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HAPPY 2016!

by AOG Wealth Management

FrederickI hope each of you enjoyed the holidays with celebration and refreshment with your friends and family. All of our staff took vacation time over the last month, both for “staycations” at home, and travel. Sheila and I attended the wedding of our godson in Crested Butte, Colorado, and managed to ski a couple of days in-between the wedding festivities. We also had our son home for a full month from Law School at the University of Virginia. He accepted an Honor’s Fellowship with the Securities and Exchange Commission Department of Corporate Finance for next summer. One of the requirements for the fellowship is 80 hours of volunteer service, so Joe worked the last two weeks at the Northern Virginia Legal Aid Society. Joe asked to move home next summer while he completes the fellowship, and we are really looking forward to having him around the house again.

As I prepared to write this 2016 article, I reviewed the 2015 version. My estimation of a 70% chance of a stock market correction was validated in both August and December (and the first two weeks of January!). I think the declines of the last month have occurred because too much weight has been attributed to slowing growth in China, tepid growth in Europe, tumult in the Middle East, and falling energy prices. I believe that slow but steady growth in the United States will probably push stocks higher for the year. However, we are near the end of the seventh year of this bull market run, many companies are anticipating lower earnings this year, and I think the volatility from August and more recently will continue to dominate financial news, and worry investors.

We finally got our first interest rate hike in almost ten years. Federal Reserve watchers continue to debate as to whether the FED acted too soon and may hold or pull back, or if they will continue to look at occasional incremental rate hikes. I tend to favor the later opinion, but wouldn’t be shocked if rates stay flat. Either way, we favor floating rate debt over fixed rate debt in all of our portfolio models.

My biggest “miss” from last year’s prognostication was on energy prices. I had thought that world demand would cause a second half rebound. Usually, tension in the Middle East leads to a rise in oil prices, however, the current fractiousness has just caused a complete breakdown in production quotas from OPEC as Iran comes on line, Libya continues to produce at higher levels, and Saudi Arabia refuses to cut production. Although US production costs have plummeted, we may look for investment opportunities to purchase distressed assets, in addition to our regular energy investments.

At AOG, we have continued to refine our procedures to enhance our client experience. We are reviewing our real estate offerings, and moving to smaller funds that can be more nimble as we progress into later “innings” of this real estate cycle. We have also added a new tax planning strategy that is even more effective than our oil & gas drilling programs. Although we limited it in 2015 to clients with incomes in excess of $300k, we are reviewing it with some of our CPA partners for potential Roth IRA conversions. More on that later in a newsletter article later by Jim Ortlip.

For those of you in the DC area, we have a new and robust schedule of education programs. For those outside the area, we hope to introduce live or recorded webinars to offer similar content to what is available at these education events. Either way, we look forward to seeing you in person, by conference call, or skype for our 2016 reviews.

Securities offered through TD Ameritrade Institutional Services located at 5010 Wateridge Vista Dr., San Diego, California 92121-5775. Investment advisory services offered through AOG Wealth Management, Inc. AOG Wealth Management, Inc. is neither an affiliate nor subsidiary of TD Ameritrade Institutional Services.

Category: Blog, Company Updates