March 2018

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March 2018

The experts (?) are at it again, as they are every year about this time when earnings from the last quarter of the previous year give indications of the health of the economy. In addition to earnings, there are multiple other inputs that analysts and economists incorporate in their projections. Among those this year are fiscal and monetary policy, the effects of repatriation of funds held outside the U.S., lower corporate and personal tax rates, the prospects of an improving balance of trade, and interest rates at relative historic lows—all being factored into prognostications for the economy and markets.

Earnings estimates for the market, as measured by the S&P 500, are being raised by an increasing number of analysts, as are rates for dividend payouts. It’s the stuff we like to see. So where’s the catch—if there is one?

A legitimate catch would be the proverbial ‘Black Swan’ event that, by definition, can’t be predicted. (Except by those who, after the fact, will say, “I told you so!)

The media, ever vigilant for news that can be spun negatively, will continue to create investment ‘noise’ that will seldom be of lasting value to long-term investors. (Minor catches.) On the more esoteric side expect financial media to spend a lot of coverage on Blockchain, Bitcoin, and recreational versus medicinal Marijuana. (My, how times have changed!)

And, of course, we will deal with carry-over catches/concerns: Kim Jong-un, Brexit, the Middle-East, political partisanship, with its bickering and child-like game playing, et al.

In effect much of the same pluses and minuses of past years, just with different figures and focus.

Are we too sanguine with all this? No. We remain comfortable with our philosophy of owning for you passive investments in companies that pay you to own them and increase those payments regularly. They are the epitome of sound investing and will continue serving you well.

Previous column: February 2018
Next column: April 2018