June 2016 Financial Markets Summary

Numerous articles and commentary in investment circles suggest that the bull market that began in March of 2009, the second longest in 70 years, is in its final months.  In the last year, the S&P 500 has gone essentially nowhere since reaching its all-time high on May 21, 2015.  As we write this update, it is actually just a bit below the peak.  If you had been Rip Van Winkle a year ago, and just now awakened, you might be forgiven if you thought it had been a boring year.  But alas, that has not been the case, with numerous periods of startling, short-term volatility.  Will we see new highs in the near term?  With oil prices (currently close to $49 a barrel) having rebounded almost 50% from their February lows, does this clear the way for more market gains?  As we have shown many times, trying to time the market is almost always a losing proposition.

As a Registered Investment Adviser, PDS has always assumed a fiduciary relationship with our clients, to always put their interests ahead of our own.  The biggest news in the investment community has been the Department of Labor’s new regulations requiring brokers, reps, and other salespersons to do the same.  It has caused quite a commotion, with some in the industry saying “requiring us to be fiduciaries will hurt investors!”  Can you believe it?  Fewer annuity commissions will harm investors?  Disclosing the sources of their income will be detrimental to investors? Oh, the humanity!  Our view: it’s about time!

The hot asset class this year, surprisingly, has been commodities, with higher oil and metals prices leading the way.  It may be worth noting that this asset class is usually a feast-or-famine category.  If you want boring, short-term bonds fit that description, and might be safe havens when the Fed decides to increase the Fed Funds rate a small amount for a second time.  The dollar regained some strength this past month, in anticipation of the higher rates. Another event to watch will be Great Britain’s voters deciding whether to stay or to leave the European Union.  The race is currently too close to call, with significant numbers of undecided voters.  A Brexit, as the possibility is called, could not only damage UK trade and jobs, but could further strain the already stagnant global economy, especially that of the EU.  Brace for some heightened market volatility as the June 23rd referendum nears.

Change is constant, and sometimes it seems to be increasing in speed.  Be sure your portfolio’s overall allocation matches your long-term goals, your shorter-term cash flow needs, and gives you some measure of assurance.  And remember that Today’s headlines and tomorrow’s reality are seldom the same.

Asset Index Category Category Category Category 10-Year
3 Months 2016 YTD 2015 Average
Dow Jones Industrials – Large Cos 7.7% 2.1% -2.2% 4.8%
S&P 500 Index – Large Companies 8.5% 2.6% -0.7% 4.6%
S&P 400 Index – Mid-Size Companies 11.9% 6.7% -3.7% 6.9%
Russell 2000 Index – Small Companies 11.6% 1.7% -5.7% 4.8%
MSCI EAFE Index – Developed Intl. 7.0% -2.8% -3.3% -0.9%
MSCI EM Index – Emerging Markets 9.1% 1.7% -16.4% 0.7%
Short-Term Corporate Bonds 1.2% 1.4% 0.2% 2.9%
Multi-Sector Bonds 0.7% 2.3% -2.1% 3.9%
Global Government Bonds 3.1% 4.3% -3.9% 4.1%
Bloomberg Commodity Index 12.5% 8.8% -24.6% -6.1%
Dow Jones U.S. Real Estate 11.1% 5.8% 2.1% 6.1%


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only.  Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy.  It is provided with the understanding that no fiduciary relationship exists because of this report.  Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice.  PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice.  If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives.  All rights reserved.