05

I S S U E

Efficient Frontier J a n u a r y – M a r c h

2 0 1 7

WORDS OF WISDOM

Benjamin Franklin

“An investment in

knowledge pays the

best interest”

Ralph Waldo

Emerson

“It is one of the most beautiful compensa-tions in life that no man can sincerely try to help another without helping him-self”

Abraham Lincoln

“Always bear in mind

that your own reso-

lution to succeed is

more important than

any one thing”

THIS ISSUE

Flat Tire P.1

A Look Behind and Ahead P.2

Family Time P.3

Upcoming Events P.4

Flat Tire For the past 7 years, the financial media has been

extensively covering the Federal Reserve. Will they

raise or lower interest rates? How high or low will

they go? In fact, it was a fairly good predictor of

what would happen in the stock market. Each time

there was a rumor that the interest rates would

rise, the stock market would crater. Conversely,

the announcement would come that interest rates

were falling and the stock market would rally. Jux-

tapose that with what just happened in December

2016. The rumor was that the Federal Reserve

would be raising interest rates during their Decem-

ber meeting. However, the markets barely react-

ed. Why?

The economy was operating akin to a bike with a

flat tire. When you ride a bike with a flat tire, you

can in fact still move. The effort required to propel

that bike forward is significantly greater than if

both tires were full and operating efficiently. Addi-

tionally, the bike is less nimble. Making adjust-

ments to impediments in the road require more

effort than simply gliding around on two full tires.

Our economy has two tires that propel it forward.

Monetary Policy (Federal Reserve) and Fiscal Policy

(Congress, Senate, Executive branch). The Fiscal

policy has been practically nonexistent. Constant

gridlock in the Senate and Congress has led to our

“Fiscal tire” to be flat, which requires our

“Monetary tire” to bear the load of pulling our

economy. Hence, the reason the stock market was

driven so greatly by the Federal Reserve.

The Dow rose approximately 4.9% from January 1,

2016 to November 7, 2016. Conversely, the Dow

rose approximately 8.2% from November 7, 2016

to December 30, 2016. That means approximately

2/3 of the Dow’s growth occurred during the final

37 days the stock market was open in 2016. All

while the Federal Reserve was raising interest

rates. Using the last 7 years as our guide, this

should not have occurred. However, the “Fiscal

tire” appears to be filling. The common belief is

that the Congress, Senate, and Executive Branch

will actually be employing stimulus to our economy

for the first time in quite a while, which is why we

have seen the stock market rally.

This is great news for our economy and stock mar-

ket. However, there is nothing that has fundamen-

tally changed since November 7, 2016. It is only

the perception that things will be better in the fu-

ture. Therefore, I believe we should be cautiously

optimistic. If the “Fiscal tire” does in fact “refill,”

the recent moves in the stock market are real. If

there appears to be gridlock, we will likely see wild

swings in the stock market. The first quarter of

2017 will be very important, so lets stick with those

“mighty oxen” (see issue #3) until we have some

clarity.

Matt

The majority of 2016 looked to be con-

tinuing the lackadaisical results of 2015.

The S&P 500 from January 2, 2015 to

November 7, 2016 generated a lacklus-

ter 2% return. The story was the same.

Growth continued slowing around the

world (See “Eye on the Numbers” on

Page 3) and there was nothing in sight

that would spur the US, much less the

world, to grow. Additionally, there was

a great deal of uncertainty surrounding

the US elections. The world seemed to

pause awaiting

the results of

the US elec-

tions and the

corresponding

economic poli-

cies that would

be employed by

the inevitable winner. Once the winner

was announced, the stock market rallied

to all time highs. However, the election

overshadowed some major shifts in the

direction of our global economy.

The UK (United Kingdom), in a surprise

to most, voted to leave the European

Union (EU). Furthermore, OPEC finally

agreed to reduce their production of oil.

This, after their attempt at driving Amer-

ican oil production out of business by

oversupplying the world with oil. 2016

was a year filled with surprises and

uncertainty, but the first quarter of 2017

should provide us with an excellent

roadmap for the coming years.

Looking Ahead

There are 3 areas of focus for the first

quarter of 2017. First, is the potential

changes as a result of Donald Trump’s

Presidency. As I previously mentioned,

the stock market has rallied since the

election. That rally is based solely on

the promise of what he intends to do.

Unfortunately,

that rally will

quickly retreat if

his intentions are

not realized. He

needs to get the

“fiscal tire to

inflate” by en-

acting legislation that will inspire compa-

nies to innovate and grow. One such

policy is the repatriation of the approxi-

mately $2.6 Trillion that is held outside

of the U.S. This influx of money could

provide additional investments in skilled

labor and thereby more innovative

products and services.

The second lies beyond our borders in

the EU. There appears to be an in-

creased likelihood that more countries,

in addition to the UK, will be leaving.

This will likely cause volatility in the

short term for international markets.

There will be definitive winners and

losers. It is highly likely that those coun-

tries that have their “house in order”

will thrive, while those that do not will

be forced to alter their course.

The final area of focus deals with ener-

gy. Recently, the largest oil and gas

deposit ever found in the United States

was discovered in West Texas. The

continued additional supply of oil has

kept prices low. I believe this trend will

continue. I have mentioned in the past

that energy is a primary component

needed for growth. Thus, as energy

prices remain low, the costs for econom-

ic growth remain muted.

The United States and world is in the

process of changing direction. If that

change of direction spurs innovation and

growth, the US and the world will great-

ly benefit. The European countries that

have their “house in order” will benefit

greatly, as they will likely follow our

lead. That growth would be sustained

by the low costs of energy. The recent

stock market rally suggests we have

many reasons for optimism. However,

we will soon know whether that opti-

mism is based on a golden opportunity

or a clever salesman has sold us

worthless fool’s gold.

The U.S. stock market started

off 2016 with a whimper but

the final 37 days went out

with a roar.

EYE ON THE NUMBERS*

Oil (WTI)

12/31/13: $98.81/barrel

12/31/14: $53.49/barrel

12/31/15: $37.13/barrel

12/30/16: $53.75/barrel

Gasoline

12/31/13: $3.32/gallon

12/31/14: $2.30/gallon

12/31/15: $2.04/gallon

12/30/16: $2.31/gallon

Natural Gas

12/31/14: 3.0/MMBtu*

12/31/15: 2.32/MMBtu*

12/30/16: 3.68/MMBtu*

Gold

12/31/14: 1206/oz

12/31/15: 1060/oz

12/30/16: 1146/oz

S&P Global 1200

Index

12/31/14: 1897.82

12/31/15: 1834.71

12/30/16: 1944.67

2016 was a year filled with sur-

prises and uncertainty, but the

first quarter of 2017 should pro-

vide us with an excellent

roadmap for the coming years.

A Look Behind and Ahead

EYE ON THE NUMBERS* United States GDP

2014: 2.4%

2015: 2.6%

2016: 1.6% (estimated)

Europe & Central

Asia GDP

2014: 1.3%

2015: 1.7%

2016: 1.2% (estimated)

China GDP

2014: 7.3%

2015: 6.9%

2016: 6.7% (estimated)

* Provided by Thomson Reuter

Ask Matt

Each quarter I will answer a

question (or maybe 2) from

you. I tend to get some great

questions from my clients on a

regular basis during our meet-

ings. I have found that the

answers to those questions

are pertinent to quite a few of

you. Don’t worry though. I will

maintain the privacy of those

asking the question as well as

any personal details. Addition-

ally, if you have a question you

would like me to address in the

practice update give me a call

or shoot me an email

Q: If I have money sitting on

the sidelines, when should I

invest it?

A: I frequently get this question during

periods when the stock market has

rallied significantly. The concern

behind the question is usually relat-

ed to the “buy low, sell high” saying.

The typical belief is to wait until the market “pulls

back.” This is a logical response. Everyone wants

to get the best deal they can when buying some-

thing. However, when dealing with the stock

market, the deal is usually today and not tomor-

row. The Dow was at approximately 6,800 in Jan-

uary 1997. Today it is close to 20,000.

Every dollar invested would have tripled

over that time period, in spite of the “Tech

Bubble” bursting and the “Great Reces-

sion.” Remember, 2/3 of the Dow’s 2016

performance occurred in the final 37 days.

In fact, most of the stock markets perfor-

mance each year happens in short periods.

However, I do not typically recommend investing

everything at once if you have this concern. It is

important to develop a game plan. For instance,

spending the next 5 months investing 1/5 each

month. If the stock market drops by 10% or more

in any given month, invest it all.

This Quarter ’s “Ask Matt”

I began my practice a little over 11

years ago and I have spent a great

deal of that time discussing your

families goals. Frequently, that

conversation turns to a genuine

interest in my family. I have shared

many stories regarding my family in

the past, and it is inevitable that I

am asked for a picture. Unfortu-

nately, this frequent request ends

in me aimlessly searching my phone

for a picture to show to no avail. It

even spurred me to look through

the pictures on my desk. I quickly

realized that most are 10 years old

or older. In fact, half of my family

isn’t even in the pictures on my

desk because they were not alive.

As I admit this, I realize that many

women are chuckling and shaking

their heads at me. So hopefully the

updated picture above will earn me

some points. I even added a pic-

ture of my dog for good measure.

Yes she is a female, no I did not

choose the unmanly little foo foo

dog, and yes I am severely outnum-

bered.

Families are the driving force be-

hind most things we do. I’m grate-

ful that you share so much about

yours with me and that you have an

interest in mine. Even if that leads

to a little chuckle at my expense.

Family Time

Matthew R. LaPlant, CRPC®, AAMS®

Financial Advisor

14755 North Outer Forty Drive, Suite 500 Chesterfield, MO 63017

636-534-2065 (Office)

EMAIL: matthew.r.laplant@ampf.com

WEBSITE: ameripriseadvisors.com/matthew.r.laplant/

Upcoming Events

Medicare and Your Retirement

Wednesday, March 15th

, 2017

6:00 PM—8:00 PM

Ameriprise Financial

14755 North Outer Forty, Suite 500

Chesterfield, MO 63017

This seminar will feature Sherri Beets, Licensed Sales Representaive with

United Healthcare, to discuss the different coverage options as well as the

eligibility and enrollment periods. Complimentary hors d’oeuvres will be

served.

This event is for educational purposes only. Plan-specific benefits or details will not be provided. There is no cost

or obligation. Ameriprise Financial and UnitedHealthcare® are not affiliated. UnitedHealthcare is not a broker-

dealer. Ameriprise Financial and its representatives do not provide Medicare advice.

Events

I f there i s some-

th ing in par t i cu la r

tha t ca tches your

eye, p lease do not

hesi ta te to reach

out to me . I am

ant ic ipa t ing tha t a

major i t y o f the

events w i l l reach

maximum capaci t y .

Efficient Frontier Issue 05 January - March 2017

The views expressed here reflect the views of Matthew R. LaPlant as of 12/31/2016. These views may change as market or other conditions change. Actu-

al investments or investment decisions made by Ameriprise Financial and its affiliates, whether for its own account or on behalf of clients, will not neces-

sarily reflect the views expressed. This information is not intended to provide investment advice and does not account for individual investor circumstanc-

es. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon and risk tolerance. Past

performance does not guarantee future results and no forecast should be considered a guarantee either.

Ameriprise Financial cannot guarantee future financial results.

Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon and risk tolerance. Past per-

formance does not guarantee future results and no forecast should be considered a guarantee either.

The Dow Jones Industrial Average is an unmanaged index that follows the returns of 30 well-established American companies, and is frequently used as a

general measure of market performance. The index reflects reinvestment of all distributions and changes in the market prices, but excludes brokerage

commissions and other fees. It is not possible to invest directly in an index.

The Standard & Poor’s 500 Index (S&P 500® Index), an unmanaged index of common stocks, is frequently used as a general measure of market perfor-

mance. The index reflects reinvestment of all distributions and changes in market prices, but excludes brokerage commissions or other fees. It is not pos-

sible to invest directly in an index.

The S&P Global 1200 Index is a free-float weighted stock market index of global equities from Standard & Poor's. The index covers 31 countries and ap-

proximately 70 percent of global stock market capitalization. It is composed of seven regional indices: S&P 500 Index, S&P/TSX 60 Index, S&P Latin

America 40 Index, S&P/TOPIX 150 Index, S&P Asia 50 Index, S&P/ASX 50 Index, S&P Europe 350 Index.

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