Sources: Equity Market and Fixed Income returns are from JP Morgan as of 11/11/16. REIT, Rates and Economic Calendar Data from Bloomberg as of 11/14/16.
U.S. Stocks staged a surprising rally last week on the back of now President Elect Donald Trump’s unexpected victory in the U.S. Presidential Election. Despite the futures market falling dramatically overnight, stocks recovered and the S&P 500 Index finished week with a 3.9% gain while the Dow Jones Industrial Average posted an impressive 5.5% advance. Internationally, stocks were mixed as a stronger dollar and questions about trade policies led to a flat finish in developed markets, which gained 0.1%, and a selloff in emerging markets, which declined by 3.5%. Yields on U.S. Treasuries rose across maturities with the 10 year hitting 2.15% as investors speculated that fiscal stimulus will promote economic growth and may force a more hawkish monetary environment.
Economic data was relatively quiet last week with the two most impactful releases being Jobless Claims and Consumer Sentiment. Jobless Claims held steady at 254,000 – very much in line with past month’s claims and close to record lows. Consumer sentiment, which was measured before the election results, was better than expected and showed the strongest reading since June. This is welcome news since nearly two thirds of the U.S. economy, as measured by Gross Domestic Product (GDP) is driven by consumer spending.
One important lesson that can be learned from last week is that trying to time the market is often an exercise in futility. If an investor had been given advance notice that on Tuesday night Donald Trump would win the election, that investor would likely have sold stocks assuming a sell-off would ensue given the widespread belief prior to the election that Hillary Clinton would likely be the victor. In fact, some of the most recognized investors predicted an immediate sell-off in stocks following a Donald Trump victory as can be read on CNBC, The Financial Times, and The New York Times. So, even with a crystal ball telling you what economic, political, or other events are going to occur in the future, it is still not certain how the markets will respond to these events. For investors with a long term objective of growing their portfolio, we believe that the answer is to try and not jump in or out of the market based on short term news cycles but rather to try and remain disciplined and focused on their longer term financial objectives. As we have discussed in the past, one of the best ways to maintain this discipline is to have a financial plan completed so that you can understand how much money you are likely to need in the future in order to take care of yourself and your family.
Important Information and Disclaimers
Disclosures: Hennion & Walsh is the sponsor of SmartTrust® Unit Investment Trusts (UITs). For more information on SmartTrust® UITs, please visit www.smarttrustuit.com. The overview above is for informational purposes and is not an offer to sell or a solicitation of an offer to buy any SmartTrust® UITs. Investors should consider the Trust’s investment objective, risks, charges and expenses carefully before investing. The prospectus contains this and other information relevant to an investment in the Trust and investors should read the prospectus carefully before they invest.
Investing in foreign securities presents certain risks not associated with domestic investments, such as currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging markets.
There are special risks associated with an investment in real estate, including credit risk, interest rate fluctuations and the impact of varied economic conditions. Distributions from REIT investments are taxed at the owner’s tax bracket.
The prices of small company and mid cap stocks are generally more volatile than large company stocks. They often involve higher risks because smaller companies may lack the management expertise, financial resources, product diversification and competitive strengths to endure adverse economic conditions.
Investing in commodities is not suitable for all investors. Exposure to the commodities markets may subject an investment to greater share price volatility than an investment in traditional equity or debt securities. Investments in commodities may be affected by changes in overall market movements, commodity index volatility, changes in interest rates or factors affecting a particular industry or commodity.
Products that invest in commodities may employ more complex strategies which may expose investors to additional risks.
Investing in fixed income securities involves certain risks such as market risk if sold prior to maturity and credit risk especially if investing in high yield bonds, which have lower ratings and are subject to greater volatility. All fixed income investments may be worth less than original cost upon redemption or maturity. Bond Prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline of the value of your investment.
MSCI- EAFE: The Morgan Stanley Capital International Europe, Australasia and Far East Index, a free float-adjusted market capitalization index that is designed to measure developed-market equity performance, excluding the United States and Canada.
MSCI-Emerging Markets: The Morgan Stanley Capital International Emerging Market Index, is a free float-adjusted market capitalization index that is designed to measure the performance of global emerging markets of about 25 emerging economies.
Russell 3000: The Russell 3000 measures the performance of the 3000 largest US companies based on total market capitalization and represents about 98% of the investible US Equity market.
ML BOFA US Corp Mstr [Merill Lynch US Corporate Master]: The Merrill Lynch Corporate Master Market Index is a statistical composite tracking the performance of the entire US corporate bond market over time.
ML Muni Master [Merill Lynch US Corporate Master]: The Merrill Lynch Municipal Bond Master Index is a broad measure of the municipal fixed income market.
Investors cannot directly purchase any index.
LIBOR, London Interbank Offered Rate, is the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London.
The Dow Jones Industrial Average is an unweighted index of 30 “blue-chip” industrial U.S. stocks.
The S&P Midcap 400 Index is a capitalization-weighted index measuring the performance of the mid-range sector of the U.S. stock market, and represents approximately 7% of the total market value of U.S. equities. Companies in the Index fall between S&P 500 Index and the S&P SmallCap 600 Index in size: between $1-4 billion.
DJ Equity REIT Index represents all publicly traded real estate investment trusts in the Dow Jones U.S. stock universe classified as Equity REITs according to the S&P Dow Jones Indices REIT Industry Classification Hierarchy. These companies are REITSs that primarily own and operate income-producing real estate.