In my Riggs Update of early December, I gave you my thoughts on where I see the markets going and why. This report is intended to accompany the delivery of performance reports for the accounts I manage with discretion on your behalf.
So let’s start with a review of 2016.
It started out rather scary. Do you remember the mood as the primaries went into full attack mode?
As the year began, the market continued the correction that started in November of 2015, to the point that I was quite frankly very concerned about another 2008. The technical indicators were deteriorating, and defensive assets were gaining strength. By the end of the first quarter, my growth accounts were about half in cash.
By the end of summer, because of some market recovery and gains in commodities, we were basically breakeven. The market had rallied, and actually hit new highs by September. It then languished as we all sat back and watched the daily drama of the elections.
We all woke up on November 9, the country in shock, the media in denial, and the market took off.
As November progressed and the rally gained momentum, I began putting the cash to work. By the end of the year, fully diversified growth portfolios were only up very modestly. Not particularly what I would refer to as a banner year, but when you consider that the major concern last winter was a recession with “2008 like losses”, I guess a meager positive is pretty good.
Smaller accounts, those generally below $50,000 in value, did not reap the rewards the larger accounts benefited from. When I put the gold, oil, and precious metals positions into the larger accounts, they were mostly 3-5% (of the account value) in size. In accounts below $50,000 I have a difficult time justifying trading costs for that small of a position. So these accounts finished the year well into negative territory.
Do I like this? Am I proud to deliver these returns? Nope.
However, if the market had sold off, as everyone (including me) expected, all that cash in the accounts would have looked real good. Instead, playing defense cost us potential gains.
And that is the lesson. You can take actions to protect, but those same actions work against you when the market rally’s. You simply cannot have it both ways.
My livelihood is totally dependent on what I deliver to you. Therefore, every day when I look at the markets, I first look at what can go wrong, and then I look for where to put our money for gains. It is my belief that is what you have retained me to do.
Thank you for your continued Trust and Confidence.
Gregory G. Riggs, CFP
Accredited Investment Fiduciary
Securities and Advisory Services offered through KMS Financial Services, Inc. Member FINRA/ SIPC
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only.