News & Information
1st Quarter 2017 in Review

The first quarter of the year saw many indexes hit new highs and then back off after the Federal Reserve raised rates. Since the election, the stock market has been running on hope of a better economy. The bond market has also been affected but instead of rising in price, bonds fell as inflation expectations rose.

After eight years of rising markets, investors have become accustomed to low volatility and rising prices. This has led to many becoming more aggressive which is seen in record levels of margin debt (borrowing to buy stocks). It is also seen in high valuations for stocks which are seemingly ignored as a warning sign. We believe the market is in a topping pattern and being conservative is a prudent approach. In the fable of the Tortoise and the Hare, the Tortoise always wins.

Market Outlook

Economic optimism is high. CEOs, consumers and builders are all reporting the highest levels of optimism in at least the last 11 years. The manufacturing area has indeed seen a rebound, and home prices have been rising.

Overall, we suggest a cautious approach to bonds, focusing on shorter term, Treasury Inflation Protected Securities (TIPS) and Floating Rate bonds. We believe bargain stocks should do relatively well in the current environment and active portfolio management will show its value.


* S&P 500 is a leading indicator of US equities and is meant to reflect the risk/return characteristics of the large cap universe. Dow Jones Industrial Average is a priceweighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. Typical Stock refers to median stock in the JIR universe which follows over 8,000 stocks.

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