A Word From Bob, January 2016

Greetings! I hope readers were able to take time away from their busy schedules to enjoy a respite from the daily grind during the holiday season. Spending time with family and close friends is always a welcomed distraction from our regular lives!

Recently I was doing some business traveling and I experienced a flight where the intensity of the turbulence became unnerving for some of the passengers. Interestingly enough, as the passengers became more nervous about the bumpy ride, the atmosphere and the attitude of the passengers started to negatively impact the mood of everyone on the flight.

Ultimately the flight smoothed out and we landed safely at our destination. I likened the experience to the emotional roller coaster that long-term investors deal with as market conditions change. The flight made it apparent to me how critical the flight attendants’ behavior was in calming some of the restless passengers. I would compare their job duties to the role financial advisors play in keeping clients focused on their long-term financial goals during periods of stock market volatility.

The most significant volatility in 2015 came in commodity markets where energy prices sold off due to increased production and stagnating demand. In December, oil prices traded around $35 per barrel marking a 6 year low, while natural gas prices made a 16 year low near $1.70 per million British Thermal Units (BTU’s).

2015 was a tough year for investors as the Dow Jones Industrial Average produced a loss of around 2.23% for the year. Energy prices certainly fueled losses in the equity markets as the energy sector lost more than 23% in 2015. While energy prices hurt our clients’ performance in 2015, we believe that significant investment opportunities may exist in energy in the future.

Admittedly our portfolio performance suffered because we were overweight energy and energy related investments a bit early in the selloff, but in the longer-term the sector has improving fundamentals. The expansion of the Panama Canal, recent U.S. Congressional actions which lifted the 40-year old ban on oil exports, and a nearly 61% reduction in rig counts since the end of 2014 are all constructive attributes for higher energy prices in the longer-term.

My firm and I remain focused on our clients’ long-term investment time horizon. We will continue to be committed to diversification and we will strive to add value for both our tax and financial planning clients. As we transition from the past to the present, I hope everyone has a safe and prosperous New Year! In closing, I would remind you to stay healthy, wealthy, and wise, and certainly . . . stay tuned.

Bob

http://www.richmond.com/business/local/article_e921c54a-73f1-554a-a43d-a07c3a3babbb.html
http://www.greenbaypressgazette.com/story/money/2015/12/31/2015-year-commodity-volatility/78136616/
http://finance.yahoo.com/q/hp?s=XLE&a=11&b=31&c=2014&d=00&e=1&f=2016&g=d&z=66&y=0
http://finance.yahoo.com/q/hp?a=11&b=31&c=2014&d=00&e=1&f=2016&g=d&s=%5EDJI%2C+&ql=1
http://www.theneweconomy.com/business/panama-canal-expansion-to-enhance-global-trade
http://www.aogr.com/web-exclusives/us-rig-count/2015