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First Quarter 2017 Market Letter

During the first quarter of this year, stocks continued their upward march, to the

surprise of many investors. The S & P 500 Stock Index was up 6.1%, although

performance across various sectors of the market was quite uneven. While the S & P

Technology Index was up 10.2%, and the Health Care Index up 7.9%, the S&P

Energy Index was down 7.2%. I believe these movements are the result of

investor’s efforts to forecast the impact of expected Trump Administration policy


Stocks have had an extended run without a significant market correction. The

popular stock market averages are currently trading close to the high end of their

average range, relative to earnings. A pull‐back of some magnitude would not be

unexpected. However, when current equity pricing is viewed relative to the current

low interest rate environment, stocks look less expensive. In addition, significant

amounts of cash remain on the sidelines awaiting investment and should help to

cushion any downturn. Meanwhile, the strength of the U. S. economy coupled with

the negative interest rate environment in Europe is attracting significant foreign


In addition to the above factors, several significant international issues are sitting on

the front burner which could impact markets at any time. These include North

Korea missile testing, the ever present Middle East crisis, Iran and BREXIT.

These issues leave us, as usual, with an unpredictable situation. We will continue to

manage portfolios within client guidelines and focus on the individual securities we

hold, while searching for new opportunities.


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