By Joe Smalley, Accredited Investment Fiduciary

My dad and I on our Spring Training trip a couple years ago.

My dad and I on our Spring Training trip a couple years ago.

For me, February is a tough month.  I’m a college basketball fan, not a pro basketball fan, and this year, unfortunately, my Spartan hoopsters are taking a cue from the football team.  But there is still hope for run in the big dance; unfortunately, that’s not in February.  I love hockey too, but like most fans, I don’t usually pay much attention until the playoffs – which is months away.  My only consolation is that as the calendar flips to March, my beloved baseball starts back up again.

When Spring Training starts, the world seems right again.  While the mighty Detroit Tigers were pretty quiet in the off-season, the big news is no news.  The Dodgers were interested in Verlander, but he stayed.  The Astros were interested in Miggy, but he stayed.  The Mets were interested in JD Martinez, but he stayed.  And both the Twins and the Padres were interested in Iglesias, but he stayed, too.  We will see how the starting rotation and the bullpen do this year – that, of course is the key to everything.  But not much changed in the clubhouse.

That is not true, however, of what is happening in politics.  With big changes in the White House, lots of waving of arms, gnashing of teeth, shaking of heads, wagging of fingers, and rolling of eyes is occurring.  The administration is changing policies, as loudly and bigly promised.  The Republican controlled Congress is gearing up to get bills passed and signed into law, which was considerably more difficult during the last administration.  And Democrats are taking a page out of the delay/stall/block playbook to oppose anything that the administration is trying to do, much like the Republicans did to President Obama. 

Meanwhile, the economy is chugging along.  Growth is growing.  Unemployment is improving.  Housing is steady.  And the Federal Reserve, after what seems like decades, is finally ready to raise interest rates to attempt to keep inflation in check, which has caused the stock market to continue its historic climb.  Since the bottom in March of 2009 when the Dow was at 6500, the markets have risen sharply.  The Dow today is over 20,000. 

So what could possibly go wrong?

Often times, it’s the thing you don’t see coming.  And it usually comes about as a reaction to something else. 

Here are a few things I’m watching:

  • Tax changes
    • The administration has some they’d like
    • The Congress has others they’d prefer
  • Geopolitics
    • Mexico
    • Middle East
    • Russia
    • China
  • Regulation changes
    • Banking
    • Finance
    • Telecommunications
    • Energy
  • Economy
    • Rates
    • Global

But of course, these are the things we’re watching, which means that it could be something else, entirely.  Or an unexpected reaction to one of the above.

I devour a lot of different commentaries.  Here are two interesting reads from two very different economists. 

The first one, Why Isn’t Political Turmoil Shaking the Markets, is from Brad McMillian.  Brad is good at giving us easy-to-read-and-understand bites of economic information on a daily basis.  This one is timely.

The second one, Tax Reform: The Good, the Bad, and the Really Ugly, is from economist John Maudlin.  John’s pieces are usually long and detailed, and this one is no different.

As you can see, they paint a very different picture.  So what is an investor to do?  Longtime readers will know what I am going to write before I can type the words:  diversification is important, invest with your time horizon in mind, and keep some powder dry. 

There is a saying on Wall Street, “being right but being early, is being wrong.”  Right now the trend is up.  It is hard to know when things will change.  Until then, stay the course.  If you are concerned, now might be a good time to pare back.  No one ever went broke taking a profit. 

Have a question about your portfolio?  Give us a call and we’ll schedule something up.  But now that the Tigers are playing baseball again, it just might have to be after the game. 



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