Second Quarter, FY2019 newsletter
The stock market, whether judged by the Dow Jones Industrial Average or the Standard and Poor’s 500, closed the second quarter near all-time highs. If our only news source was the evening news it would be hard to understand how the markets could close at such levels. The quarter, ending June 30, had no shortage of events to adversely affect the stock market. Whether the news was about attacks on oil tankers in the Strait of Hormuz or tariff wars with China, even an optimist can be challenged. While such events are not to be underestimated, as James Carville famously stated in 1992, “It’s the Economy Stupid.” The economy is still looking reasonably strong. Gross Domestic Product (GDP) growth remains at 3.1% as businesses continue to invest. Consumer spending growth and unemployment stand at 3.6%.
In 1844, Ralph Waldo Emerson opined that “the years teach much which the days never know.” This simple wisdom is certainly true when applied to the stock market. When the stock market is viewed as Emerson might advise, the returns are consistently strong. The average annualized total returns for periods of 60, 30, and 10 years range from a high of 13.12 to a low of 9.8 are meaningful and substantial, even after factoring in the effects of inflation. (Annual total return data is provided by slickcharts.com using calendar years ending December 31, 2018).
At Penobscot it is our responsibility to consider the long term when applying our investment discipline to your investments. We devote substantial time and effort to the ensuring quality of the companies that you own, as well as to diversification and asset allocation. This gives us the perspective to not react to news cycles that drive short-term volatility in the markets, but to keep our focus on the long term. For more than thirty years, on your behalf, we have invested your portfolios in well managed companies that have consistent earnings and dividend growth. This is the discipline on which we have built this company and upon which we will continue to grow.
Speaking of growth, we are delighted to announce that on June 3, J.T. Ligget joined Penobscot with 15 years of experience in the financial services industry. Before coming to the firm, he spent eight years working for BNY Mellon in roles focused on growing the financial advisory practices of several institutional clients. J.T lives in Newton, MA with his wife and two children.
All of us at Penobscot wish you an enjoyable summer.