Daily Capital

Market Recap – Small-Cap Stocks Post The Largest Gains

Market Digest – Week Ending 12/9/2016

Stocks rallied on strong economic data and comments from the ECB suggesting its bond purchase program would continue for some time. Small-cap stocks again posted the biggest gains and are now leading large-caps by almost 10% since the election. The leading theory is that smaller companies are more focused domestically and will benefit most from Trump’s policies, but the actual cause is impossible to know. The dollar rose and bond yields rose again, partly due to investors selling bonds and piling into stocks.

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Weekly Returns:

S&P 500: 2,260 (+3.1%)
FTSE All-World ex-US: (+3.2%)
US 10 Year Treasury Yield: 2.47% (+0.09%)
Gold: $1,159 (-1.5%)
USD/EUR: $1.056 (-0.9%)

Major Events:

• Monday – The ISM non-manufacturing survey rose to 57.2, suggesting strong growth in the US service sector.
• Monday – Travel B.V. will seek up to $428 million in an IPO and renamed itself Trivago.
• Tuesday – Blackstone announced it will issue and IPO for Invitation Homes, its division which bought up nearly 50,000 homes in the wake of the subprime crisis.
• Tuesday – The EU approved Microsoft’s acquisition of LinkedIn.
• Wednesday – Initial jobless claims dropped, signaling the labor market remains strong.
• Thursday – The ECB reduced its monthly asset purchase but said the program would remain open-ended. The Euro fell on the news.
• Thursday – President elect Trump lashed out on a union leader (who represents Carrier workers) on Twitter who criticized his approach to keeping jobs in the US.
• Friday – Exxon-Mobile CEO Rex Tillerson emerged as a leading candidate for Secretary of State.

Our take:

With only three weeks left in 2016, now is the time to take care of calendar year tax related items if you haven’t already. Required minimum distributions are at the top of the list if you’re over 70.5 years old. Don’t wait until Christmas week, as securities trades need to settle before cash can be disbursed.

If you’ve got realized capital gains in taxable brokerage accounts, look to see if there are any meaningful losses you can take to offset them. Be wary of the “wash sale” rule which prevents you from buying back the same or functionally equal security for 30 days. Even if you don’t have gains, you can deduct up to $3,000 in capital losses from your income.

Finally, if you’re not happy with you’re the strategy for your investment portfolio, now is a great time to make changes. There is nothing particularly magical about doing so this time of the calendar year, but since you’re addressing your finances anyway it’s in your best interest to start the new-year with a portfolio that is working as hard as it could possibly be for your retirement.

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

Craig Birk leads the Personal Capital Advisors Investment Committee and serves as Chief Investment Officer. His focus is translating improvements in technology into better financial lives. Craig has been widely quoted in the Wall Street Journal, Bloomberg, CNN Money, the Washington Post and elsewhere. Prior to Personal Capital Advisors, he was a leader within the portfolio management team at Fisher Investments, helping assets under management grow from $1.5 billion to over $40 billion. Craig graduated from the University of California at San Diego and has earned the Certified Financial Planner® designation.

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