Mid-Year 2017 Financial Update

As July, 2017 has begun; one-half of 2017 has already past. And for the financial markets, 2017 has been good so far.

We emphasize that you should focus on the long-term, not the day-day or month-month financial market moves. However, an update at this point can be informative.

If you are a client of our firm, your accounts would have increased in the first half of 2017, so you are making progress toward your financial goals.

Diversification is always working….as 2017 has shown.

As we recommend a globally diversified portfolio, with an appropriate allocation of fixed income (based on your need, desire and willingness for risk), your portfolio’s gains were helped by very strong International and Emerging Market gains. Increases in US Large company stocks were strong. US small value, a top performer in 2016, had very small losses for the first 6 months of 2017.


There has been a lack of volatility in US markets for over a year. There have been very few days over the past year when the S&P 500 (an index of the 500 largest US based stocks) declined more than 1%. The S&P 500 went 110 days without a decline of more than 1% prior to March 21, 2017. This is the longest period without a 1% daily decline of the S&P 500 since May, 1995.

Why is this relevant? Because intra-year declines of around 10-14% are normal within most calendar years….and there has not been a decline of this nature in over a year.

Over the past 70 years, there have been 57 “corrections” of the S&P 500, where the S&P 500 index has declined more than 10%. That is an average of one every 15 months.

Other updates:

  • The price of crude oil has dropped significantly from January 1, from $57 per barrel to the mid-$40s per barrel, a decline of over 20%. Oil company stocks and energy master limited partnerships are again significantly trailing major market indexes and most have lost value in 2017.
  • Interest rates have increased over the past year.
    • The 10 year US Treasury Note has increased from 1.37% to 2.33% over the past 12 months, but is actually slightly lower than when the year began.
    • The 2 year US Treasury Note has increased from .6% to 1.4% over the past 12 months and slightly increased from 1.2% in January.
  • There has been no significant or measurable progress on corporate or personal income tax reform. The goal is still for legislation to be enacted by the end of 2017, but that may be dependent on passing health care reform.

You should focus on things that matter to you and things which you can control.

Most of what is discussed above is beyond your control, with the major exception of your decision to work with our firm and to adopt our rational investment philosophy, which is to invest in stocks using a very low-cost, globally diversified investment strategy.

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