The Northern Star 07/18/18 Special Report: Quarterly Update
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Message for JonWhat if this time is different? The good and bad about what I do is that I am consuming so much data and so many materials on a daily basis that I sometimes get oversaturated. I run the risk of becoming biased towards a principal, idea, methodology, and philosophy to the point that it contaminates my thinking. As a result, I am always aware of what I am reading and more importantly the sources so that I remain on stable, solid footing when making decisions on behalf of my clients. The one thing I can bet on though is the consistency of change throughout time. Progress moves forward and is evident in the transitions from horse and buggies to cars, hand-written letters to email, and corded, rotary phones to wireless phones to our modern smartphones. Change has always remainedthe one constant through time, and if you do not become comfortable with change, you will ultimately be left behind as a result. Changes happen in all realms both physical and metaphysical. For example, the buy-n-hold camp grew up investing during our last bull market condition (the 1980s through 2000) when all the academic material began to surface "proving" that active rebalancing was not enhancing the returns. As a result,the majority of the now retiree investors grew up believing that the market was efficient and therefore one could never outperform it. Bull markets and bear markets being different made sense to me. I have come to realize the differences are more important than what many realize since they define philosophy, strategy, deployment of strategy, and maintenance of expectations as a result. Just like the investors during the '80s, the 40-year-old investors will come to depend on active management now as the buy-n-hold investors did back then. They, too will come to realize that change is constant and you must remain flexible in your philosophy to finish the game strong. The condition of the current market seems to be over-valued; however, according to Crestmont Research, there is a shift underway that will likely cause the criteria for market valuations to change. As a result, although we will see an underperformance take place in the coming years, we may see a correction rather than a crash. We may see a lower level of P/E and EPS as a result of a decline in historical GDP growth from 3.3% to 2%.It is likely that the next century will look nothing like the one that preceded it. At Summit, we have continued to evolve over nearly twodecades. We have gone from a commission-based business model to a fee-based one. We have gone from a buy-and-hold approach to a sophisticated active management approach. We have added technology, staff, software and completely updated the manner in which we help our clients obtain their financial summit's over the years as well. We have always embraced change, and the next wave of change in the markets will undoubtedly require more of it. You can read the article on the BIG SHIFT here. Till we speak again, enjoy this mild weather! Jon Source: www.crestmontresearch.com/docs/Stock-Big-Shift.pdf www.crestmontresearch.com/docs/Stock-Reconciliation-Principle.pdf WEEKLY UPDATE - JULY 16, 2018
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Notes: All index returns (except S&P 500) exclude reinvested dividends, and the 5-year and 10-year returns are annualized. The total returns for the S&P 500 assume reinvestment of dividends on the last day of the month. This may account for differences between the index returns published on