Summer Newsletter: Mid-Year Update

Reginald A.T. Armstrong • The Armstrong Report


The most important thing I will say in this update: Congratulations Chanticleers! Wow! What a Cinderella story. Now on to business.

“Brexit” has become a new word in our vocabulary; let’s talk about it a bit.

The Economy

“Brexit” came as a shock to markets as most analysts had expected the UK to remain in the EU. I believe that fears of major economic negatives are overblown, especially for England. Certainly there will be short-term disruptions, and this may be a negative for European economies in the short term. Longer term trading between the UK and the continent will continue. I expect the UK to have sharper growth in the longer run as they have the opportunity to free themselves from senseless overregulation. The big fear in Europe is that other countries will want to extricate themselves from the union. US growth was stronger in the second quarter, likely coming in around 2.5% versus a 1.1% in the first quarter. Disruptions from “Brexit” will have some affect here, but fears should not be overblown.

The Markets

European markets dropped dramatically due to “Brexit”, especially in the financial sector. US markets were also affected, but not as significantly. I do not believe this to be a “Lehman moment” that starts the next financial crisis. The fact that the markets almost fully recovered the two-day swoon by the end of the month hints at this. “Brexit” may, however, turn out to be a “Bear Stearns moment” that gives us a warning about the fragility of a financial system that has too much debt, and where low interest rates have distorted investor risk behavior. US markets remain overvalued, and this continues to be the primary area of concern.

Portfolios

After entering 2016 in our most conservative position, our Strategic Asset Management portfolios gradually increased equities as our WealthProtect System* triggered back in certain asset classes. Fortunately, our system did not trigger a position in either foreign developed or emerging market stocks. We remain conservatively positioned compared to our benchmarks, and we believe that most investors should lean toward reducing risk rather than increasing it.

The Firm

I’m proud to announce that Matt Ridenhour earned his CERTIFIED FINANCIAL PLANNERTM designation. In addition, Emily Ridenhour passed her exams and now holds her Series 7 and 66 registrations through LPL Financial. Well done to both.

On a personal note, my granddaughter Ellie turned one! Of course, a proud grandpa has to share a picture—thanks for indulging me.

Thank you for your continued trust.

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