Market Commentary June 2015

The continuing saga of absolutely nothing happening…

While I haven’t confirmed it, I’ve recently heard it said that the past few months have been some of the slowest, “go-nowhere” months that the stock market has seen in approximately 15 years. If you recall our chart from last month’s newsletter, this month’s chart shows the continuation of the trading range that we’ve been in. While the S&P 500 did pop up above the top line for a moment, back into the range we went (see below).

Economics – while the US economy’s growth remains positive (meaning we are not yet heading for recession), what little growth showing is nearly non-existent.
SP500Daily June It also looks possible that the FED will put off raising rates even longer than expected, partially due to this lack of growth. Either way, “lack of growth” seems to be the theme for the year.

To take a positive view, we believe there could be a little more room to run UP before another “bear” market takes place. All we are missing is the “euphoric” surge that often signals the end of a “bull” market. What is interesting is that China’s stock market is currently in that stage, looking much like the US NASDAQ did at the lofty heights of the 2000 tech boom! We all know how that story ended…not well.

The (above) Chart is the Daily S&P 500 From January 1 to June 4

Sectors – not much has changed as to which sectors are showing the most strength and promise. It should come as no surprise that Healthcare and Biotechnology are still leading the way. Close behind are the general Technology and Consumer Goods (and Services) sectors.

Bonds – we are finding that the bond market is very mixed this year. There are bright spots as well as dark. As of June 1st, we made adjustments to our bond holdings away from what we perceive to be troubled durations, and into more promising areas. Our thought is that we don’t want to throw out the good with the bad when it comes to bonds. There are still opportunities out there. Much like what we do among Sectors, we like to stick with what we believe is working.

Fun Fact of the Month: Graduation Time!
The CFP Board conducted a study in September 2014 to compare parents’ college savings and debt to their children’s existing or upcoming college savings and debt. They found that 1/3 of parents are currently prevented from saving for their children’s higher education due to their own remaining debt. Parents age 18-39 are significantly more likely to report this restriction in saving (42% vs. 24% of parents age 40+). Older parents (age 50+) reported having paid off their own student debt, allowing them to fund their children’s college expenses without having to borrow. The moral of the story: paying off student debt while you’re young affords greater opportunities, not only for you, but also for your family.

We hope everyone has a great start to their summer vacations now that school is out!