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Looking Forward – A Brief Market Update

September 1, 2015


Metric 8/4/2014 1/2/2015 7/31/2015 YTD RTN 1 YR RTN
SP500 1925.15 2058.20 2103.89 2.21% 9.28%
DOW30 16493.37 17832.99 17689.86 -0.80% 7.25%
10 yr T-note 2.51% 1.98% 2.21% +11.61% -11.95%
COMEX Gold Spot Price $1316.00 $1189.80 $1093.10 -8.12% -16.9%
WTI Crude Oil (per barrel) $92.30 $56.90 $46.78 -17.7% -49.31%


“The Plateauing Effect: Is the United States Stock Market and Economy entering the last stage of expansion?”

What to know…

  1. U.S. economy has slowed but expected to improve through year end.
  2. Central banks around the globe diverge with the U.S. Dollar likely to continue higher.
  3. Economic strength in jobs, retail sales, housing, and consumer confidence.
  4. With the Federal Reserve beginning to tighten in the second half of 2015, expect short term volatility to continue.
  5. Commodities continue to retreat globally.

What to do…

  1. Sticking with stocks and staying engaged through short term volatility. Resist the urge to exit the market however raising cash to buy through the market bottoms is appropriate.
  2. Opportunities abroad but be selective. The highest reward comes with the highest risk.
  3. Watch your step in bonds as interest rates rise. Bond liquidity expected to become a concern.
  4. Greater diversification in a conservative portfolio by using a multi asset income approach.

Forces of progress…

  1. Growing strength of the U.S. economy.
  2. Continued easy money policy on the international front.
  3. Corporate earnings holding solid with large amounts of capital available for reinvestment or M&A.
  4. Innovation in technology, biotech, and healthcare.

Game changers…

  1. Global turf war continues using oil as the conduit.
  2. Rising Interest rates set for Q3 or Q4 2015. It is currently forecasted for the Fed Funds Rate to reach 2.0% during calendar year 2016.
  3. China remains the biggest mystery.
  4. Effective handoff in the U.S. from a foundation of an easy money environment to a foundation of corporate earnings and macro-economic metrics.

Focus points for our investment strategy…

  1. As the rally in the equity markets mature and bond yields tumble, the case for diversification increases. We advise staying active as the expansion progresses and remaining aware of the benefits of diversification to reduce risk. A cautious approach to the volatility during the second half of 2015 is appropriate.
  2. Globally, the support from central banks will continue to influence markets creating short term volatility. Side effects like herd behavior and intermediate corrections are expected. These corrections are necessary and healthy preventing the momentum forward from turning into bubbles.
  3. Economic sustainability is the key measure globally as monetary policy cannot be our only hope for the future.

So what is my take…

As we enter the second half of 2015, there are many converging events that can influence market conditions. These events include the Fed interest rate launch, the August Session of Congress expected to bring issues around a “potential government shutdown, China’s continued slowdown and ongoing challenge of accurate data, and the commodities retreat. This set of events has the potential to create a choppy September and October. Even though I am more cautious today, I still believe the U.S. markets will push through the short term volatility to end the year higher.

Holding true to our Common Sense Approach to Portfolio Management, we are currently “staying the course” while “navigating around choppy waters”. The current diversification of our portfolios allows for the rounds of short term volatility. Our team will continue to monitor the market influences to determine an effective course of action in the long term. I thank you for your confidence in our team at Capital Investment Services.

Bobby Lumpkin

Managing Partner, CIS

Financial Advisor, RJFS


The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of the author and are not necessarily those of Raymond James. Opinions expressed are as of this date and are subject to change. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Asset allocation and diversification does not ensure a profit or guarantee against loss. Investing involves risks and investors may incur a profit or loss regardless of the strategies employed. Past performance does not guarantee future results.




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