Dear Clients + Friends,

Below is a chart showing the investment performance of the managed portfolios and mutual funds of our Investment Advisor, Archer Investment Corporation. We have also included the 2017 Update & Outlook from our advisors Troy, John, and Steve.

For a free review of your investments, call Chris at extension 142, Ben at extension 131, or Paul at extension 102.

Thanks,
Chris Bailey, CPA, IAR
Ben Perron, CPA, IAR
Paul Sullivan, CPA, IAR
Sullivan Wealth Management

 

 

 

                                              10 Things To Do Now For Your Financial Future
 

 

1.

Contribute up to $5,500 ($6,500 if you are 50 or older) to an individual retirement account for 2016

 

2.

Contribute an automatic fixed amount each month to your company's retirement plan or an individual retirement account for 2017 and the future

 

3.

Write down an investment strategy that includes approximately what percentage to invest in stocks, bonds, and cash; when to change the percentage invested in each; and how often to review the performance of your investments

 

4.

Find out how much you are paying to invest in the form of mutual fund fees, management fees and commissions, and other transaction charges

 

5.

Purchase personal finance software to record your income and expenses in 2017 to better understand and improve your financial situation

 

6.

Set a deadline for your financial goals, including when to pay off credit card debt, purchase a home, or retire

 

7.

Determine the risk level of your investment portfolio on a scale of 1 (safest) to 100 (most aggressive). Ask us for a review of your investment portfolio to include the risk level of your investments.

 

8.

Transfer your retirement accounts into a single account to simplify and reduce the cost of investing

 

9.

Store your digital assets, including bank accounts, e-mail addresses and social media accounts, in a secure location to be accessed by family or others in the event of illness or death

 

10.

Undergo a financial plan (free for our clients with accounts above $100,000) to determine what you are worth (what you own less what you owe), your current and expected spending levels, and action steps you should take to improve your financial situation.

 

 

 

 


 

    Archer Investment Performance

 

                           
                           
        Actively Managed Accounts            
                           
      2013   2014   2015   2016        
                           
Aggressive 23.29%   7.62%   -3.35%   7.61%        
                           
Moderate Aggressive 19.54%   9.36%   -2.17%   6.85%        
                           
Moderate 15.54%   7.92%   -1.31%   4.75%        
                           
Income & Growth 10.00%   7.43%   -1.46%   5.56%        
                           
Conservative 6.94%   6.82%   -1.29%   5.02%        
                           
                           
        Archer Funds              
                           
Balanced Fund 18.92%   14.33%   -2.20%   7.51%        
                           
Income Fund -3.19%   5.72%   -0.96%   4.32%        
                           
Stock Fund 33.30%   10.04%   0.52%   0.87%        
                           
                           
                           



The Archer Funds Disclosure: You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund's prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund's prospectus by calling 800-581-7701 or visit www.thearcherfunds.com. Past performance is not guarantee of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
 

 

 

 

 

 

 

9000 Keystone Crossing # 630
Indianapolis, IN 46240
www.thearcherfunds.com


click here to download this report in a PDF format

 

Archer 2017 Annual Update and Outlook:

 

At the start of 2016 we anticipated the market to move higher by 5-7%. We looked pretty accurate until the election turned in results that many were not expecting. The water under the bridge kept moving so let's do the same. Typically from November through April of an election year we see an average 10.3% return in the market since 1926. From November 2016 through this writing on January 4, 2017, we have seen returns of approximately 7.5% in the S&P 500! Whether this takes some steam out of 2017 total return or not is yet to be determined. We will examine why the market should move higher and what role interest rates will play in 2017. Most importantly what will earnings report in 2017? Will earnings break out of this 2015-16 Rip Van Winkle nap?

If you recall in October, confidence in the stock market was waning even with unemployment at anemic levels. We heard doom and gloom consistently out of the talking heads on TV. Now with the election behind most of us, we can focus on earnings growth in the US. Yes, with this President, we are going to see constant headline risk (or Twitter risk), but with this comes some relief in regulation for the financial industry. Any bull market needs financials to perform well if it is to be long-lived. In this case higher rates and less regulation may propel financials higher.



The previous table shows how weak earnings were in 2016. Much of this was attributable to energy as shown in the table below. For 2017, we see Energy returning some of its earnings growth which could propel overall earnings much higher in 2017. In fact, the current estimates are for some double digit earnings growth for the S&P 500 in the latter half of 2017.


However, one statistic we just can not ignore is the prognostication coming from the elite on Wall Street. We know how accurate they are every year! (Hear my sarcasm). For 2017, the experts are predicting a 5% return on the S&P 500. Now that number may not seem too far-fetched. However, for the last 17 years these same experts have predicted 9.6% returns on average and the end result was only a 4.2% return. This is not even close. They have been overly exuberant about returns.



The reason I mention this exuberance about returns: 2017 will represent the smallest gap between the most optimistic estimates and least actual results since 1999. We all know how 1999 ended. I think these estimates tell us there is going to be much more volatility in the stock market in 2017-18. There will be some bumpy rides as everyone jumps and climbs with every headline or tweet.

We can see in the next graph the volatility we experienced in 2015 and 2016. I don't like looking in the rearview mirror, but it is important to note that 5% moves up or down in the market are to be expected in 2017 and beyond.



Let's move on to interest rates. We have seen the yield on the 10 year Treasury Note move up 100 bps to over 2.5% since the election. Many are speculating a move upward in interest rates would ruin any chance of the stock market moving higher. Not so fast. Stocks and interest rates can sometimes go up together as they did in the mid 50's up to 1970. The one thing we don't want to see is interest rates move too high too fast. We expect the Fed to move rates higher at least twice in 2017 and probably three times. This will be a positive for financial institutions and property and casualty insurers. Likewise, deregulation could boost profits for financial firms and many other companies. The table below shows 12 episodes of bond yields rising and the stock market rising as well. Often times, interest rates are moving higher because the economy is doing well; as is the case this time. The US Manufacturing PMI for December came in at 54.7% which says the economy is doing better than OK. With numbers strongly above 50, we see little chance of an economic downturn in the first half of 2017.
 

 

With PMI here at home approaching the mid 50's and world PMI above 50 now we could start to see inflation creep in and move above the average Consumer Price Index (CPI). We will look at the last 46 years and half of the years are lower than the median and half are higher. The average annual returns were positive except for commodities in low inflation years (the lower 23 years). In higher inflation years commodities increased 22% annually vs. -1.9% in low inflation years. So we might expect higher oil prices and gas prices for 2017 if we assume CPI/Inflation are higher than normal. We expect oil to hover around $62 per barrel in 2017. This level will not be enough to derail the economy, but enough to return profitability to the energy sector which should be another positive for the stock market in 2017.

As we keep discussing sectors such as financials or energy, we think it makes sense to look at how sectors perform annually in different years of an election cycle. We all know Health Care struggled in 2016 and was essentially flat for 2015 and 2016 combined as Washington took their pound of flesh from the industry by claiming they were the cause of high insurance and health care costs. Folks, we are aging as a society and we all want to live longer with new drugs. This costs money! I do think making insurance companies compete across state lines will also drive down costs. This may be a possibility if the new administration finds a way to adjust the Affordable Care Act and make it more Affordable.

 



Looking Ahead:

We continue to see opportunities for stocks in lieu of bonds in the next year. As we are in Election Year +1, we see good opportunities for the stock market. If earnings hold up as expected this year, the market could move 9-12% higher in 2017. Although we have discussed bonds moving lower (rates higher) it is possible with all the World's Central Banks, interest rates may be range bound as liquidity is extremely high. In addition, money supply in the US and around the world continues to grow even in the face of Federal Reserve Banks around the world raising rates.

Regards,

The Archer Team

Troy C. Patton, CPA/ABV
Steven C. Demas
John W. Rosebrough, CFA

The opinions contained herein are not intended to be investment advice or a solicitation to buy or sell any securities. Archer Investment Corporation manages The Archer Funds. You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fundís prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fundís prospectus by calling 800-800-1776 or visit www.thearcherfunds.com. Past performance is not a guarantee of future results. The investment return and principle value of an investment in the Fund will fluctuate so that an investorís shares, when redeemed, may be worth more or less than their original cost. Distributed by Arbor Court Capital, LLC, 2000 Auburn Drive, Suite 300, Beachwood, OH 44122 Member FINRA.
 


 

Wealth Management Services at Sullivan & Co. CPAs

 

 

Please call our offices at 301-657-8080 if you have any questions about these or any other accounting, tax, financial planning or insurance related issues. 

 

Thanks,
Chris Bailey, CPA, IAR
Ben Perron, CPA, IAR
Paul Sullivan, CPA, IAR
Sullivan Wealth Management

 

 

 

 

Sullivan & Company, CPAs | 4709 Montgomery Lane | Bethesda, MD 20814 www.eSullivan.net | email: pSullivan@eSullivan.net | Connect With Me on Linkedin

Direct: 240-316-3531 | Main no.: 301-657-8080 Ext 102 | Fax: 301-657-9055