Halftime

I hope everyone had a lovely 4th of July! 


As the first half of 2017 comes to a close I’d like to put things into some perspective and give a few thoughts for the second half.

Fact #1: Thus far, the largest pullback of the SP500 has been a little more than 2%.  According to Bloomberg, since 1980, the average annual pullback has been 14% at some point during the year.  In fact, there was only one year that didn’t experience at least one 5% pullback at some point: 1995.  In 1995, the worst pullback was only 3% all year.  

Odds are: we may see a 5%+ pullback in the second half of the year.

Fact #2:  Over the last 30 years, there have been 13 times when the S&P500 was up 6% or more in the first half.  In 12 of those 13 years the market went even higher in the second half.  The only year to post a negative 2nd half: 1987, when stocks fell more than 20% in a single day in October (source: CNBC).

Odds are: the second half of the year may finish with more gains.

Fact #3: US Stocks, Bonds and Gold prices all rose in the first half of 2017.  The same can be said for almost all major asset classes including real estate, emerging market stocks and bonds, high yield bonds, and municipal bonds.  To the surprise of most, in spite of Trump’s rhetoric, Mexican stocks were up 23% in the first half.  Didn’t see that coming!  The losers were Russia (down 11%), and oil stocks (down 14%).  (Source: Yahoo Finance)  

Odds are: investors should be pretty happy.

Fact #4: Oil prices fall by 14% during the first half of 2017, the worst start to a year since 1998 when prices were down 19% over the first half.   In 21 of the last 30 years oil prices have increased in the first half of the year.  In the 8 years previous instances that it decreased in the first half, it was a coin flip for the second half.  Four up and four down. (source: CNBC)   

Odds are: there are plenty of surprises in store for the second half of 2017.