June 2018 Financial Markets Summary

Many investors attempt to “beat the market” by picking a handful of stocks they believe will outperform.  Sometimes they can be rewarded if they happened to choose a shooting star, but they can just as easily be punished with a falling knife.  For instance, Netflix, the S&P 500’s best performing stock in 2018, is up over 83%.  DISH Network and L Brands, on the other hand, are each down about 40% in the past five months.  Southwest Airlines, Kraft Heinz, General Mills, General Electric and Proctor & Gamble are all down over 20% over the same time period.  Very few investors would have expected such poor performance from these blue-chip names with the index being up 1.1%.

Other investors attempt to identify sectors they believe will “beat the market.”  However, there is still significant disparity in sector returns.  Technology has led the way this year with a 13% return while consumer staples have struggled with a 12% loss.  Most investors hold consumer staples for their historically less aggressive nature, but hardly any forecasted the double digit losses.  This is just another example where it pays to be diversified within your portfolio.

On another note, the recently released May jobs report exceeded expectations.  The economy added roughly 223,000 net new jobs in May which pushed the unemployment rate to an 18-year low of 3.8%.

This is just another sign of the strengthening economy, but some are concerned that this increases the risk of rampant inflation.  As fewer potential employees are available for open positions, companies are forced to pay higher wages to seek the talent they desire.  Coupled with rising interest rates from the Federal Reserve and potential tariffs from Washington, this could certainly push inflation above the Fed’s 2% long-term target.  However, we expect this to be a small move from the anemic inflation experienced over the past ten years.

Asset Index Category Category Category 5-Year 10-Year
3 Months 2018 YTD Average Average
S&P 500 Index – Large Companies -0.3% 1.1% 10.6% 6.8%
S&P 400 Index – Mid-Size Companies 4.4% 2.4% 10.5% 8.2%
Russell 2000 Index – Small Companies 8.0% 6.4% 10.6% 8.1%
MSCI ACWI – Global (U.S. & Intl. Stocks) -0.5% 0.4% 9.1% 5.3%
MSCI EAFE Index – Developed Intl. -1.8% -1.5% 5.9% 2.1%
MSCI EM Index – Emerging Markets -5.7% -2.6% 4.5% 1.6%
Short-Term Corporate Bonds 0.3% 0.0% 1.1% 2.3%
Multi-Sector Bonds 0.6% -1.5% 2.0% 3.7%
International Government Bonds -2.5% 0.4% 1.3% 2.0%
Bloomberg Commodity Index 3.4% 3.6% -6.6% -7.9%
Dow Jones U.S. Real Estate 7.5% -2.5% 7.2% 6.0%


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.