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Don’t Mess with Texas (or Florida)

by / Wednesday, 13 September 2017

It is a relief to hear that all of the friends, family, and clients of Boyer & Corporon Wealth Management who live in Texas, Florida, and the Caribbean weathered both hurricanes successfully. If there is anything good that can be taken from storms that cause over $200 billion in damage, it is the anecdotal stories and videos of citizens helping each other survive the flooding waters—regardless of color, religion, or ethnicity.

Texas and Florida, the rest of the United States is impressed with you.

As we are writing this, Hurricane Irma is wreaking further havoc in Georgia and much of the Southeast.

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The stock market is not fazed by dual hurricanes or the threat of negative nuclear events (how’s that for avoiding the word “bomb”?). In August, The S&P 500 eked out a small gain (less than 1%), as did foreign stocks. Bonds did a little better, increasing almost 1%, primarily due to North Korean threats of global disruption.

For the past twelve months, the S&P 500 increased over 16% and foreign stocks gained almost 19%. Bonds barely gave a positive return.

For the record, since the market hit its nadir in 2009, it has increased over 300%! However, that statistic is a little misleading, because what it doesn’t reveal is the battering that investors took immediately prior to the gain, as the market plummeted 55% throughout 2008 and early 2009.

Going back to August 31st of 2007, it’s interesting to note that the S&P 500 has increased 7.6% annually over the past ten years. Sounds boring, but it wasn’t.

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While Obama was president, the economy grew slowly (very slowly) pretty much every year he was in office, and the stock market increased an average of 7–8% per year. Liberals hailed it as a great period of steady growth, while conservatives pointed out that it was the weakest recovery on record.

Since Trump became president, the economy continues to putter along and the stock market has increased over 17%. Conservatives point out that enthusiasm for Trump’s yet-to-be-developed policy reforms (taxes, health care, trade) are keeping investors enthusiastic while liberals maintain that Trump will eventually destroy America, so don’t get too excited.

At Boyer & Corporon Wealth Management, we remind our clients that there is no distinct correlation between who the president of the United States is and stock market performance. There are so many larger geo-political forces at work.

We continue to hold the belief that growth will remain slow and steady and that inflation will remain under control. However, the Southeast may see some localized inflation as rebuilding efforts begin.  Good workers are hard to find.