Q3 2015 Newsletter
THIRD QUARTER NEWSLETTER
As we write this, Halloween is just around the corner; and the Fed meets just 2 days before. Consensus among economic analysts is that the Fed will not raise rates this month, but may signal that December will be the month they “lift off”. We looked back to last year’s third quarter newsletter just for fun; you can review a copy on our website: www.galarneaugroup.com. This fall seems much like the investment environment back then. The market was buffeted by conflicting signs on company earnings, the Jobs Report, and whether or not the Fed would raise rates. Consumers hoped energy prices would continue to fall; and they got their wish.
The phrase “Be careful what you wish for” is probably no more appropriate in other industries than in ours. Developments which help one sector can weaken another; factors which initially help the economy, eventually create problems and wear out their welcome, like the holiday guest who stays just a little too long. One of the sectors most damaged in our equity markets this year has been energy; you will see this reflected in the performance of the energy securities in our portfolios.
We have just seen somewhat of a surge in the price of crude oil, following a report that supplies rose less than had been expected. This news caused a nice rally in energy stocks. Dividend yields in this sector look attractive at these reduced market prices; and we would expect to see some bargain hunters if signs of a possible bottom in oil prices continue. Still, the economy is sending mixed messages, keeping investors on edge. The September Jobs Report, for example, was disappointing. As corporations report earnings, a mixture of tricks and treats appears to be developing. And everyone is waiting to see what the Fed plans to put under the Christmas tree. Along with holiday bargain shoppers, we would expect the market to be influenced by institutional investors who typically look to reduce risk in their portfolios near year end.
We will continue to observe as events unfold, paying attention to risk avoidance, while being prepared to invest some of our cash in good opportunities. Meanwhile, we’re trying to schedule account reviews with clients who haven’t sat down with us for a while. You may be hearing from us asking to schedule a meeting or conference call before year end.
It is also the time of year when Katie haunts those of you who still have not completed the Required Minimum Distributions from IRAs. We sometimes need to sell a security to raise the cash you need for your RMDs, and need to talk with you in person or over the phone to do so. She is vigilant about getting in touch with everyone who hasn’t yet satisfied their RMDs.
We are excitedly preparing for this year’s Open House, Friday, November 20. You should have received your invitation with details. If not, give Katie a call or email. This is always a very special time for us to get together with you and have fun celebrating the start of the Holiday Season. So please try to come by at least for a few minutes!
As always, don’t hesitate to call if you have any questions, or would like to review your report with us. We know that market volatility can be scary; and we want to talk with you if you are concerned.
Hoping to see you at the Open House!
The Galarneau Group