Filter by:
Newsletter | October 2018

October 23, 2018

Newsletter | October 2018

We separate the relevant from the noise, to bring you timely content that helps you on the path to and through retirement! 

This month’s newsletter starts off with an update on the economy and the stock market. We then move on to:

  • Climbing interest rates
  • Will there be a seismic shift towards value investing?
  • Strong expected holiday sales
  • Oil prices reaching $100 a barrel!
  • Finally, we wrap up with an example of how patience pays when it comes to your portfolio… Walt Disney’s housekeeper was worth millions by doing this!

State of the Markets- S&P 500: 2,769.41 (+3.58% YTD THROUGH 10/19/18)

After rising 7.2% in the third quarter, the S&P 500 Index collapsed 6.4% in the first nine trading days of the fourth quarter. The sell off was caused by rising interest rates, fear of a global trade war, softening global growth, and earnings jitters (several companies in the industrial & material space warned of higher costs and currencies being weak).

Historically, October kicks off a seasonally strong period for stocks. In fact, in mid-term election years, October tends to be the best month of the year, rising 3.3% vs. a typical return of 0.9% [1]. However, it has a reputation as the most volatile month of the year and this year is no exception.

What should an investor do now? First, never sell into a market that is in panic mode. Second, re-examine your asset allocation. But most importantly, do not panic! As we wrote about in last month’s newsletter, we are still positive about the economy and the stock market, and our position has remained firm.

Looking ahead, earnings are expected to grow 20.3% for 2018 with sales growth of 8.1%. For 2019, earnings are expected to grow 10.4% with sales growth of 5.3%. These are very strong growth rates and with consumer sentiment at its second-highest level since 2004, we expect the economy to remain strong.

In fact, the latest third-quarter forecast for GDP is 4.2% – well above what most economist’s expected.

Bottom line: Despite the recent sell off, the economy continues to grow, earnings are very strong and inflation remains in check. Remember what Warren Buffet said: “Be fearful when others are greedy, and be greedy when others are fearful.”


The 10-year Treasury rose to 3.26% earlier this week, its highest level in 7-years. The 2-year, 5-year, and 7-year Treasury climbed to their highest level in 10-years. These rates did not rise because of inflation concerns but rather because we are experiencing strong economic growth.

In addition, President Trump has been critical of the Fed, blaming the central bank’s rate-hiking efforts for the stock market weakness. Some critics think the Fed’s rate strategy is too aggressive, just when the economy is starting to take-off.

We have been saying for months that a Fed misstep (in terms of tightening too quickly), could derail the stock market. In our opinion, the Fed will likely walk back some of their more hawkish comments in the days and weeks to come.


Since the financial crisis began, growth stocks have grown 463.3% compared to 357.7% for value stocks. Both beat the S&P 500 Index, which returned 319.8%. According to a study by Eugene Fama and Kenneth French, evidence has demonstrated that value outperforms growth over the long-run.

From June 30, 1927 through December 31, 2016, value stocks’ annualized return was 13.5%, outpacing growth stocks’ 9.2% return by a wide margin, according to AFAM Capital.

In recent years, growth investing strategies, reflecting companies whose profits grow consistently and at a faster clip than the overall market, have by far been the best performers in recent years. However, in late July, the divergence between value & growth was 4.3 standard deviations relative to the returns of the past 10 year period. [2]

We have been big believers in value stocks as the foundation of a prudently invested portfolio for over 2 decades, so it will be interesting to see how the dynamics between growth and value stocks continue to change.


According to Deloitte, holiday retail sales (November – January) could hit $1.1 trillion. The corporate consulting firm expects sales to grow between 5 – 5.6%, due to low unemployment and strong consumer confidence. Deloitte says: “We think most retailers will have a good holiday season if they have a distinctive value proposition. We think off-price will continue to do well, and there will be a rebound in luxury [3].”

E-commerce is expected to have another strong year – rising 22% from $110 billion to $134 billion. Much of this increase, unlike in years past, will come from brick and mortar retailers. These retailers are putting greater emphasis in online operations.

In order to meet this booming demand, companies are ramping up holiday hiring. FedEx is expected to hire 120,000 workers, UPS- 100,000 workers, Target- 120,000 workers, Macy’s- 80,000 workers, and GAP- 65,000 workers. The problem will be in trying to fill all these openings. This will probably mean much higher wages to entice workers to commit.


Brent Crude, the global benchmark for oil prices, rose 4.1% in the third quarter to $82.72 a barrel. This is the highest level it’s been in nearly four years. The November 4th U.S. sanction deadline to stop buying Iranian oil, OPEC’s decision to leave production steady, and supply disruptions in Venezuela, have all helped to push prices higher.

In addition, a strong and vibrant U.S. economy should keep fuel consumption near record levels. These factors have ignited talk of $100 a barrel, which hasn’t occurred since September 2014. [4]

Buy & Hold Works!

Successful investing requires patience (i.e. time, not timing). A great example of this was Walt Disney’s housekeeper, Thelma Howard. She kept the Disney home clean for 30 years until her death in 1993. In November 1994, her estate- worth $9 million- was divvied up.

How did a housekeeper get so wealthy? “Starting in the 1950’s, she was given a few shares of stock for Christmas and birthdays and that sort of thing. She was told to hang on to it, and she did!” [5]. From 1980, until she died (14 years later), Disney shares rose more than 1,300%.

Mia joined the TNRA team on July 11th. She has come a long way both in travels as well as in her training.  Mia was found on the streets of Houston, TX and wound up on death row at a high kill shelter.  The employees found her to be so sweet that they reached out to the local rescues in the hope of saving her life.  Three Little Pitties to the rescue!  The team at Three Little Pitties took her in and got her into a loving foster home and began the search for just the right family.

Now that she has her forever home in Clackamas, she is blossoming into the pup we all knew she could be.  She receives training three times a week to help her overcome her shyness and teach her how to be a well-balanced dog.

Mia now spends her days lounging the TNRA office and lounging around the house when she’s not on the clock.  You can expect a warm welcome from this sweet girl when you come by the office. But please don’t be upset if she doesn’t get up from her fuzzy bed.

~Melissa Gray

Operations Manager & Proud Fur Parent

Thanks for reading this month’s newsletter!

Did you enjoy reading this?  Do you want more content like this delivered to you each week?

>>Click here to subscribe to our newsletter <<

Have questions about your situation?

If you have questions about your specific situation or portfolio and whether you are well positioned for this current market and

economic environment,click on the button to schedule your 15-minute Portfolio Strategy Call!


[1] Chang, Sue and Ryan Vlastelica. (2018, October 1). Should investors fear October, a historic “jinx month” for stocks? Market Watch. Retrieved                         from

[2] Gold, Howard. (2018, August 7). Opinion: It’s finally time to shift some money into value stocks. Market Watch. Retrieved from  shift-some-money-into-value-stocks-2018-08-07.

[3] Mander, Edmund. (2018, September 19). Holiday retail sales could hit $1.1 trillion, Deloitte predicts. ICSC: International Council of Shopping Centers. Retrieved   from

[4] Ramkumar, Amrith. “Oil Rally Reignites Talk of $100 a Barrel.”  The Wall Street Journal, 2 October 2018, p. R1.

[5] Associated Press. (1994, October 28). “Kids’ Charities Reap Some Of Disney’s Magic.” Deseret News. Retrieved from


The views outlined in this newsletter are those of True North Retirement Advisors (TNRA) and should not be construed as individualized or personalized investment advice. Any economic and/or performance information cited is historical and not indicative of future results. Economic forecasts set forth may not develop as predicted.

Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for a given client or portfolio.

Investing in stocks includes numerous specific risks including the fluctuation of dividend, loss of entire principal and potential illiquidity of the investment in a declining market. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond and bond mutual fund values and yields will decline as interest rates rise and bonds are subject to availability and change in price.

Any questions regarding the applicability of any specific issue discussed above should be addressed with TNRA. All information, including that used to compile charts and/or tables, is obtained from sources believed to be reliable, but TNRA has not verified its accuracy and does not guarantee its reliability.

Moreover, you should not assume that any discussion or information contained in the newsletter serves as the receipt of, or as a substitute for, personalized investment advice from TNRA or from any other investment professional. To the extent that you have any questions regarding the applicability of any specific issue discussed above to your individual situation, you are encouraged to consult with TNRA or the professional advisor of your choosing. All information, including that used to compile charts, is obtained from sources believed to be reliable, but TNRA has not verified its accuracy and does not guarantee its reliability.

More articles by

David G. Wilson

Subscribe to Our Blog

Sign up to receive the latest news and blog posts in your inbox!

Subscribe to Our Blog
Planning for your retirement as a business owner can be complex - saving enough, minimizing taxes, and planning your exit. Let us handle the details of your retirement so you can focus on what you do best: running your business.