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2016 In Review
2016 was a wild year. It began with “the worst six weeks in equity market history”. The Dow declined more than 1600 points from its 2015 close through February 11th. Then came “the Brexit” in June where the British voted to exit the European Union upon with the market immediately afterward was down 900 Dow points in a day and a half. We closed out October with the market down nine consecutive days heading into the election and there was a moment somewhere around 2am after the results where the DJIA futures were down more than 800 points! Mix in the fact that we have World Champions in Cleveland (Cavs) and the Chicago Cubs won the World Series and this is definitely a year we won’t soon forget.

A Resounding Success
This year highlights the importance of patience, having a plan and not reacting to “news”. As you recall, our advice during those volatile times to simply turn off the TV and ignore it all together (or call us to talk you through it) proved prescient once again. In short, if your goals haven’t changed, don’t change your portfolio.
Despite the volatility, the Dow is closing in on 20,000 up more than 15% for the year. The S&P 500 looks to close out the year near 2300- an all-time high, up nearly 15% in ‘16. Small cap stocks are up more than 20%. The laggards once again are the international markets up around 3% while the broad bond index finished up less than 2% (I’ll talk more on these in my upcoming Looking Ahead to 2017” letter). Diversified, balanced portfolios are up anywhere from 7% to 10% this year- not too bad, especially given our start to the year.
So take a moment and congratulate yourself on a great job- You did it!. Another successful year in the books. While there were volatiles times, we are proud to say we did not have a single client make “the big mistake” and sell out of a well-built, diversified portfolio. We kept our clients fully invested, participating completely in the year-end rally, not sitting in cash trying to time the election. The key lesson this year was by far the critical importance of investor behavior. Not giving into panic and emotion…even better yet ignoring it and living your life.

Our Approach & Why It Works
On the heels of this past year, in the context of my year end letter, it’s worth reiterating our philosophy of advice and why it works. Successful investing is goal-focused and planning-driven versus market-focused and performance-driven. Successful investors act continuously on a plan, tuning out fads and fears of the moment, while the worst investors continually react to economic or market “news” and emotion.
We are in the business of working on multi-decade, sometimes multigenerational financial plans with our clients that include life goals like education, retirement and legacy. Current events, the economy and the markets, in that sense, are essentially distractions. We don’t react to today’s headlines and make no attempt to predict tomorrow’s. Rather we seek to align your money with your long-term goals. We’re planners not prognosticators. Our highest value services to you are planning, portfolio management and behavioral coaching (essentially helping you avoid overacting to good and bad market events).
Our Essential Principles of Portfolio Management:
1.     The performance of your portfolio relative to a benchmark is largely irrelevant to your financial success.
2.     The only benchmark we care about is the one that indicates whether you are on track to accomplish your goals.
3.     We measure risk as the probability that you won’t achieve your goals; not by day to day market volatility.
4.     Investing’s exclusive objective is minimizing the risk of not accomplishing your goals.

Our client portfolios don’t need constant changing or tweaking. As Nobel Prize-winning behavioral economist Daniel Kahneman said “All of us would be better investors if we just made fewer decisions.” I say this not to preach, but to reinforce what makes our philosophy so successful and provide you a clear, straightforward explanation of what we do and why we do it. 

Happy Holidays to all,
Gavin Gleason, President

2016 Year-End Tax Planning

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The Gleason Group 9418 Norton Commons Blvd, Suite 100 Prospect, KY 40059

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The Gleason Group · 9418 Norton Commons Blvd · Suite 100 · Prospect, KY 40059 · USA

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