Happy New Year!
The old cliché’ is that the time goes by faster as you get older. Well, I seem to have reached the age where Father Time feels like he’s running at full speed. I hope that you had a warm and wonderful holiday season. We’d like to start this year with a wish for a happy, healthy, and prosperous 2017 for all of us!
2016 was quite a year. When I looked back at the news stories that made headlines this year, it was pretty amazing. Obviously, the presidential campaign and the election were the stories that gained most of the attention throughout the year; but there were plenty of other headlines that were of interest.
Sadly, several terrorist attacks once again dominated the news and kept us all on edge. There were major attacks in Turkey, Brussels, Nice, and Berlin. There were also several events on our soil, the closest to home being the devastating attack at the Pulse Nightclub in Orlando. We also had the ambushes on police departments in Dallas and Baton Rouge.
We had to deal with news like the Zika virus, the transgender bathroom issue, creepy clowns, the Wells Fargo scandal, and Hurricane Matthew. Although, for most of us here in Central Florida, we got lucky when it came to Hurricane Matthew; not so much for our friends up the coast in North Carolina.
Then there were those stories that were harder to classify as "good" or "bad". The big news this summer was Brexit, England’s decision to leave the European Union. Also in the “not sure if it’s good news or bad news” category, we had the breakup of Brad and Angelina, or Brangelina, and the Pokemon Go craze, which seems to have already mostly faded away…thankfully.
But it wasn’t all bad news last year. It was announced that NASA’s Kepler Mission had discovered 1284 new planets. We saw self-driving cars finally making it to the marketplace, at least for limited commercial use. We had a peaceful and fun Summer Olympics, although Ryan Lochte tried to spoil that for us. 2016 also brought us the Chewbacca Mom. If you don’t know what that means, Google it. She’s had 135 million views. You will shake your head, but you will laugh.
Bob Dylan won a Noble Prize in Literature, and we saw the city of Cleveland win their first sports Championship in more than fifty years. But of course, the big sports story of the year was that the Cubs winning their first World Series in 108 years.
We lost of lot of famous people in 2016. The band that makes up Rock and Roll Heaven got some new talent this year with the passing of David Bowie, Prince, George Michael, Glenn Frey and Merle Haggard. In the movie and television category, we saw Gene Wilder, George Kennedy, Garry Shandling, Florence Henderson, Zsa Zsa Gabor, Patty Duke, Carrie Fisher and Debbie Reynolds all take their final bow. We lost some legends in the sports world, most notably Muhammad Ali and Arnie Palmer. Sports enthusiasts also mourned the loss of Craig Sager, Gordie Howe, Pat Summitt, Buddy Ryan, and Jose Fernandez.
Beyond sports and entertainment, we lost some other notables. John Glenn, an American Hero, took his final journey. Antonin Scalia, Nancy Reagan, and Janet Reno also passed this year. And Fidel Castro is finally gone from Cuba.
When we turn our attention to how the investment markets performed in 2016, we see that it was most likely a decent year for your portfolio. US Stocks had a pretty good year. After the worst start of a year ever, the equity markets recovered, and then rallied after the election to hit new all-time highs. In the final weeks of the year, the Dow came close, but couldn’t break through, the 20,000 level.
Bonds had a bit of a volatile year, but basically ended up the year about where they began. The 10-year US Treasury note started the year with a yield of 2.27%, hit an all-time low of 1.36% in July, and move higher at the end of the year, finishing 2016 at 2.45%.
Oil prices hit bottom in February, sliding into the mid-$20s for the price of a barrel. But since February, OPEC seems to have gotten serious about cutting production, or at least promising to do so, and prices have doubled since then.
At Rall Capital Management, we diversify your portfolio by asset class. A quick review of the performance of the asset classes we use shows that the portion of your portfolio allocated to US stocks gained about 13%. Stocks from developed international countries didn’t fare as well, showing a gain of 2-3%. Emerging Market stocks rallied about 12%, and real estate also had a pretty good year, up about 8%. On the bond side of the portfolio, short-term bonds were up just over 1%; intermediate-term bonds were up 2-3%; and Treasury inflation-protected bonds gained a little over 4%. Of course, the performance of your portfolio depends on your specific allocation and any cash flows into or out of the accounts.
It was a good year for Rall Capital Management. While there were a number of positives that we could reflect on, the highlight of the year for our firm came in July. TD Ameritrade, the custodian we use to hold our clients’ assets, selected us to be the subject of a promotional video. They wanted to capture our story of being a family-owned-and-operated advisory firm and to learn more about us and our business. They sent a professional film crew to spend a couple days with us, in both business and personal settings. We recently received the videos that they produced and are thrilled with them. We just placed them on our website and would like to invite you to take a look. You can find them here.
It is a new year, and like many of you, we have some New Year’s Resolutions too! We will be introducing some new tools that we will use to help make sure you are on track to reach your financial goals. We are looking forward to sharing them with you.
Thank you for being a friend of our firm. We wish you and your family the best of everything in the new year.