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812-853-0878  |  800-355-9624

July 1, 2017

Dear Client: Returns for the major stock indices for the first half of 2017 and the current bond market yields are as follows: Index YTD 2017 Dow Jones Industrial Average +8.03% S&P 500 +8.24%   Fixed Income Yields 1 year 5 year 10 year 30 year Municipals 0.84% 1.35% 1.96% 2.81% US Treasuries 1.23% 1.89% 2.30% 2.83%   The good old days!  When I began work at LYNCH & Associates in 1995, I was a 22 year old recent graduate from Purdue’s Krannert School of Management.  I was excited to be in the investment business and to work alongside my dad who had been in the business since 1979.  Little did I know, we were in a Goldilocks era for investing; the S&P 500 Index was in the middle of a 37% year; followed by a 22% year in 1996, a 33% year in 1997, a 28% year in 1998 and a 21% year in 1999.   Accumulating wealth was easy, and we heard regular drumbeats that “it’s different this time” and “it’s the new economy” when explaining why we could come to expect big double-digit years in the stock markets.  Many in the industry began to believe you could assume a greater than 10% annualized return in the market.  As we know, the market corrected with three consecutive negative years (-9% in 2000, -11% in 2001, -22% in 2002), reversion to the mean ran its course, and valuations came back to normal.  Those with undiversified portfolios (most notably, overweightings in technology stocks), those using leverage to buy stocks, and those who thought it was “different this time” learned many...