“They pledged their lives, their fortunes, and their sacred honor.”
Election Obviously, this is a very hot topic as I write this in July, and it will continue to be so. Most interesting to me, it appears a prediction can’t be made until we have an electoral outcome. Most important, though, is to follow the data, not the narrative (the topic of my last article). To recap, no matter the narrative, the economy is doing better than the negative narrative that seems to prevail in our media or even conversations within our spheres of influence.
Market The market has had a terrific run as one of our major valuation indicators is the price/earnings ratio. The current P/E is around 27, which is higher than a “normal market” ratio of about 20, so either earnings must go up or the market will come down to get back to more normal levels. I think it will be a bit of both, but the unknown is how to value artificial intelligence (AI) going into the future. Momentum due to AI may keep the current rally in technology going.
Bonds/Interest Rates This is where we are focused and think we will be until the end of the year. Rates are high, offering investors great yield in the fixed market, and if rates go down, bonds will appreciate in price. In my opinion, Federal Reserve Chairman Jerome Powell is most important when thinking about the economy after the election.
As I sit here just ahead of the 4th of July, which is important for our country, county and city, I often think of leaders and how proud I am to be an American. So, I will close this article with a quote from Ronald Reagan that struck me as timeless and very to the point. This is a quote from a commencement address he gave at Notre Dame in 1981:
“This Nation was born when a band of men, the Founding Fathers, a group so unique we’ve never seen their like since, rose to such selfless heights. Lawyers, tradesmen, merchants, farmers – 56 men achieved security and standing in life but valued freedom more. They pledged their lives, their fortunes, and their sacred honor. Sixteen of them gave their lives. Most gave their fortunes. All preserved their sacred honor.
“They gave us more than a nation. They brought to all mankind for the first time the concept that man was born free, that each of us has inalienable rights, ours by the grace of God, and that government was created by us for our convenience, having only the powers that we choose to give it. This is the heritage that you’re about to claim as you come out to join the society made up of those who have preceded you by a few years, or some of us by a great many.” QCBN
By Steve Schott
Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker-dealer member FINRA/SIPC. Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Schott Financial Management are not affiliated. These are the opinions of Stephen Schott and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice. The information in this email is confidential and is intended solely for the addressee. If you are not the intended addressee and have received this email in error, please reply to the sender to inform them of this fact. We cannot accept trade orders through email. Important letters, email, or fax messages should be confirmed by calling 928 776-1031. This email service may not be monitored every day, or after normal business hours. Indices mentioned are unmanaged and cannot be invested into directly. The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded bluechip U.S. common stocks. The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. The Nasdaq 100 Index is a basket of the 100 largest, most actively traded U.S. companies listed on the Nasdaq stock exchange. The index includes companies from various industries except for the financial industry, like commercial and investment banks. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal. Diversification and asset allocation strategies do not assure profit or protect against loss.
Steve Schott has been a financial advisor since 2010. His expertise in business ownership and capital management spans banking, office products, office machines and autos. A former owner of Prescott Honda, Steve holds an MBA from the University of Arizona and a Bachelor of Science in Finance from The University of Denver. Steve is a proud graduate of Prescott High School and an avid community volunteer. Steve purchased Tomlinson Wealth Management from its predecessor, Andy Tomlinson, in 2019, making Schott Financial Management a 3rd generation financial firm in Prescott, AZ.