Currents Winter 2017 Newsletter

Despite the many real geopolitical risks and uncertainties we currently face, investor sentiment is currently more positive than it has been at any time over the past seven years. Higher stock prices, rising longer-term interest rates and the strengthening dollar since President Trump’s election victory signal that the markets expect his policies to spur faster expansion. While this is likely to mean that cash that has been sitting on the sidelines will nd its way into the market, it also points to the likelihood of higher volatility and the potential of short-term market pullbacks. These are the times when it is particularly important to keep your discipline—the one you committed to in calmer times—until things become more settled.

A term coined by John Maynard Keynes, “animal spirits” is used to describe human emotion that drives consumer confidence. According to Keynes, animal spirits can also generate human trust. The rapid shift in the financial markets since the U.S. elections serves as a powerful reminder that a shift in the story can make all the difference to the animal spirits, and the belief in a better future can create its own positive momentum—just as persistent pessimism can nip a recovery in the bud. Will the optimism survive the realities of the new year? Or will the shift to optimism create its own positive reality?

In times of financial crisis we have encouraged you to stay the course, and in times of financial exuberance we will do the same. Whether the animal spirits are spiraling upward or downward, we believe that a sound plan, a steady course, a smart strategy and high-quality, diverse investments will serve you best in meeting your goals. Thank you for putting your trust in us, we look forward to our continued relationship and we wish you and your families all the best in 2017.