January has come and gone, and luckily we managed to avoid any snowfall or serious winter weather. Unfortunately, we still have February and March to contend with before the months primarily associated with nasty weather are behind us. Here is to hoping anyways . . .
January’s end ushers in tax season and the busiest time of the year for my staff and I. Every year we try to improve our preparedness for the approaching tax season, and this year Sandy and her team feel as prepared as ever. While paying taxes is not exciting to most of our clients, my staff and I certainly enjoy getting to see all of our friends. We take pride in helping our clients mitigate their tax liability to the greatest extent possible.
On the financial planning side, we have seen a poor start for the U.S. stock market so far in 2015. According to Yahoo! Finance, the S&P 500 Index closed on December 31, 2014 at 2,058.90. At the close of trading on Friday, January 30th the S&P 500 posted 1,994.99. The month of January resulted in a loss of 63.91 total points, or a loss of roughly 3.10%.
We did have some mixed economic data that came out which concerned markets about future growth prospects. Furthermore, the rapid drop off in the price of oil also started to hurt the energy sector of the marketplace. According to Factset.com, “On September 30, the estimated earnings growth rate for the Energy sector for Q1 2015 was 3.3%. By December 31, the estimated growth rate fell to -28.9%. Today, it stands at -53.8%.”
While we have seen volatility thus far in 2015, I believe that with volatility can come opportunity. Recently we have been opportunistic and have purchased the United States Oil ETF (Ticker: USO) in our managed accounts. While the position is small in terms of the overall portfolio allocations, I believe that the potential upside could enhance our clients’ 2015 returns.
According to John Hofmeister, the former President of Shell Oil, “The next round of high prices is likely to start later this year, as crude rebounds to the $80’s and $90’s, perhaps pushing to the $100 level by late in the year or early next.” While January provided lower U.S. stock market and energy prices, we will continue to utilize a well-rounded, diversified investment approach that incorporates alternative investments and variable annuities. While I am hopeful about the economy’s future prospects, the potential for uncertainty and volatility are always there.
Before closing, I wanted to remind readers that our next Just Because We Care event will be the Honduran Run set for March which includes a 1K, 5K, and 10K walk or run. I am soliciting sponsorships for me to run in the 5K event. My goal is to raise enough funds to pay for a container full of goods to be shipped down to the children in Honduras. If you are interested, please let us know! The children certainly appreciate everything that we are doing and we are very proud of their accomplishments! Let’s hope for mild winter weather in February and as always, stay healthy, wealthy, and wise, and certainly . . . stay tuned.