Second Half of 2018
The year started off with a sprint to all-time highs for most US Equity indexes. That very quickly evaporated in late January and early February with a nearly 12% correction. The markets have stayed within the range of these highs and lows the rest of the first half of the year.
A couple of areas of strength have been the small and mid-cap stocks as earnings continue to be strong and most companies may not have direct exposure to possible trade tariffs like the larger, multi-national companies. We expect this trend to continue.
Growth stocks continue to outperform value quite significantly, however, we are finding opportunities in the value space, especially in the mid cap area. We have also been selectively adding to financials, energy and healthcare. On the growth side, technology remains a long term favorite but the summer may see some consolidation of the previous year's large gains.
There is no change to our view that yields on fixed income will continue to climb longer term but at a modest pace short term.
The best profit growth in many years, along with modest inflation, low unemployment, low historical interest rates and modestly rising wages will be a larger influence on stuck prices than the numerous "worries" of the day.
We believe the future remains bright and are investing accordingly. I will be attending the Raymond James Summer Development Conference in late July and I am sure I will have numerous ideas to share.
We very much appreciate our current relationships and their loyalty and trust.
Best regards,
Ken
Views expressed are not necessarily those of Raymond James & Associates and are subject to change without notice. Information contained herein was received from sources believed to be reliable, but accuracy is not guaranteed. Information provided is general in nature, and is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Past performance is not indicative of future results. There is no assurance these trends will continue or that forecasts mentioned will occur. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success.
The S&P 500 is an unmanaged index of 500 widely held stocks. It is not possible to invest directly in an index. Gross Domestic Product (GDP) is the annual market value of all goods and services produced domestically by the US. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices rise. Diversification and asset allocation do not ensure a profit or protect against a loss.
