January 2019

After a volatile close to 2018, I want to address a common question: ‘Where are we?’ It’s a good question – 2018 is still fresh in our minds, yet we are looking towards 2020 and wondering what the new decade will bring us. I can’t tell you what excitement and surprises 2019 will bring for you and yours, but I will take this opportunity to give you some insight into my thoughts on the market.

There are two important places to look when finding out what the markets will do over the several weeks and months – backward and forward. Looking back provides a good explanation for why investors are wondering what the next weeks or months will look like. As of Friday, January 18 of this year, we are 13.6% up from the recent trough on Christmas Eve, though we are still down about 8.9% from the high in September 2018. We also experienced more S&P 500 moves greater than 1% in either direction in 2018 than in 2017 and 2016 combined.

In many cases, using numbers to describe markets is a double-edged sword, but some context can help to mitigate some of the negatives. What took place in the end of 2018 could be described as an end to the overly optimistic view that analysts and investors had on the market. This optimism led investors to down-play the risks and costs associated with global events such as Brexit and the US-China trade negotiations. The reason I tell investors to stay the course through events like this is because in the short-term, the markets tend to overreact to such a change in investor sentiment – I think that this is apparent in the +13.6% change in the S&P 500 between 12/24/2018 and 1/18/2019.

To look even further back, I would like to quote a Barron’s article, “Many Unhappy Returns,” by Vito J. Racanelli that quoted a number that surprised me. The number is the nominal compounded annual growth rate (CAGR) of the S&P 500 over the last 20 years, a mere 5.52% - a number which does not even exceed the highest 10-year Treasury that we’ve seen in the same timeframe. I – alongside Racanelli – hope that this means that over the coming years returns will normalize back towards the average 20-year CAGR which since 1928 has been 10.7%

There is a lot to be said about the past year, but what is more important for where the markets are going is what is ahead. Most of the question marks with regards to global politics up in the air as they were when 2018 came to a close. A no-deal Brexit could be harsh for Britain and the EU’s economies as an escalation in the US-China negotiations could be for the US and China. Moreover, with such an interconnected global economy, what is bad for Europe and Asia would likely effect our domestic economy as well.

With all that in mind, it is clear that the markets are doing a better job of pricing in the risk and likely outcomes involved with these events. In the words of Janney’s Chief Investment Strategist, Mark Luschini, “Expansionary fiscal policy, decent wage growth, and an elevated savings rate without evidence of an overdone binge in cyclical spending suggest that there is plenty of fuel left in the tank.” Although 2019 may not look as smooth as 2016 and 2017, we remain in a strong US economy with analysts and investors taking a realistic view on what growth levels are possible for 2019. If you have any questions about your portfolio or would like a second opinion, please feel free to reach out to my team.

Happy New Year,

Chris Willett

Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation or needs of individual investors. Employees of Janney Montgomery Scott LLC or its affiliates may, at times, release written or oral commentary, technical analysis or trading strategies that differ from the opinions expressed here. Investing may involve market risk, including possible loss of principal. Past performance is not indicative of future results.

December 2018

Don’t put all your eggs in one basket.

Venture not all in one ship.

Regardless of which version of this centuries old proverb you have heard, you probably get the idea. You probably already guessed that this month, I am writing about diversification because whenever you hear or read about diversification, you are bound to hear some version of this old saying.

So is that simple, right, just don’t put all you stocks into one basket? Unfortunately, it’s not as simple as it sounds. This saying leaves many unanswered questions – chiefly, what is a basket? Is an individual company a basket? An industry? A sector? Stocks? Bonds? Domestic? International? And why can’t I leave my eggs in one proverbial basket – one really good basket?

Modern Portfolio Theory helps us answer these questions and explains why these answers will help you get a risk-return ratio that is optimal for your risk tolerance and your goals. The importance of a properly diversified portfolio centers on the fact that proper allocation of capital can reduce exposure to certain types of risk, which allows investors to maximize returns for taking a certain amount of risk. Without getting into details that would even make a Finance Ph.D. student’s head spin, let’s narrow in on a popular place where an investor can find risky investments – the stock market.

Financial markets researchers came up with intuitive names for two types of risk you can find on the stock market, namely, diversifiable risk and non-diversifiable risk. As the names imply, the risk of an individual stock includes diversifiable risk (or company-specific risk) which can be minimized via diversification as well as non-diversifiable risk (or market risk). The amount diversifiable risk will decrease as the variety of companies, company sizes, industries, and sectors in a portfolio increases until the securities held in a portfolio reaches a point where the diversifiable risk becomes a negligible portion of the portfolios overall risk.

If we zoom out from this example, we notice that there are many similar and different types of risk that relate to bond markets, international stock markets, international bond markets, and almost any other market for investments. The point I am trying to make is that with proper allocation and diversification, a portfolio can be tailored to your specific goals and tolerance for risk while minimizing unnecessary risks. If you have questions about your portfolio, you’d like us to review how you’re positioned, please don’t hesitate to contact our office.

Happy December and Happy Holidays,

Chris Willett

November 2018

Daniel Kahneman won the Nobel Prize in Economics in 2002 despite never having taken a single economics course. I actually think it’s quite fitting that a research psychologist won this prize because amidst the GDP, earnings, revenue, and other data points, is another factor that plays a key role in our financial markets – emotions.

Without getting into the minute details of Kahneman’s almost 500-page book, Thinking Fast and Slow, I would like to explain the concept that he introduced regarding the two decision-making systems in our brains. Our first system is automatic and happens in an instant, but it is very error-prone and based entirely on emotion and instinct; it is helpful when deciding between options that do not produce significantly different outcomes or when decisions must be made instantly. The other system requires conscious thought and can be slow, but it is significantly less error-prone than our first decision making system. This second system is useful for making important decisions such as home-buying or where to invest one’s assets.

The reason I spent a paragraph of this month’s letter explaining Kahneman’s book is because, I believe it explains why investors become restless during periods of volatility. You already know how your first system feels about volatility – that’s the feeling you got as soon as you looked at your stock tracking app on your phone or your account value on your Janney Online Access. This is the feeling that many investors base their decisions upon, but as I said, the decisions that your first system makes are error-prone and almost entirely based on emotion and instinct.

My piece of advice to all of you for this month is to try to ignore this part of your brain when it comes to making decisions about your investments. If you can ignore you gut-instinct, you have won the battle – you have given the second system in your brain the opportunity to think about the situation that you are in, and make a conscious, informed decision about your investments. This part of your brain will read and interpret data such as estimated GDP growth of 3.5% for the 3rd quarter as well as 0.2% decline in unemployment and wage growth of 3.5% for the month of September all of which indicate that the long-term outlook for the US economy is great. Your decision-making may also include the fact that based on S&P 500 returns, investors who stay fully invested average 7.20% annual returns versus 3.54% and 1.15% returns for investors who miss the best 10 and 20 days respectively during recovery.

Remember, the aim of my advice is to help you reach your long-term goals, and during months like this past October we need not worry about the short-term returns of your portfolio, but rather how your current position will help you reach those goal. If you have any questions about your portfolio or would like a second opinion, please feel free to reach out to my team.

Happy November,

Chris Willett

October 2018

It seems that every month there is something to talk about with respect to taxes. My message this month is that it is time to start positioning yourself, so that you can have an efficient tax filing. With the Tax Cuts and Jobs Act (TCJA) there are sure to be some surprises, and changes in the way you will want to prepare for tax season. With the last quarter of the year approaching fast, I want to plant a few ideas in your head that can help guide you in preparation of tax season.

With this being the first year of filing under the TCJA, you may want to review your taxable income and the tax payments you (or your employer) have already made. There will likely be a sizable difference between this and last year’s tax returns. By taking the time to review your tax withholding and gross income, you can avoid letting the IRS hold on to your money, interest-free, for a few months, and you certainly would want to avoid the unpleasant surprise of a large tax bill in April.
A yearly review of your retirement accounts is always a great idea. While you are going through your retirement accounts to review risk tolerance, retirement income needs, and your account’s beneficiaries, it may also be a good idea to finish the year’s contributions. Additionally, you may be interested in this article on Backdoor Roth IRAs that allow Roth IRA contributions for those who exceed the income limit for Roth contributions. (https://advisor.janney.com/willettgroup/research-and-insights/#investable_themes)
If you have just reached the age where you want to begin withdrawing from your retirement accounts or are required to take minimum distributions, you may want to consider whether you should take a withdrawal before or after year’s end which gives you the freedom to have the distribution taxed in this year’s filing or next year’s. Even though the deadline for your first required distribution is April 1, you should consider taking the distribution before the end of the year to avoid having two distributions in the same tax-year.
Now is also a good time to begin reviewing the capital gains and losses that you have realized during the year as well as unrealized gains (or losses) that could help you reduce your tax liability. There is a lot to consider when figuring out which transactions will make your tax filing as efficient as possible, and it’s never too early to get started.

For more information regarding the TJCA as well as general information about filing this year’s taxes, check out Janney’s 2018 – 2019 Tax Planning Guide at http://www.webtaxguide.net/Janney/.

Have a great month!

Happy October,

Chris Willett

August 2018

It seems like every year summer gets shorter and shorter. The back to school season is upon us. I remember as a kid that feeling I’d get for the new school year. It’s a fresh start, a chance to do something better than the year before. The first day of school is when everyone wears their best outfit and you hear the best stories of the summer. Slowly though the bliss of the first day starts to fade, and after the first week the eyes are already looking to fall break. Which back in my day we didn’t have multiple fall breaks, there was just one: Thanksgiving. This year there is something new though with the school year. I wrote about this briefly in June, but wanted to remind you about this big change in the tax law. 529 plans are now available for use at any level of education. It used to be only allowed at the college level, but now this great option has been allowed to help fund education at all levels. This is a big step because previously the Coverdell accounts that could be used had many restrictions that limited the impact. 529 plans have much less restrictions as to how much money you can put into the plan, and it is not restricted if you make above a certain amount of money.

One of the best things about what I do is getting to see the growth within the families that we work with. I’ve had relationships with parents, their children, their children’s children, and I don’t want to age myself, but I’ve even had relationships with great grandchildren. In client meetings, a main goal of most is typically focused on the family legacy and to have a positive impact on the next generation. This time of year really gets my mind focused on the back to school atmosphere. I wanted to write this month’s letter more to the kids. I wanted to offer three pieces of advice, and my hope is that this will be read to encourage your children.

1. Be YOU

You are unique. You have been given many great gifts that are to be used and shared! A story I heard a while ago was about a conversation between the ear and the hand. The ear said to the hand, “You don’t do anything…all you do is get dirty. I, however, hear everything and help the body.” Then one day the ear had a tremendous itch. The shoulder couldn’t satisfy the ear’s itch, neither could the arm. There was only one part for the job. Everyone has a unique gift and talent that adds to the greater good of all. Be you! Don’t feel the need to conform to what society thinks you should be more like.

2. Be THANKFUL

Giving thanks is a way to offer and build friendships. Just as I mentioned in the story above, a thankful mind is helpful in building great teams and friendships. Be thankful that you have friends, family, and people that care about you and what you want to achieve. They are there to help you.

3. Be OK WITH FAILURE

Failure is not a bad thing. Failure is simply a way to give you better direction. Just because you aren’t able to do something doesn’t mean you’re a failure. It is true that no matter how hard I try, no matter how hard I practice, I could not play basketball in the NBA. If I tried to play against the guys on the court I would fail 100% of the time. That doesn’t mean I’m a failure, it means I’m supposed to succeed at something else. Years ago I read a story about a little girl who did very poorly in school. The teachers had trouble with her because she couldn’t stay focused. She always wanted to be moving around and couldn’t sit still. Her grades suffered so badly that her parents sent her off to a boarding school that offered a focus in dance. That girl ended up dancing in New York City and held one of the highest positions in American Ballet. She failed in school, but succeeded in finding out what she was best at. Look at failure as a guide not a setback.

I wish you all a happy new school year, and I hope this school year is the best one of your life!

Happy August,

Chris Willett

July 2018

Two-hundred and forty two years ago, the Second Continental Congress met and discussed a draft written by Thomas Jefferson. The “Lee Resolution” as it was proposed by Richard Henry Lee of Virginia, was a proposal to declare independence from Great Britain. We celebrate this date on July 4th, however many do not know that the actual vote to declare the United States independence from Great Britain was on July 2nd, 1776. Needless to say, the leaders of our country did not have a Twitter handle in 1776. In the Declaration, there is the famous line that provides a promise that all have rights to Life, Liberty, and the Pursuit of Happiness. My focus in this letter is directed to a critical word: Pursuit.

Years ago the movie “The Pursuit of Happyness” came out in which Will Smith depicts a man named Chris Gardner who was struggling to provide for his family. Some business ventures failed, his family life was struggling, and he didn’t have much except for his drive to provide. In a normal day occurrence, he met a manager from Dean Witter and was able to share a cab ride with him. This manager had a Rubik’s Cube out and couldn’t solve it. Gardner then takes the cube and solves it in the short taxi ride. This impressed the manager so much that he asked Chris to interview for a position as a broker at Dean Witter. Though practically homeless at the time, and up against some of the brightest and well-to-do people in the financial industry, Chris made it to the top of Dean Witter. I bring up this story because it really does embody the spirit of what our Founding Fathers wrote in the words “Pursuit of Happiness.” We are not guaranteed anything in this life. We are not given our wins without work. We can’t rely on anyone or anything to provide for us what we can do ourselves.

This Independence Day my wish for you is that you acknowledge and be thankful for this pursuit of happiness. Day in and day out, I get to see firsthand the pursuit with every family we work with. We map out a plan in which we pursue a certain goal. Pursuit is an interesting word. At its core, our country was founded on the need to pursue. Our founders pursued freedom and a better life for future generations. They made an investment with their time, money, and lives.

The stock market does not work without pursuit. In its simplest function, the market is a place where companies can pursue dreams and goals by offering a share of investment to other pursuers of their own goals. An individual investor might have a goal to save money for the next generation, and so that investor pursues that goal by investing in the pursuit of another’s goal. This circle of pursuit is necessary to the market and to our country’s prosperity.

The Declaration of Independence promises us many things, but for me the promise of the “Pursuit” is something that I am very thankful for. As a country, we might have differences in political affiliations and opinions, but we are bound together in this wonderful idea of pursuit. If we can help you in anyway pursue what you really want, please let us know. Happy Independence Day to your and your family.

Have a great month!

Chris Willett

May 2018

The month of May brings us some common sayings such as that “April showers bring May flowers,” and the market saying of “Sell in May and go away.” This year it does seem that the showers and wintery weather we have experienced here in Atlanta is setting up for wonderful gardens of flowers. The bright colors of spring are certainly popping in the city in the trees. The saying of selling in May comes from the relative historically poor performance of stocks during the months of May through October. Historically, these have been weaker months compared to the turnaround months of the holiday season and beginning of the New Year. But what causes this and is it true? And, if it is true then why doesn’t everyone take part in it?

I started in this business when everything was still done over the phone and orders were made by handing runners an actual ticket order to buy or sell a certain stock. You couldn’t go into an app and make a buy, information was slower to get out, and if you wanted to do anything a person had to be in the office. Typically in the summer months, people go on vacation, including people on Wall Street. This historical fall in volume can sometimes hinder the returns within the market. The lack of volume is caused simply by people taking in their breaks. Kids are off of school and most people’s focus turns to their activities. It’s natural to put the investments on the back burner and decide to call your advisor to meet once school starts up again because your time is taken up.

Investopedia cites that from 1950 to now, the market in the months of May-October have averaged only a 0.3% increase, while the other months have averaged about 7.5%. So if this is the case, then why would anyone keep their investments during these underperforming months? The reasons to stay the course are actually quite vast and include the added cost of transactions, the fact that recent years have bucked this trend, and there are sectors that historically have performed well during these months.

Since Wall Street has adapted more to a fee-based model, the transactional costs are down, but if a person pays commissions based on transactions then the moving around multiple times within the same position can limit your gains.

Over the last 5 years, if you sold the Dow Jones Industrial Average in May and didn’t get back in until November, you would have missed out on an average of 4.5% gain. This is certainly a buck to the trend and saying. My thought is that technology has impacted this saying because now people are able to see their investments on their phones, make trades quickly, and can communicate with their financial advisors during vacation. This has certainly helped volume remain higher in the weaker months, and I would argue that it could potentially keep climbing as technology improves over the next few years.

Lastly as to why it is prudent to stay invested is that there are investments that historically do well in these months. Often times, consumer staples and the healthcare sector have produced stronger than average numbers. I believe this is simply due to the fact that kids are out of school which implies that the staples are needed more within the household, and the families have time to do all the necessary summer checkups at the doctors’ offices.

Selling in May and going away might be a saying, but remember that this saying started a long time ago in a different environment than what we see today. If you have any questions about your portfolio or would like a second opinion, please feel free to reach out to my team.

Have a great month!

Chris Willett

April 2018

As I look out my office window deciding what I wanted to write about for this month’s letter, I see how the warm weather has finally started to bring out the color and new life into the landscape. Trees are starting to turn green again, and as you saw at this year’s Masters, the azaleas are in full bloom. With it being the month of April, there are certainly many articles and discussions about the new tax laws in place. I will touch on the new tax laws during the summer. I wanted to focus this month on a topic we are getting asked about more and more regularly: How do I plan to help my aging parents? This question has come up so much that we decided to host a discussion with industry experts on how to care for aging parents. This event will be Thursday May 3rd, and we welcome you to join us! Throughout my time helping people with this question, and getting input from other experts, there are a few critical areas you should be concerned with. Those including knowing all your options for care, knowing the full financial situation of your parent’s household as well as your own, and knowing how to communicate and understand what your parents want.

The options for aging parents has never been vaster. There are care options ranging from an in home caretaker that has limited duties to full time Ritz-Carlton equivalent assisted living facilities. Knowing which type of care and how much care a loved one will require is an important task. A good tip to determine how much care is needed is simply to write down your parent’s daily tasks and mark which ones they can and can’t do. If your parents are able to do most of their tasks but for example have a difficult time maintaining their home, maybe a helper or family members taking turns to help with the yard or the cleaning would be a great option. Also, depending on the type of care that is needed, you’ll need to determine how this will impact your daily life with more than likely an already full schedule. Finding the balance between what is needed and how much it will cost both monetarily and on a time scale are important first steps.

Next, you will need to look at your financial situation. Often times we will run a retirement plan analysis for a client with different scenarios. Having a family member move into your home can cause added expenses. Though they might seem small, it could have an impact on your ability to save the proper amount for your retirement. It is a critical step to communicate with your financial advisor what type of options you have thought about in terms of caring for your parents. This way, you can work together to determine the best financial plan to accomplish both goals of helping your parents, while also working towards your retirement goals.

Lastly, one of the most difficult things is simply communicating with your parents about them needing some help. Generationally, most of the people needing assistance are part of the “Greatest Generation” and “Baby Boomers.” Times were slightly different back when they were seeing their parents during the final chapters of their life. Your parents might not know the many different ways they can be helped. The best way to start the conversation is by sharing with them the multiple different options and letting them decide what they think would be best. Giving them all the information and showing support for their well-being is usually all that is needed to start the process to getting them the best care.

As I mentioned, we are hosting an event May 3rd to go much deeper into all the aspects of caring for aging parents. We will have experts touch on the legal matters, financial impacts, knowing how to spot dementia and Alzheimer’s and what to do, and how to communicate and facilitate the process of helping your parents receive the care they need. I’d love for you to join us. Please send me a message to reserve your spot today!

Have a great month!

Chris Willett

March 2018

Mark Twain once said “It isn’t what you don’t know that gets you into trouble. It’s what you know for sure that just isn’t so.” This is something that has always resonated with me in my investing career. Thinking that you know something and being certain when in fact the certainty rests on unstable outcomes is the most dangerous mindset an investor can have. During this recent correction, many social media “traders and financial experts” that have massive followings, got decimated by the sudden pullback. Bull markets can make things look easy. As I have been saying though in a few of my letters, this stage of the bull market is when experience and quality advice is prudent. Being selective not only in the sectors, but selective with the companies within the sectors is important at these price to earnings multiples.

Being the month of March, we expect a bit of “Madness,” however the volatility we have experienced already this year has many questioning the future of the bull market. I’m sure on the various news outlets you’ve heard of the term “Black Swan.” This was a theory created by Nassim Taleb to explain rare occurrences that can have tremendous consequences. After researching more into this theory, I learned that part of the rationalization of a “Black Swan” event is the fact that hindsight provides information for which the event could have been predicted or planned for through better risk mitigation.

The other night I watched “Sully,” where Tom Hanks portrays Captain Chelsey Sullenberger, the US Airways pilot who safely landed a fully disabled plane on the Hudson River after striking birds during takeoff. That morning of January 15, 2009 was a clear morning. The flight was a routine trip from LaGuardia to Charlotte, however double engine failure shortly after takeoff was not routine. This event was a “Black Swan” type of event. It was not expected, came out of nowhere, and the consequences could be severe. The training, experience, and calm reserve of the pilot and co-pilot who used their knowledge built over their careers to respond to the event, took a situation that most would’ve experienced panic, but instead, turned it into a heroic story.

The point that I am getting at is that while the sky looks clear and the market looks to be supported by strong economic numbers, now is the time to really ask: What if? What if interest rates rise more than expected? What if the unemployment rate doesn’t continue to improve? What if the sure thing company that has been doing so well has an internal scandal? The steps need to be taken now to prepare. I don’t know when a “Black Swan” event is going to happen, but I know that having experience and having a plan to respond calmly with a clear mind is better than quickly reacting on emotion. Captain Sully and his team was able to land the plane safely because of the training instilled in them to be able to respond to any occurrence. If you have questions about your portfolio, or you’d like us to review how you’re positioned, now is the time. You don’t want to wait until a bird strike to start thinking about a plan for safety.

Have a great month!

Chris Willett

February 2018

I wanted to hold off on writing this month’s note until after I heard President Trump’s State of the Union speech. There have been many things that have happened over the last year that give me a great sense of optimism for the future. The stock market has continued to progress upwards, unemployment is approaching historical lows, the economy from almost all indicators is starting to rev its engine, and we have a new pro-business tax plan. The big effects will soon be felt and we should have time to enjoy a healthy American economy.

I’m not here to give you my opinion on the State of the Union speech, or talk about the brightness of the electric blue tie of President Trump, I’m here as your trusted advisor to help you protect and grow your wealth. This is my own State of The Market. As January comes to a close, we have seen another stellar month in which the stock market gained approximately 5%. This could be a great sign for the year because since 1950 a positive January has happened 40 times, and subsequently a positive year 38 times after those January gains. Hopefully this barometer rings true for 2018.

This year will mark about ten years from the lows we saw in the Great Recession. In many conversations I am having with clients, a common question is: “When will the correction come?” I hate to be the bearer of bad news, but unfortunately I don’t have a crystal ball. We might see a correction over the next week, or we might not see one for the year. The market has a mind of its own. Strictly dealing with the data that we are provided though, I do think this market has selective pockets in which we will see growth. The last few years has led investors to think they can just buy the stock market in an etf, because almost all the sectors have been positive. In my experience, at this stage of a bull market, that should not be the case. To do well in 2018 one will really have to be selective in the companies and sectors you invest in. When you’re climbing a mountain the danger from falling is far greater the higher up you go.

In general, looking at the President’s initiatives from last night’s speech, we should see an influx into infrastructure spending. This could bode well for materials, industrials, and financials. Alongside the infrastructure improvements, the labor force is seeing vast improvements. When more people have jobs, more people have opportunities to save in their company’s retirement plan, thus adding additional consistent investments into the stock market. Lastly, the Federal Reserve is expected to gradually raise interest rates. Though some see this as a stock market deterrent, I think differently. Rising rates are good for the overall market. In an economy that is projected to strengthen, lending will still be needed for businesses to expand. Rising rates will also give conservative investors the ability to look towards safer investments that can provide them more income than they have seen over the past ten years. This ultimately could be a great thing for many different types of investors.

Please let me know if my team and I can be of any assistance to you and your family. Thank you for trusting in us and I wish you a wonderful February.

Sincerely,

Chris Willett

January 2018

Happy New Year! Isn’t the beginning of a New Year one of the best feelings? There is this sense that the prior year is behind you, the future is bright, and your perspective is even brighter! I want to focus this month’s letter on encouragement. One of the best parts about my job is that I get to learn about people’s goals and what they want to achieve in their life, and help them get on the right plan to get them there. But before I get into that, let me just sum up the business side of things.

2017 was a year in which we saw about a 21% gain in the S&P 500. We got to witness many new highs in the market, and in December we saw a new tax bill get signed into law. This tax bill looks great for many companies that have been paying a high corporate rate. Our country should become more competitive, we should see movements of some headquarters back to the States, and we should see a trickle down of positive benefits for individuals in these corporate tax cuts. The main conversation that many financial advisors have had with their clients this past year has been the fact that many people saw underperformance compared to the 21% that was gained in the S&P 500. I want to remind you that if you have had a well-diversified plan, the S&P 500 should not be your benchmark. We are almost ten years removed from one of the worst financial bear markets, and I urge you to stay focused and committed to your plan. The market has almost tripled in this time and though we don’t see a recession around the corner, I urge you to stay focused on the fundamentals of your portfolio.

A member of our team posted on their social media a quote the other day and I wanted to share that with you. Cameron posted that “What you wish to pursue is closer than your next breath.” I wasn’t surprised that this is something he said because at the end of the day, the reason we are in this business is because we love to encourage our clients to pursue their dreams. Often time’s people will only look at the financial side of things and neglect the heart and drive it takes to accomplish something. A new year always gives you a fresh start. What you wish to achieve isn’t as far away as you might think. The task might be daunting, and it might be scary, but that’s why you have a team that is committed to you and your goals. It is my desire to help you achieve your dream. If you’re willing to take that first step, my team and I are willing to be right there with you and help you! We are very good at math, but having been in this business for a long time, I know that when the right team is assembled and everyone works together, 2+2 can in fact equal 5!

I wish you all a Happy New Year and look forward to hearing the great stories that will be made in 2018!

Sincerely,

December 2017

It could be the early Thanksgiving, the glittering reindeer display at Phipps Plaza, or the good markets we have seen this year, but this year I am feeling very festive and ready for a great December. During this time of year, it is easy to dive into all the hustle and bustle of holiday parties, family plans, and getting that perfect gift. With all of the festive activities I want to remind you that you have a closing window to complete any giving for the year 2017. Also, if you have not already taken out your Required Minimum Distribution or RMD, that is a must to avoid penalties.

Moving on to the markets, as I’m writing this the Dow Jones Industrial Average just crossed 24,000! We have certainly seen a good year in the markets, however we have seen a good amount of consolidation towards certain companies. When markets are good, it is natural for people to think that the market will keep going up. The “herd” mentality in behavioral finance is a real thing. Though we don’t see data that would suggest a recession or a stock market crash, the fact is that we are pushing the highest point this market has ever been. The time is now to really look into your portfolio and make sure that over the past few years it hasn’t shifted to where your investments are too heavy into one industry. Historically we know that the market can’t go up every year, and I want you to be in a position that better prepares your investments during multiple scenarios if we do see a pullback. If you haven’t already, please get with us to do a full review. I’d like to close this letter out with a slightly different version of one of the holiday’s best songs:

Chestnuts roasting on an open fire

Jack Frost nipping at your nose

It’s that time of the year, your advisor’s been calling

To talk about your portfolio

Everybody knows with markets up the last 8 years or so

It helps to make the statements bright

Your account, with gains all a glow

Might find it hard to review tonight

But we know that Mr. Market is on his way

He’s loaded lots of earnings news on his sleigh

And every analyst and advisor is going to spy

To see if Bezos will raise the price for Amazon Prime

And so…I’m offering this simple phrase

To kids from 1 to 92,

Although it’s been said, many times many ways

Markets are up, it’s time for your review.

Sincerely,

Chris Willett

November 2017

It is hard to believe that we are already in the month of November. Soon we will start to see Peachtree Rd. jam up with shoppers all trying to get the hot item for someone at Lennox or Phipps. As I look out my office window I am starting to see some of the green transition into the beautiful colors we have come to expect this time of year. Summer is over, school is back in session, our lives start to get a little more normal, and it is the best porch sitting weather all year. I don’t need a calendar to know that in this month of Thanksgiving, it is a great time to take a step back and reflect on what we are thankful for. On a personal level, I am thankful for my wonderful family. They are what drive me every day and they are the greatest support system a man could ask for. I am thankful for my wonderful team members and how everyone molds so well together to create this Willett Group family. I am thankful for the trust that you as clients have put into our group. I am thankful for the bull market and the resolve of the American people. The recession in 2008 certainly was a tough time, however we have now seen a rebound over the last few years within the economy, and I’m thankful that from an economic outlook we are starting to see positive signs.

A few years ago I heard a motivational speaker talk about this little girl. She would wake up in the morning, brush her teeth, look herself in the mirror, and talk about her blessings. This video is on YouTube and has almost 20 Million views. You can find it by searching for “Jessica’s Daily Affirmation.” The little girl goes on for almost a minute shouting the things that she loves and talks about her blessings. The passion and gratefulness that she has is contagious. The challenge was that as adults sometimes we lose this sense of thankfulness. We get so wrapped up in the daily grind of our jobs, our family, and our to-do lists, that we don’t see them as blessings, rather we can sometimes view them as stressful. I hope that in this season you are able to see all of the little things in your life as truly a blessing. My wish is that you will be able to look yourself in the mirror just like Jessica and passionately share your blessings.

One thing that I am certainly thankful for is good health. Cameron, who joined our group at the start of the year, will be taking part in the “No-Shave-November” movement in which people forgo shaving during the month of November and donate the money that they would typically spend on shaving towards cancer research. As you know The Willett Group has been clean shaven for years, but I thought this was a great idea. If you’d like to take part in this, please look out for video posts from Cameron in which he will share information pertaining to the charity.

Once again I thank you for putting your trust into The Willett Group. It is one of the most rewarding feelings to see the impacts that my team has made on people’s lives. I can’t thank you enough for this true blessing you all have given me. I wish you a happy and wonderful Thanksgiving.

Sincerely,

Chris Willett

October 2017

The month of October really kicks off that feeling that Fall has arrived in this area. The mixture of pumpkins, fall colors, sweater weather, and Starbucks pumpkin spiced latte makes Fall official. Like many, people are starting to fill their yard with scary things to represent Halloween. I wanted to bring up two topics of fear that relate to the market: The fear of the unknown, and the fear of the month of October.

Recently I read an article in which Jamie Dimon, the CEO of J.P. Morgan came out and said that Bitcoin is a “fraud,” and that he would “fire any employee who traded Bitcoin for being stupid.” What scares me about Bitcoin is simply the lack of knowledge that I have on the crypto-currency, and more importantly, the lack of knowledge anyone else has on its fundamental workings. In my readings and research, I have still yet to find someone who has a simple description and full understanding of what Bitcoin really is. That is scary to me. As I am entering my 36th year of managing peoples’ hard earned money, one of the biggest lessons I’ve learned along the way is to invest in what you know. I am scared that some are investing in the hype of this crypto-currency and simply don’t know what it is. Investing in what you know has been a common investing 101 rule, and that can certainly help alleviate fears when things get volatile. For example: Right now the stock market is pushing to all-time highs. This is going into an area of “unknown” because we have never seen the stock market at this price point. Though unknown in experience, we do know the price to earnings multiple of the stocks that make up these indices, we know the products and services that the companies create or have, and we know the fundamental financials these companies possess. This is what we use to help build confidence in the cloud of unknown, and will give us resolve in the investments we select if the waters do get choppy ahead.

The month of October can also be a relatively scary time for many investors as well. It just so happens that the 1929 crash, 1987 crash, and 2008 crash happened right at this time of year. Historically we have seen major crashes happen during this time. I wanted to say that though this has happened, the month of October still is statistically one of the better performing months during the year. On average from 1929-2012, October has returned historically 0.4%. The theme of this letter is simply the battle of the unknown vs. the known. We don’t have a crystal ball and can’t tell you where the market is going to be in a year, but we have data to help us prepare and allocate your risk properly. Risk and fear are always associated with the unknown. If there is something you don’t know, understand, or would like to learn more about that we can help with, please reach out. The costumes in October may be scary, but we certainly do not want you to be scared in this market. Have a great month!

Sincerely,

Chris Willett

September 2017

Growing up mostly along the Eastern Seaboard as my father was a career Naval Officer, this time of year typically meant one thing: hurricanes. It always seemed that every few years we would get one that would hit the Carolinas and roll up to Virginia. The devastation left by some of these storms is almost unthinkable. A few days ago, Hurricane Harvey made landfall in Texas. Many people have been concerned about the impacts that this massive storm will have on the markets. History has shown there can be major economic impacts, but also major human impacts. Our thoughts and prayers go out to all those affected by this storm.

Looking first at the economic impact Harvey will bring, we have to look at the area it hit. Texas has seen a large boom over the last few years with the rise in oil exporting, and the technological advancement of shale oil fracking. Houston has benefited significantly from this growth and has grown into the 4th largest city in the United States. Houston was positioned on the North Eastern side of the eye wall, and that is typically where some of the worst attributes of a hurricane can occur. High winds, tornados, and severe flooding, have ravaged Houston and other surrounding areas. Houston’s largest industry is oil and gas. Since landfall, we have seen the production of crude drop sharply because refineries were taken offline to protect the structures and those working there. Because the crude cannot be refined however, we should expect to see the price that we pay at the pump rise to offset demand. Oil does not just go into our cars, it is also used in the production of many plastics. Depending on the amount of time it takes to get these refinery plants back online, we could see an impact on prices such as toys, containers, and daily household items. The overall dollar amount that this storm will cost won’t be known for a long time, however, estimates are being thrown around that run from $30 Billion to $100 Billion. To compare, Hurricane Katrina’s total cost was roughly $130 Billion. I read a headline yesterday that mentioned GDP will boom from the rebuilding after the storm. This certainly can be true, but it is also a skewed number. If your car is totaled by the flood water, then you’ll have to buy a new car. This will be a positive for GDP, and could likely make the auto industry look better. However, GDP does not account for the loss of the previous car. There will also be a significant loss of income, both real and potential. People cannot get to their jobs because the infrastructure is stressed, business deals didn’t go through that were in line to, and people are going to be shifting their time to the clean-up effort while getting back into their jobs. Texas will certainly rebuild, however this storm has certainly created a negative impact on its economy and the people that rely on it.

The other impact outside of an economic one is the human impact. You might see on YouTube a funny video of people water skiing in the streets, or people sharing photos about their new “pool” in the backyard, but remember that the devastation is real. Many people have lost their lives and will lose their lives in the aftermath of this storm. Financially, most people do not carry flood insurance and so they will be pushed towards the government to help subsidize their repair costs. Far greater than the loss of money will be the loss of time and normalcy for millions. This cannot be charted, this cannot be gauged, but needless to say at The Willett Group the people that have been affected by this disaster are in our thoughts and prayers. History has shown us that when we come together we can be ultra-resilient. We will hear many stories of resiliency over the coming months. Stories that show support, courage, and overcoming obstacles can always create a silver lining in a disaster such as this. Thank you again for your relationship with The Willett Group, and have a wonderful September!

Sincerely,

Chris Willett

August 2017

During these times of "fake news" and headlines that can be misleading, we thought it would be an added value to produce a monthly letter in which I share with you what I am thinking in terms of the market. We encourage you to read this and pass along to anyone that you might feel could benefit from this. In my 35 years of having the honor to serve the financial needs of clients, I have seen a lot of different circumstances in the market, and I am excited that I can share with you on a broader level my current thoughts.

As I write this, the DJIA is hovering around 21,600 points. We find it incredible to think that it wasn’t long ago when the United States debt rating was cut for the first time, and we never thought the market would get above the 14,000 mark set in 2007. There are many positive things happening in the global economy, but equally there are hazards. Through client conversations and interactions with many peers in the business, my thoughts are focused on two important themes that include the rise of interest rates and the rising rent levels of multi-family housing.

As of now the Federal Reserve has brought interest rates up at a very gradual pace, but statements from Fed Chair Janet Yellen suggests that this gradual increase could begin to slow. The 2008 Financial Crisis really hurt our market, but to turn 2008 into a positive, it did make us more cautious. I relate what is happening with interest rates to learning how to ride a bike. The first time you get on your parents have a hold of the bike. You have full trust in them that you’ll be ok…then they let go! Through teary eyes you see the pain of scraped knees. After some time to reflect, you decide to try it again, but this time you’re not getting hurt. You’ve got so much padding on in order to safely ride the bike, but the ride will not be very efficient. The accommodative procedures that the Federal Reserve has given investors for the last 10 years has been our padding. Slowly investor’s trust is being restored, and we are starting to see the pads come off. There might be a few falls in our future, but we now have more confidence we can ride. Caution with interest rates has helped the market and has slowly restored some confidence in investors. There is still considerable money on the sidelines in "padded" accounts. This could potentially flow into other investments and we are currently researching the many options available.

Another concern I hear about is the rising rent prices on single and multi-family housing. Some factors contributing to this include tightened restrictions on home buying, millennials hit with student debt, and wages that have been fairly stagnant. Just this past month, the Federal Reserve Board announced that 100% of the nation’s biggest banks passed the Comprehensive Capital Analysis Review, which is a big step in potentially helping this issue because they might be able to loosen current lending restrictions.

I am very thankful that you allow us the privilege to help you and your family manage your wealth. If you have any questions or would like to discuss some of these points in greater detail I’m always available.

Have a great August!

Sincerely,

Chris Willett