February Market Review from Sumner Wealth Management

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February 2016


 In This Edition:

  • Market Review
  • US Economy
  • International Economy
  • Insurance Updates

Market Performance

Stock Market



YTD 2016

 Total U.S. Market1  -5.64%  -5.64%  -2.48%
   Domestic Large Cap Equity2  -4.96%  -4.96%  -0.67%
   Domestic Small Cap Equity3  -8.79%  -8.79%  -9.92%
 International Equity4  -6.80%  -6.80%  -11.95%
   Developed International Equity5  -7.23% -7.23%   -8.43%
   Emerging Market Equity6  -6.49%  -6.49%  -20.91%
Fixed Income



YTD 2016

 U.S. Bonds7  1.38%  1.38%  -0.16%
Cash Equivalent8  0.00%  0.00%  0.03%
1Russell 3000 2S&P 500 Index 3Russell 2000 Index 4MSCI ACWI ex-U.S. Index 5MSCI EAFE Index 6iShares MSCI Emerging Markets Index 7Barclays Capital U.S. Aggregate Bond Index 8Barclays Capital 1-3 Month U.S. Treasury Bill Index   

Dear Visitor,

As I have expressed in my last newsletter, this year the market is going to be volatile and it the market is holding true to my assumptions.  Going forward, we all continue to keep a close eye on the market.  With it being an election year, throws another twist to what the market will do.  Going forward, assuming what could or might come about, stay diversified and never invest with your feelings.

December Market Review

It was a tough start to the year for the global financial markets. We are cautiously optimistic that the remainder of the year will be better than the last four weeks. As for the numbers, the overall U.S. stock market lost 6% in January, with larger companies losing substantially less than smaller companies. That is typically the case in most market setbacks, though of course not necessarily in all. International stocks were also down over 6% last month, with some markets outperforming. Some investors think international stocks lose more than domestic stocks in down markets, but that is a poor assumption. Relative performance is a function of many factors, including relative valuations and current market narratives.
Bonds were the winners among major asset classes last month. And again, it’s interesting to see how fixed income continues to defy most market experts. Yes, yields are low, but bonds remain the ultimate diversifier for equity dominated portfolios. The overall bond market gained over 1% in January. The 10-year Treasury bond closed the month at 1.92%.


Investor's have been taking these banking concerns seriously. For example, the S&P Banking index is down over 18 percent year-to-date, trailing the S&P 500 by approximately 10 percent. Furthermore, high yield bonds have continued to experience almost indiscriminate selling. Such market action may have some wondering if markets are on the verge of another "2008"? That is, is the current downturn just an (albeit painful) correction being driven by investors digesting Fed-induced gains that may have gotten too far ahead of themselves? Or is this one of those instances ("The stock market has predicted nine of the past five recessions" - Paul Samuelson) where markets are actually signaling economic deterioration? Unfortunately, the evidence on the economy is mixed. Manufacturing has been weak, and the recent drift lower in the Institute of Supply Management (ISM) Non-Manufacturing survey indicates that the broader economy might indeed be moving in that direction. However, the job market looks much healthier. Unemployment is at 4.9 percent, and the recent Non-Farm Payrolls report indicated steady wage growth. Furthermore, initial jobless claims fell to 269,000 last week, near their post-recession lows.This Monitor keeps coming back to the adage that "markets loathe uncertainty". In her testimony before Congress this week, Federal Reserve Chairwoman Janet Yellen did not help to allay investor anxiety. Given other central bank forays into negative rate territory, Chairwoman Yellen certainly did not sound definite in her assessment of the Fed's willingness to implement negative rates: "In light of the experience of European countries and others that have gone to negative rates, we're taking a look at them again, because we would want to be prepared in the event that we would need (to increase) accommodation. We haven't finished that evaluation. We need to consider the institutional context and whether they would work well here. It's not automatic." The uncertainly stemming this week from both central and private banks had bond yields plunging and gold soaring to an extent (e.g. U.S. Ten Year Treasury yield down 10 percent and gold rallying ten percent in just two weeks (Source: Sentimentrader.com) rarely seen in the last 40 years. As always, a key component of successful long-term investing is keeping a level head and balanced view during times of extreme short-term emotion.


Global equity markets sold off again in January, as signs of systemic risk unnerved investors around the world. Concerns over the stability of Chinese and European banks, and possible contagion to U.S. banks, had investors crowding into the "fear trade". That is, before somewhat stabilizing by the end of the month, the yield on the U.S. Ten Year Treasury Note at one point broke below 1.60 percent, and the price of gold rose above $1,250 per ounce. Even with Friday's strong bounce (e.g. oil rallied over 11 percent on Friday), stocks were still well down on the week, with the S&P 500 falling almost one percent and international equities dropping over three percent.


Many people purchase a life insurance policy and don’t worry about it after that. However, an annual review of your life insurance coverage, or other insurance policies, is highly recommended, and it could prove beneficial for you. Changes in your life and needs may warrant more coverage, less coverage, or perhaps an altogether different kind of coverage. You may find that you would like your life insurance to help you reach a new or different goal. Your needs may also evolve from temporary to more permanent in nature. Life insurance may be a foundational piece of your financial strategy. It should help you meet your financial security goals. Please call me to set up a meeting during which we can review your needs and current life insurance coverage.

About SWM

Our firm assist individuals, families, and businesses in proactively preparing themselves for a broad range of financial decisions and life events by utilizing a team of specialized individuals to help our clients gain income protection, financial stability, and overall peace of mind for themselves and their loved ones.  We are an Integrated,  Wealth Manager Specialists. 

Mark Sumner
Financial Advisor
Sumner Wealth Management, Inc.                
517 Alcove Road, Suite 202                                            
Mooresville, NC  28117                      
(704) 660-5510  Ext. 401                                        


Investment Management
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   Sumner Wealth Management | 704.660.5510 x 410 | www.SumnerWealthManagement.com
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