DIS and DAT - Market Update, March 2016

The ultimate authority must always rest with the individual's own reason and critical analysis.
Dalai Lama

 Performance review by the numbers

We begin by reviewing past performance of broad areas, which is not indicative of future results.

Index                                  Y-T-D                    1 Year               5 year(annualized)

SP 500                               (5.16)%                 (6.12)%              9.58%

SP 500 Value                     (4.38)%                 (8.11)%               7.94%

SP 500 Growth                  (5.87)%                 (4.78)%              11.06%

Russell 2000 Growth        (11.35)%                (16.38)%             6.95%

Russell 2000 Value             (5.98)%                (13.18)%             5.02%

Aggregate Bond                     2.14%                   1.43%               3.34%

MSCI EAFE                          (8.67)%                (15.13)%             0.37%

Gold                                      16.93%                     2.13%           (2.93)%

XOM                                       3.76%                   (6.18)%             1.58%

Commodities                         (7.08)%                (35.39)%             (18.22)%

SOURCE: Yahoo Finance, Morningstar.com – As of 2/29/2016

DIS Commentary

After a strong rally on the last day of January, investors were hoping to carry that momentum into February. Instead the first two weeks had the SP500 down another 5.6% and down 10.3% the first 6 weeks of 2016. With fears of another recession, financials continued to be a laggard, oil hit 13 year lows, and gold continued its strong start to 2016. Jamie Dimon’s $26.5 million purchase of JP Morgan stock seemed to calm investor’s fears as the SP500 rallied closing basically flat from January 31 levels. It was a strange February with defensive sectors like utilities and telecoms continuing their momentum yet economically sensitive sectors like materials and industrials were the best performers for the month.

From a top-down Asset Allocation Perspective, our internal model is suggesting new money be invested 50% Aggregate Bond Index and 50% International Developed markets, which is a change from previous months when it was 50% International and 50% Small-Cap Value. From a relative performance stand point, International Developed markets haven’t been this out-of-favor, comparatively, since 1993-94.

2016 Continues to be a year of volatility. According to J.P. Morgan Market Insights, there have been 23 days of more than 17 (up and down) moves in the SP500, basically equating to 3 days out of the week experiencing large moves.

We appreciate your time and will talk to you again soon,

Reggie McFadden, CFA 

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Performance Disclosures

All indexes are unmanaged and an individual cannot invest directly in an index. Index returns do not include fees or expenses. (JPM: Guide to the Markets)

The S&P 500 Index is widely regarded as the best single gauge of the U.S. equities market. This world-renowned index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Although the S&P 500 Index focuses on the large-cap segment of the market, with approximately 75% coverage of U.S. equities, it is also an ideal proxy for the total market. An investor cannot invest directly in an index (JPM: Guide to the Markets)

The Russell 2000 Growth Index® measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. (JPM: Guide to the Markets)

The Russell 2000 Value Index® measures the performance of those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values. (JPM: Guide to the Markets)

The MSCI®EAFE (Europe, Australia, Far East) Net Index is recognized as the pre-eminent benchmark in the United States to measure international equity performance. It comprises 21 MSCI country indexes, representing the developed markets outside of North America. (JPM: Guide to the Markets)

The Barclays Capital U.S. Aggregate Index represents securities that are SEC-registered, taxable, and dollar denominated. The index covers U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indexes that are calculated and reported on a regular basis. (JPM: Guide to the Markets)

The Dow Jones-UBS Commodity Index is composed of futures contracts on physical commodities and represents 22 separate commodities traded on U.S. exchanges, with the exception of aluminum, nickel, and zinc. (JPM: Guide to the Markets)

The spot price for gold bullion is determined by market forces in the 24-hour global over-the-counter (OTC) market for gold. The OTC market accounts for most global gold trading, and prices quoted reflect the information available to the market at any given time. (Ishares) 

XOM is the common stock symbol of ExxonMobil Corporation that trades on the exchange