Weekly Market Recap This week saw the Federal Reserve hold rates steady, seeing a slightly improved and generally positive picture for the US economy noting "Near-term risks to the economic outlook have diminished". Many countries shared estimates of second quarter (April-May) GDP growth this week. The first estimates for US GDP for the second quarter of 2016 at 1.2% growth year-on-year, this is a similar rate of growth to the first quarter, but below what many expected. In the European Union, GDP growth of 1.6% year-on-year was also broadly consistent with the prior quarter. UK GDP was strong for the second quarter at 2.2% year-over-year, however did slow meaningfully in the month of May as the EU referendum drew closer at the end of May. Overall, it appears that developed economies continue to grow at a solid, if unspectacular, pace. Various markets in the US, including the S&P 500 and Dow Jones indices, have made new all-time highs this month. Though this can be encouraging for investors, it may actually matter less than you think. If you're more pessimistic or contrarian in nature and concerned that a new high may mean the markets are set for a fall, remember that historically the S&P 500 has actually performed slightly better in the 12 months after making a new high than during other periods. A new high isn't necessarily a permanent peak for the markets. For example, in the 1980-2000 period, the US market saw a series of increasing new highs over a span of two decades. Additionally, historically, approximately 40% of investor returns in US stocks have come from dividends. Thus, we should remember that price changes are important for returns but so too are the slow and steady accumulation of dividends, if history is any guide. Furthermore, academic research suggests that stock market valuation can be helpful in predicting longer term stock returns, but in our view, the presence or absence of new highs has less meaning for markets. Most major stock markets, with the exception of the US, are not above highs of 2015 at this point. So although there is focus on the US market, other markets and asset classes are at different points in their economic cycle, as is often the case across the global economy. All of which is to say that we see no reason to change course. Just as when the markets appeared concerned about Chinese growth last summer, commodity weakness this February, or Brexit just last month, and now the US markets up on what appears to be improving employment and benign inflation, we have conviction that our recommended investment portfolio remains robust for the longer term, whatever the future should bring. Notes:
Federal Reserve Statement:
https://www.federalreserve.gov/monetarypolicy/files/monetary20160727a1.pdf
Further Detail on New Highs
http://www.forbes.com/sites/simonmoore/2016/07/26/new-highs-mean-less-than-you-think-heres-why/#4ff5a40d20ac Disclaimer:
The views expressed are for informational purposes only and are not intended to serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities by FutureAdvisor. All expressions of opinion are subject to change without notice in reaction to shifting market, economic political conditions, and as subsequent conditions vary. The investment strategies mentioned are not personalized to your financial circumstances or investment objectives, and differences in account size, the timing of transactions and market conditions prevailing at the time of investment may lead to different results. This material may contain "forward-looking statements": information that is not purely historical in nature. Clients may lose money. Past performance is not indicative of future results. Investments in securities involve the risk of loss. Any tax strategies discussed should not be interpreted as tax advice and do not represent in any manner that the tax consequences detailed will be obtained. Clients should consult with their personal tax advisors regarding the tax consequences of investing. Your Portfolio Update Over the past month your portfolio was up 3.6%, and we have no recommendations at this time to improve it. Congratulations on maintaining one of the best portfolios among all our clients. We will, as always, continue monitoring your account and alerting you if there are actions to take (periodic rebalancing is required, etc). Ways To Improve Your Portfolio | 0 Accounts with Actions | Your portfolio has no recommended actions right now. We'll watch over your investments and alert you with an email when there are actions for you to complete. Sign in to see detailed steps  |  | Action Required - keep your recommendations accurate | | Your financial institution requested additional authentication to keep your investment accounts synchronized to FutureAdvisor. Keeping your accounts synchronized allows FutureAdvisor to monitor and keep you up-to-date on your investments and recommendations. | | Please log in to fix this in your Financial Profile. | | Sign in to see your full dashboard | * All amounts are as of the sent date of this email | 
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