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Or, some year-end musings on market performance and what we do…

While we are a planning firm helping clients accomplish their goals; retirement, college planning for children and grandchildren, protecting our client’s net worth, developing a sound legacy plan for an asset transfer to family or charities, and minimizing our clients risk for long term care needs in the fourth quarter of their lives, and other goals, the investment portfolio is a major tool in our planning.

So, what is the market prognosis for the future? Dr. David Kelly, Global Chief Strategist of JP Morgan projects that a balanced portfolio (60% US Stocks\40% US Bonds) will yield in the low single digits for the next 5 years.[1] Take note, this is the forecast for an investor who has “home country bias” holding only US equities and bonds.

For this type of investor and whose planning may require over a 4%-5% return, this is not good news. To have a chance to outperform this result you may have to work with a more diversified portfolio. As I started to talk about 3 years ago, the benefits of a diversified portfolio have rewarded a diversified investor. Consider the following year to date index returns from Morningstar as of 11/30:

Asset Class YTD Return 10 Year Return


S & P 500:                (US Stocks) +22.87% +8.30%
MSCI EAFE USD:   (Int. Stocks) +20.58% +3.44%
MSCI EM USD:       (Emerging Mkts.) +32.49% +1.77%

Source: Morningstar; 11/30/2017

Thinking about Dr. Kelly’s pessimistic forecast for a diversified US portfolio (how much longer can the US stock market bull run last), we would think most investors would want to have exposure to the overseas markets. Also as a firm, we are seeing a higher rate of return on international bonds than the US Barclays Bond Index at 3.6% so far this year (Morningstar YTD 12/13/2017).

I had a conversation with a DIY investor a few months ago with cash on the sidelines and no short or intermediate term needs for the cash. His interest rate in the bank was .01%, so I asked him why he does not have the cash invested. The response was that US markets and overseas markets have been hitting 52-week highs all year and he was afraid of investing at market tops and then suffering losses. Most likely true for US Stocks, but most likely not for the overseas market as you review the 10-year return numbers. And we back up this POV for our clients by purchasing research on long term forecasts to validate our thinking.

But enough about asset class performance rotation, it gets a little boring for us. We are a planning firm and more interested in helping our clients in 2018 with planning issues. Like what a cap means on itemized deductions from tax reform and the impact for clients on their state income tax return if a higher adjusted income tax number comes over from their federal return in to their state returns for 2018.  Or how to make decisions on Medicare gap policies, how to protect our clients from cybercrime (think Equifax), how to help clients who lose the income of the primary breadwinner in their household, how to decide on either a continuing care facility or home health care in the fourth quarter of our client’s lives, and other major planning issues.

But, at the same time, we will continue to look forward in determining the positioning of our client’s investment portfolios. This will be important as we navigate asset class management over the next decade.

Looking for assistance? My contact information is listed below.  For more blogs by Peter, click on this link;

Peter B. Smith is a Family Wealth Advisor at the Planning Solutions Group in Fulton, MD and is an Annapolis resident. He can be reached at 301-543-6008 or by email at

[1] A Guide to the Markets, Dec. 2017, JPMorgan Market Update and Ultra-Short Income ETF Overview Webcast