“If Paul Revere had been a modern day citizen, he wouldn’t have ridden down Main Street. He would have tweeted.” – @AlecJRoss

The first quarter saw a lot of action with some wild swings in the market. In the end, both the Dow Jones Industrial Average and the S&P 500 finished down for the quarter. While the overall risk in the market has increased, the business outlook is still positive. Unemployment continues to trend lower. Gross Domestic Product is expected to increase. Interest rates are creeping higher (which is good for the health of the economy, we need to get interest rates back to normal levels of around 4% for the 10 year Treasury). The risk that the market is concerned about is systematic risk. Systematic risk is defined as vulnerability to risks that affect the whole market. Some examples of systematic risk would be an earthquake, a weather catastrophe or a White House tweet. It is the latter example that the market fears the most.

On the positive side, our covered call writing strategy benefits from the increased systematic risk. With higher volatility, we are able to obtain higher prices for our covered calls which provides more protection and higher potential returns. On the negative side, the higher systematic risk does send the market on more of a roller coaster ride instead of slow steady market gains. Pending the lack of hurricane induced, earthquake rattling, presidential tweets, we believe that the U.S. Economy has good future growth potential. We are in a “buy the dip” mentality which should benefit us in the long term.

The tax cut bill that is being implemented this year will be a strong tailwind for business. The passing of the tax bill justified the strong year that the market had in 2017. Now that the market had a correction in February (a correction is defined as a drop of at least 10% for the overall market), the market bubble concerns have been dramatically reduced. This will allow the market to resume it’s upward rise, pending a return to company specific news once companies start reporting their financial results in mid/late April.

We have had a very positive response to clients who now have their fees deducted directly out of their accounts. If we only manage your retirement accounts, your fees would be paid with tax free money. You will not receive a 1099-R for the withdrawal. Depending on your goals/current cash flow situation, it may be in your best interest to have us withdraw your fees directly from your account. Give us a call if you have any questions or want to discuss this in more detail.

Sincerely,

Michael Cantlon

Thomas Guyett

Robert Gephart