One of the best parts of our job here at Shadowridge is seeing clients reach major financial goals in their lives. Earlier this month, we saw a client realize their net worth had exceeded $1 Million (Assets – Liabilities = Net worth). It wasn’t an overnight success; rather, the summation of many small but meaningful activities. For this client, that summation resulted in the achievement of a milestone, and we were excited to share in their celebration. We can only give guidance and direction along the way; it comes down to the individual to make the smart choices that lead to reaching their goals. There is no magic formula. Just consistent effort and diligence.
While the S&P 500 did touch new highs in June, it wasn’t a huge jump past the previous highs set in March of this year. It seems to us that the biggest weight on the overall market this year has been the energy sector – where many of the stocks that make up that sector have been hitting new 52 week lows (cnbc.com).
What we seem to be watching most this year is the relationship between Large Cap Growth and Large Cap Value. In the chart below, this relationship is shown by the top black line. When Growth leads, the line moves up. When Value leads, the line moves down. What this shows us is that, while Large Cap Value did have a nice run recently, we see the Large Cap Growth side has remained steady and consistent since the start of 2017.
Bonds – the Federal Reserve raised interest rates again in June, as was generally expected. However, the 0.25% increase has not created much of a reaction in the bond market. The value of US Treasury bonds have actually increased since the announcement…a bit unusual.
The big picture – technology and large cap growth remain the leaders this year, which has been where our investment has been focused. While other parts of the market (small cap, value, etc.) have tried to keep up, one event or another has kept them fairly neutral. We believe that if more sectors of the market, specifically Financials and Energy, could improve their performance, then the overall market would rise much faster than it has been rising so far this year. And of course, that could help everyone. As always, we’re keeping an eye on these (and other factors) and are ready to make changes should the need or situation arise.
1 The Standard and Poor’s 500 is an unmanaged, capitalization weighted benchmark that tracks broad-based changes in the U.S. stock market. This index of 500 common stocks is comprised of 400 industrial, 20 transportation, 40 utility, and 40 financial companies representing major U.S. industry sectors. The index is calculated on a total return basis with dividends reinvested and is not available for direct investment.