row that U.S. stocks outperformed both Emerging Markets and Developed International stocks. 2016 marked the eighth consecutive year of positive performance on the S&P 500. U.S. stocks have greatly outperformed non-U.S. stocks during this time but we started to see signs of non-U.S. stocks making a comeback.

The yield on the 10-year U.S. Treasury bond went from 1.60 percent at the beginning of the 4th quarter to 2.45 percent by year-end[1]. The increase in yields resulted primarily from increased expectations for rising inflation going forward and the Federal Reserve’s move to hike interest rates in December. The Federal Reserve raised interest rates .25% to .5%. This was only the second time in eight years that the Federal Reserve raised rates. Here is a summary of returns for the major indexes:

US Large Stocks

(S&P 500 TR)

US Small Stocks

(Russell 2000 TR)

International

(MSCI EAFE)

Emerging Markets

(MSCI EM)

US Bonds

(Barclays US Agg Bond TR)

4th Quarter 2016 3.82% 8.83%

-.71%

-4.16% -2.98%
2016 11.96% 21.31% 1.0% 11.19% 2.65%
3yr annualized* 8.87% 6.74% -1.6% -2.55% 3.03%
5yr annualized* 14.66% 14.46% 6.53% 1.28% 2.23%
10yr annualized* 6.95% 7.07% .75% 1.84%

4.34%

*Through December 31, 2016. All returns are in U.S. dollars. Source: Morningstar

“The main purpose of the stock market is to make fools out of as many men as possible.” Bernard Baruch

Many men were made fools after Donald Trump’s surprise win and the ensuing stock market rally. Most polls predicted that Trump would lose the election and most predicted that the stock market would tank if he won. Immediately following the U.S. elections, the Dow Jones Industrial Average index set a new record high. Within several weeks of the election, the S&P 500 index, the technology-heavy Nasdaq index, and the small company Russell 2000 index all followed the Dow Jones lead, and achieved new all-time highs. Investors were clearly bullish, as the new narrative suggested Trump’s policies will be good for U.S. stocks. Other asset classes like bonds, gold, non-U.S. currencies and non-U.S. stocks, which had all performed well up to the election, suffered after the election.

Few thought a Trump victory would happen, but it did. Few thought “Brexit” would happen, but it did. And few thought stocks would rally after each of these events, but they did. While we’re certainly happy with the market’s gains, Trump’s election and “Brexit” re-affirmed our belief that predicting stock performance is a fool’s game and that our time is better spent focusing on things we can control.

2016: A Tale of Two Halves

The year started off with one of the worst performances in history. The S&P 500 was down 4.9% in the first four days of trading and by February 11, the S&P 500 was down 10.5%. U.S. stocks quickly recovered to new all-time highs by April as defensive sectors led the way. Sectors such as Utilities, Consumer Staples and Telecommunications performed very well while more cyclical sectors such as Financials, Technology and Consumer Discretionary underperformed. This trend reversed in the second half of the year, particularly after the U.S. election. Financials, Technology & Industrials led the market in the second half. Below is a breakdown of sector returns for the year[2].

In addition to sectors divergence we saw a large reversal in interest rates beginning in July. Below is a chart of the 10 year US Treasury yield last year[3]. Yields came down to near all-time lows of 1.4% in July and then moved higher to finish the year at 2.45%. Rates are still toward the lower end of their historical range but we could see rates begin to move higher in 2017.

Current Market Trends

The overall trend in the U.S. stock market finished the quarter in healthy shape. Both U.S. large cap and small cap stocks finished the year near their all-time highs. At one point in December, over 80% of industry groups were in up-trends[4], a sign of healthy breadth in the stock market. The trend in non-U.S. stocks is mixed. Developed International stocks were in a flat trend in 2016 while Emerging Markets stocks were up over 11% last year. Despite a poor fourth quarter performance, the trend in Emerging Market stocks was positive for most of 2016. We saw earnings in non-U.S. stocks increase throughout the year and investor expectations were for earnings to increase more in 2017[5].

Current Market Sentiment

The rally to new highs in U.S. stocks produced a surge in optimism that was evident across multiple sentiment indicators. Sentiment indicators attempt to gauge the current mood of investors. Generally, extremely bullish sentiment is a signal of an overextended stock market that may be more vulnerable to a correction. Just like extremely bullish sentiment may be a signal for a correction, extremely bearish sentiment may be a signal for a market rebound. One prominent indicator is the American Association of Individual Investors poll. It measures the percentage of individual investors who are bullish. It can be a noisy indicator, but the latest reading came in near 45%, near the highs of the last 10 years[6].

Another sentiment indicator is the Advisors Sentiment report. It surveys the market views of over 100 independent investment newsletters. As of the end of the quarter, there were three time as many bullish advisors as there were bearish advisors. The chart below shows that this near the highs of its history[7].

In addition, consumer confidence finished the quarter near recent highs. Consumer confidence polls attempt to measure how consumers feel about the general state of the economy and their personal financial situation. If confidence is high, consumers tend to spend more than if confidence is low. The Conference Board Consumer Confidence Index was at its highest level since 2001 (blue line below) and the NFIB Small Business Economic Trends Index finished 2016 near its highs of the last ten years (red line below)[8].

Economic Update

One of the longest (and slowest) expansions in U.S. history continued in 2016. The economic expansion has lasted 90 months, making it the fourth longest since 1900. However, it has also been one of the slowest expansions in U.S. history. The chart below clearly demonstrates the slow recovery of this expansion (light blue line in the current expansion)[9]

Some worried that the current recovery has lasted too long, and the U.S. was due for a recession. Although we are likely closer to the end of this cycle than the beginning, the current U.S. expansion continued to show that age is nothing but a number. Several countries, including the U.S., have enjoyed significantly longer expansions in the past (See chart below).[10] A few of the positive signs in the economy were a low unemployment rate, low inflation, increased wage growth and increased home prices[11]. Overall, there were few signs of imbalances building in the economy and reason to believe the expansion can continue.

Planning in 2017

With the elections resulting in Republican control of the White House, the Senate and the House, there is a lot of speculation on major tax changes in 2017. We don’t want to speculate at this point and will review any planning opportunities if and when laws change.

Below are a few updated figures for 2017 account contribution limits for pertinent retirement and other savings vehicles.

  • IRA/Roth IRA Contribution limits: $5,500 ($1,000 catch-up for 50 & older)
  • 401(k) Contribution: $18,000 ($6,000 catch-up for 50 & older)
  • HSA Contribution: $6,750 for family health coverage, $3,400 for Individuals ($1,000 catch-up for 55 & older)If you have any questions or would like more information on how this affects your accounts, please contact us.

 

[1] Yahoo! Finance

[2] Data provided by Morningstar

[3] Stockcharts.com

[4] Willie Delwich, CMT, Baird & Co

[5] LPL Research

[6] StockCharts.com

[7] Yardeni Research

[8] Advisor Perspectives

[9] JPMorgan, Guide to the Markets 1st Quarter 2017

[10] Capital Group

[11] Federal Reserve Economic Data

IMPORTANT DISCLOSURES

Leonard Rickey Investment Advisors, PLLC (“LRIA”), is an SEC registered investment adviser located in the State of Washington. Registration does not imply a certain level of skill or training. For information pertaining to the registration status of LRIA, please contact LRIA or refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov).

This newsletter is provided for general information only and contains information that is not suitable for everyone. As such, nothing herein should be construed as the provision of specific investment advice or recommendations for any individual. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Past performance is no guarantee of future results. Your experience may vary according to your individual circumstances and there can be no assurance that LRIA will be able to achieve similar results for all clients in comparable situations or that any particular strategy or investment will prove profitable.   As investment returns, inflation, taxes and other economic conditions vary, your actual results may vary significantly. There is no guarantee that the views and opinions expressed herein will come to pass. This newsletter contains information derived from third party sources. Although we believe these third party sources to be reliable, we make no representations as to the accuracy or completeness of any information prepared by any unaffiliated third party incorporated herein, and take no responsibility therefore.

Stock investing includes numerous specific risks including the fluctuations of dividend, loss of principal, and potential illiquidity of the investment in a falling market. International and emerging markets investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Small cap stocks may be subject to a higher degree of risk than more established companies’ securities. The illiquidity of the small cap market may adversely affect the value of these investments. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. This newsletter should not be regarded as a complete analysis of the subjects discussed.

Any projections, forecasts and estimates, including without limitation any statement using “expect” or “believe” or any variation of either term or a similar term, contained here are forward-looking statements and are based upon certain current assumptions, beliefs and expectations that LRIA considers reasonable or that the applicable third parties have identified as such. Forward-looking statements are necessarily speculative in nature, and it can be expected that some or all of the assumptions or beliefs underlying the forward-looking statements will not materialize or will vary significantly from actual results or outcomes. Some important factors that could cause actual results or outcomes to differ materially from those in any forward-looking statements include, among others, changes in interest rates and general economic conditions in the U.S. and globally, changes in the liquidity available in the market, change and volatility in the value of the U.S. dollar, market volatility and distressed credit markets, and other market, financial or legal uncertainties. Consequently, the inclusion of forward-looking statements herein should not be regarded as a representation by LRIA or any other person or entity of the outcomes or results that will be achieved by following any recommendations contained herein. While the forward-looking statements here reflect estimates, expectations and beliefs, they are not guarantees of future performance or outcomes. LRIA has no obligation to update or otherwise revise any forward-looking statements, including any revisions to reflect changes in economic conditions or other circumstances arising after the date hereof or to reflect the occurrence of events (whether anticipated or unanticipated), even if the underlying assumptions do not come to fruition. Opinions expressed herein are subject to change without notice and do not necessarily take into account the particular investment objectives, financial situations, or particular needs of all investors.

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values and yields will decline as interest rates rise and bonds are subject to availability and change in price. The risks associated with investment-grade corporate bonds are considered significantly higher than those associated with first-class government bonds. The difference between rates for first-class government bonds and investment-grade bonds is called investment-grade spread. The range of this spread is an indicator of the market’s belief in the stability of the economy.

The fast price swings in commodities and currencies can result in significant volatility in an investor’s holdings.

There is no assurance that the techniques and strategies discussed are suitable for all investors or will yield positive outcomes. The

Value investments can perform differently from the market as a whole. They can remain undervalued by the market for long periods of time.

The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

For additional information about LRIA, including fees and services, send for our disclosure statement as set forth on Form ADV using our contact information herein. Please read the disclosure statement carefully before you invest or send money.

INDEX DEFINITIONS

The Barclays Aggregate Bond Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers the U.S. investment-grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.

The Russell 2000 Index is an unmanaged index generally representative of the 2,000 smallest companies in the Russell Index, which represents approximately 10% of the total market capitalization of the Russell 3000 Index.

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. It cannot be invested into directly.

The MSCI EM Index is a float-adjusted market capitalization index that consists of indices of approximately 800 stocks and is designed to measure equity market performance in 23 emerging economies: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, and Turkey.

The MSCI EAFE (Europe, Australasia, Far East) Index is a free float-adjusted market capitalization index of approximately 900 stocks and is designed to measure equity market performance in 21 developed market countries outside of North America.

The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange (NYSE) and the NASDAQ.

The Nasdaq Composite Index is the market capitalization-weighted index of approximately 3,000 common equities listed on the Nasdaq stock exchange. The types of securities in the index include American depositary receipts, common stocks, real estate investment trusts (REITs) and tracking stocks, as well as limited partnership interests.

The S&P 500 Cons Discretionary Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® consumer discretionary sector.

The S&P 500 Cons Staples Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® consumer staples sector.

The S&P 500 Energy Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® energy sector.

The S&P 500 Financials Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® financials sector.

The S&P 500 Health Care Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® health care sector.

The S&P 500 Industrials Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® industrials sector.

The S&P 500 Materials Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® materials sector.

The S&P 500 Telecom Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® telecommunication services sector

The S&P 500 Technology Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® information technology sector.

The S&P 500 Utilities Index is a market cap weighted index comprised of those companies included in the S&P 500 that are classified as member of GICS® utilities sector.

 

 

 

 

 

 

 

 

 

 

 

2017 Key Tax Information

It’s a brand new year and before you know it, it will be time to start working on your taxes. Whether you anticipate a refund coming and plan to file as soon as possible, or you’re going to wait until the last minute to delay paying a hefty tax bill, tax season always involves collecting necessary documents and then using them to prepare a timely return.

This year the IRS will begin processing 2016 returns on January 23rd, 2017.  In order to complete your tax return you will need to receive a 1099R if any money came out of your IRA and a 1099 for any non-retirement accounts.  In addition, pick up your free copy of our 2017 Key Tax Information guide at our Richland or Yakima offices, or click on the link below to download a copy.

2017_Key_Financial_Data

Proposed Taxes in 2017

Proposed Taxes in 2017

One of the biggest financial implications of the 2016 election outcome could be the potential effect on tax legislation.  2017 could be the first year of major tax reform in quite some time.  It remains to be seen if any of the potential changes being discussed have a chance to be implemented; however, there are proposals by the Republican House of Representative members and President-elect Trump that are designed to reduce the number of tax brackets, restructure capital gains treatment and increase the standard deduction. For most married taxpayers filing jointly, these changes, if adopted,  would result in Lower income taxes in 2017.

Currently, we have a seven tiered tax bracket system.  The House and Trump proposals seek to reduce this number to three tax brackets: 12%, 25% and 33% – a far cry from the current top marginal bracket of 39.6%.  We are expecting to see the size of the brackets in the single taxpayer bracket decline, resulting in potentially higher taxes.  There is also no “head of household” designation in either proposals.

In the area of capital gains, there could be a couple of changes.  Both the incoming Trump administration and the House Republican proposals seek to eliminate the 3.8% net investment income tax on passive income over $250,000 for those married couples filing jointly.   This tax was added to the existing 0%, 15% and 20% long term capital gains rates based on a taxpayer’s bracket.  Under president-elect Trump’s proposal, the 0%, 15% and 20% brackets would stay in place.  Under the House Republican plan, we would move to 6%, 12.5% and 16% capital gains rates.

There may also be implications for standard deductions in 2017.  The proposals include raising the standard deduction to $12,000 for single taxpayers and $24,000 for married taxpayers under the House Republican plan and $15,000 and $30,0000 respectively under Trump’s plan.  This is a big jump from the $6,300 for individuals and $12,600 for couples in 2016.

With these larger standard deductions in mind, however come proposals to limit itemized deductions.  President-elect Trump’s proposal caps itemized deductions at $100,000 for single and $200,000 for couples while the GOP bill would eliminate virtually all deductions save charitable deductions and mortgage interest.  If you are considering major charitable contributions in the next couple of years, this may be a reason to accelerate those contributions in 2016.

This is just a quick summary of what 2017 planning could look like and what we are watching in the coming months.  These proposals have impacted our advice to defer income, make Roth conversions and accelerate the timing of charitable contributions for appropriate clients.  If you have questions or would like to see how this fits into your plan, please contact our office.

 

 

Leonard Rickey Investment Advisors, PLLC (“LRIA”) is an SEC-registered investment adviser located in the State of Washington. LRIA may only transact business in those states in which it is notice filed, or qualifies for an exemption or exclusion from notice filing requirements. For information pertaining to the registration status of LRIA, please contact the SEC on its website at www.adviserinfo.sec.gov. A copy of LRIA’s current written disclosure brochure discussing the firm’s business operations, services and fees is available from LRIA upon request.  References herein to LRIA as a “registered investment adviser” or any reference to being “registered” does not imply a certain level of skill or training.

Please Note: The information contained herein is provided for informational and educational purposes only and it’s contents represent only a summary of the topics discussed. This newsletter contains information for third party sources. Although believed to be reliable, we make no representations as to the accuracy, completeness, or timeliness of any information prepared by an unaffiliated third party, whether linked to or incorporated herein, and take no responsibility therefore. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site.  When you access one of these web sites you assume total responsibility and risk for your use of the web sites you are  linking to. 

The information contained herein should not be construed as the provision of personalized investment advice. Your experience may vary according to your individual circumstances and there is no guarantee the views and opinions expressed herein will come to pass. Information contained herein is subject to change without notice and should not be considered a solicitation to buy or sell any security. To determine which investments may be appropriate for you, consult your financial adviser prior to investing. This information does not constitute legal or tax advice and is not intended to be a substitute for specific individualized legal or tax advice. We suggest that you discuss your specific legal or tax issues with a qualified tax adviser or attorney.  Additionally, this document contains forward-looking statements that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. Readers are cautioned not to place undue reliance on forward looking statements, which speak only as of their dates. This document should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change without prior notice. 

To the extent you are receiving investment advice from a separately registered independent investment adviser, please note that LRIA is not an affiliate of and makes no representation with respect to such entity. Past performance is no guarantee of future results.