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A Look Back, A Look Ahead

From the desk of the President:

I hope this letter finds you well.  This is the time of year that most money managers predict the direction of the market for 2017.  We will not try to predict what will happen, but will reflect on what has happened in 2016.  The roller coaster called the stock market continued in 2016 – no big surprise there, but consider the following events that shaped the year:

  1. The S&P 500 Index had its worst ever first week of the year.

  2. The Dow broke its’ own record over 40 times.

  3. Global bonds ended a 25-year advance with a record monthly loss of 4% in November.

  4. Anticipating higher interest rates, municipalities issued the most bonds since 2003.

  5. The Brexit vote in Great Britain brought a lot of jitters.

  6. Gold had its heaviest ever trading day on November 9th as investors sought havens after Trump’s election…then the Dow gained approximately 2,000 points since the election!

With all of that being said, the past year was anything but quiet for investors, a lot of steep drops and sudden accelerations.

The Investment Team at Cornerstone Asset Management Services, Inc. wanted to express our thanks to your commitment and patience in this very interesting environment.  I just wanted to assure you that we have not idly sat still and hoped that things would get better.  We have aggressively improved our research team with some key additions, accelerated our portfolio models to capture some of these sudden drops and accelerations, and added numerous additional layers of analytical research to provide you with the balance of protection and performance.  We have always examined every trade we have ever made with an eye toward identifying strengths and weaknesses.  We now also examine every trade scenario (executed or not) to also determine all possible opportunities.

We believe that the fundamentals of the market need to catch up with the expectations.  Warren Buffet famously observed that ‘only when the tide goes out, do you discover who’s been swimming naked.’

We again appreciate your support and commitment as we continue to improve our process to provide you with the patient and prudent money management.

Sincerely,

George Anastasakis President Cornerstone Asset Management Services, Inc.

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