THE GARTENHAUS REPORT Volume 1009

THE FOURTH YEAR OF A SECOND TERM PRESIDENT

HOW GOES THE MARKET?

I would have to say that without fail, each and every client that goes through their review process with us asks the above question.

After doing some research on the subject, I would like to share my findings. Don’t blame President Obama for this one! Nor should you attribute weakness to whichever Republican becomes the nominee---or whom the Democrats nominate.  It’s just the way it is….the final year of the presidential term tends to perform below average for the stock market. And this is especially true for the fourth year of two-term presidents.

The Presidential Election Year Cycle is based on the notion that presidents, regardless of political party, go to great lengths to get re-elected. Immediately after assuming office, presidents take the economic medicine necessary to build a foundation for good times as the next election takes place four years later.

Historical data are largely consistent with this theory. So in the third year of the term, the stock market anticipates the economic good times that are coming. Those third years are the best for the stock market.

In the fourth year, the market begins to anticipate the economic medicine that will need to be taken in the first year of the next cycle. Keep in mind that the stock market “discounts” what is coming down the pike about six months to a year in advance. Not surprisingly then, fourth years tend to be less robust than third years.

It is important to note that the cycle follows a different pattern in first and second terms. As you can see in the chart below, the stock market during second-term presidents’ fourth year in office is on average, is the biggest loser out of the eight years.

Source: Mark Hulbert Barrons online

To be sure, the stock market could do well over the rest of 2016. Fourth years of second-term presidents are not always bad ones. We are dealing with averages here.

Bottom line? While there are many factors that influence the stock market, like the Federal Reserve, earnings and the dollar to just name a few, the Presidential Cycle is not one we can count on for a bullish year.

DR. KLAUS DE WILDT:

 THOUGHTS FROM FIDELITY’S CHIEF ECONOMIST

This year the NFP conference was held in Dallas. The conference is packed with continuing education on all subjects financial and is loaded with great speakers. In my mind, one of the best presenters is Dr. De Wildt, and each and every year I really look forward to hearing his outlook.

This year’s presentation was another excellent one. I will capsulize his prognostications below:

First and foremost, De Wildt believes that the chances of a recession in the US are very unlikely. The US consumer is spending and this is the biggest part of our economy, while China accounts for a very small part of US GDP. Of our total exports, China accounts for only 2%!

Speaking of China, he estimates that they are growing at about 2% per year currently, which is much below the “official” growth rate of 7%. China has too many bubbles, it is very overbuilt, and they are trying to become a consumer driven economy versus an economy focused on manufacturing and exports. This transition will take time.

The revolution of oil fracking has made the US the largest producer of oil in the entire world. Globally, there is an excess of about a million barrels per day that is not being consumed. This drastic oversupply is the culprit for the crash in oil prices from over $100/barrel to a low of $26/barrel. As this is written, oil has rebounded to over $40/barrel. He believes the low prices of oil and gasoline are good for our economy.

Most European economies are bad to stable and Japan is just bad. Interest rates on the 10-year German bond are 0.2%. and Japan’s bond pays 0.1%. With the US 10-year treasury bond at around 1.90% currently, one can imagine the huge global flows of money into our bonds. De Wildt believes US rates will remain near current levels and will not rise much for a longer period than the consensus predicts.

De Wildt opines that the US has fixed most of the long-term problems that were in evidence prior to the financial crisis. Peak oil is no longer an issue. The housing bubble is in recovery as there is no excess supply. The banking system which was leveraged 40 to 1 pre-crisis, is now at 9 to 1. The budget deficit is down by a trillion dollars; corporations have plenty of cash. There are a lot of investable dollars on the sidelines and he rates the US as stable to good.

So with all of the factors discussed above Dr. De Wildt believes the second half of this year will be favorable and that the stock market will be up on the year.

I’m not complaining, but this is what makes our job so challenging yet exciting. There are always reasons to be bullish and reasons to be bearish. There are always crosscurrents and we must make our own conclusions based upon the weight of the evidence.

As an aside, and also announced at the conference, is a name change and re-branding for our broker-dealer NFP Advisor Services, LLC. The new names effective April 1, 2016 will be Kestra Investment Services, LLC and Kestra Advisory Services, LLC.

RE-CREATING YOURSELF

by Lynne Gartenhaus

 “Life isn’t about finding yourself, it’s about creating yourself. "

George Bernard Shaw

What do you want out of life? It’s a great question no matter what your age. And considering how many “shoulds” there are in life, it is a matter that begs contemplation. Most of us go through life following a similar path – childhood and school, college or learning a trade, marriage and kids, working a job to support the family, taking care of elderly parents. We follow the rules, doing what is expected of us, doing what society says we “should.”

So how does one go about living a life with few regrets at the end?  One of the ways to look at this is to find out what others have said about their choices.

1. One of the most commonly expressed regrets is putting too much time and effort into work and not spending enough time with family and friends. Many people wish they had been more loving to the important people in their lives. And that includes being a better parent, child, spouse and friend.

Say I love you in words and deeds. Take your spouse on a surprise date or trip. Be with your grandchildren. Have dinner with a friend. Take time out from the “shoulds” to enjoy life and create memories. You won’t regret it.

The other side of this coin is getting rid of toxic people.  You know who they are. They are critical of all you do, they bring you down, and they are negative and depressing. Let go of bad relationships and those who don’t bring value to your life.

2. Many have said they wished they had taken better care of themselves. Getting older can be a surprise – it’s harder than you think and it happens before you know it.

I think the rule that applies best here is moderation in everything, including moderation. So, you don’t have to be a body builder, but you can find the time to fit exercise into your life: park at the far end of the parking lot, take the stairs instead of the elevator, take the dog and/or the baby for a long walk every day.

And don’t make food the enemy. You probably already know about nutrition and portion control and what is and isn’t healthy to eat – so when you want a cheeseburger and fries eat half – share with your partner or save the rest for another meal. It’s about eating a well-balanced diet – not taking all the good stuff out.

And I can’t say enough about meditation. I have been meditating for about 15 years and it has changed my life for the better. It helps my energy, helps me deal with times of anxiety or anger, and grounds me. If you don’t know how to meditate, you can learn on the web. On YouTube there are guided meditations for any situation you can think of.

3. Do more to help others. Both of my parents regret that they had not done more for others less fortunate. I think volunteering can be one of the most important things to add to life. There is nothing better for perspective then helping someone else down on his or her luck. Helping others feels good and often helps us see that our own lives are better than we think.

Random acts of kindness are fun and make you feel good. I carry extra umbrellas in my carin case of rain. I love pulling up to a bus stop and handing an umbrella to someone trying to stay dry. It makes me smile and the smile lasts for hours.  In my opinion, when you give to others you get much more in return.

4. Quite a number wished they had taken more risks. Pushing yourself, trying to do what you think you can’t. And it doesn’t have to be a good experience, trying something and failing is personally revealing.  I think that being afraid to fail is what holds must of us back too often. Our society has mislabeled failure to be a bad thing – it’s not! Failure is how we learn and grow. You can most likely do more than you think you can.

One of my favorite expressions is "leap and the net will appear."  Believe it or not, the net shows up, or you cope, or learn a valuable lesson.  Many times you will surprise yourself at how much fun it is to challenge yourself and do what you think you couldn't. The only time failure is bad is if you don't learn anything from it.  Apparently it took Edison 10,000 tries to create a working light bulb.  Suppose he had given up after the 100th try?

5. And this is the one practical thing – saving more money for retirement. Talk to one of our financial advisors for that!

Bob Marley asks “Open your eyes, look within. Are you satisfied with the life you are living?” 

We must find time to take hikes, become an artist, become a professional chef, train to run a 5k or be a triathlete, take ballet or learn to sail. Find a support system to help you make that happen. Chances are you will create your own community of like-minded people, people who will nourish you, encourage you to try new things. Invent the world you want to live in with your own brand of fun and edgy.

Find a great mentor – someone who can teach you and take you to places you never would have thought to go. Learn their lessons, pick their brain, get into their world. You never know where a new person can take you. Talk to everyone and be open to those different from you and see what they can teach you.

Finding our purpose, living our dreams and aspirations, having the courage to live more truthfully is hard, but many of us feel we missed the boat when it came to being ourselves. All too often, we did what we were supposed to, we married the person we were expected to, we followed our parents’ footsteps into jobs, careers and business as expected to, we lived near family as expected to, and followed all the rules as expected to – instead of living authentic lives of our own.  Life is about choice. Be self-aware, ask questions, so you are prepared to act now, seek adventure and challenges.

I love this quote by George Gershwin “Life is a lot like jazz….it’s best when you improvise." Be unconventional, take the other path, stand up for your beliefs, don’t back down, go to places you’ve never dared to go, do things you are afraid to do.

Your only limits are the fears that reside in your head. Don’t hold yourself back from all the wonders and experiences that our world offers. No one can do it all, but if you think about it now and plan, your list of regrets will be much shorter, and you will be happy you pushed yourself.

I like David Bowie’s approach at 50 “I don’t know where I’m going from here, but I promise it won’t be boring.”  I think all of us should make that promise.

The opinions and forecasts expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Invesment Services, LLC (Kestra IS) or Kestra Advisory Services, LLC (Kestra AS).The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. The indices mentioned are unmanaged and cannot be directly invested into. Past performance is no guarantee of future results. Kestra IS and Kestra AS do not offer tax or legal advice. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Gartenhaus Financial is not affiliated with Kestra IS or Kestra AS.