October 4, 2018 - Published by IAG Wealth Partners

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Identifying when it is time for change in leadership is very difficult for any organization. Has the current leadership team performed as expected? Are the stakeholders pleased with the results? Are the current leaders living in the past or preparing for the future?

Over the last 12 months there is no doubt who the leaders have been in our clients’ portfolios – U.S. stocks. During this time period U.S. large cap stocks (S&P 500 Index) have risen by 17.91%; U.S. mid cap stocks (S&P MidCap 400) have risen by 14.21%; and U.S. small cap stocks (Russell 2000) have risen by 15.24%.

The stakeholders in this one asset class have undoubtedly been pleased with their market leadership and would certainly vote for another 12 months of similar returns.

On the flip side, anyone with an even modestly diversified portfolio knows that the last 12 months have been much less kind to almost every other asset class. Foreign stocks, emerging market stocks and bond, high quality bonds, and many alternative investments have been left behind on a relative and absolute basis.

Investing is about the future, not the past. Over the next 12 months it is entirely possible that traders will continue to pile into U.S. stocks. It is also entirely possible that traders will conclude that the favorable conditions that benefitted U.S. stocks over the last 12 months will not persist perpetually.

Eventually there will be a change in leadership, and only those who can predict the future know with confidence when market leadership will change and which asset class will be leading.

Please enjoy your current portfolio leaders, but also recognize that next year’s leaders may be different.





Quote of the week:  Daniel Kahneman: “Leaders who have been lucky are never punished for having taken too much risk. Instead, they are believed to have had the flair and foresight to anticipate success, and the sensible people who doubted them are seen in hindsight as mediocre, timid, and weak. A few lucky gambles can crown a reckless leader with a halo of prescience and boldness.”

Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through IAG Wealth Partners, LLC, (IAG) a registered investment advisor and separate entity from LPL Financial.

Past performance is no guarantee of future performance. In fact, the opposite can be true. The information contained in this report does not purport to be a complete description of the securities, markets, or development referred to in this material. Investing involves risk including loss of principal.

The S&P 500 is an unmanaged index of 500 U.S. large cap stocks. The S&P MidCap 400 is an unmanaged index of 400 U.S. mid cap stocks. The Russell 2000 is an unmanaged index of 2,000 U.S. small cap stocks. One cannot invest directly in an index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein

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