812-853-0878  |  800-355-9624

April 1, 2017

Dear Client:

Returns for the major stock indices for the first quarter of 2017 and the current bond market yields are as follows:

Index YTD 2017
Dow Jones Industrial Average 4.56%
S&P 500 5.53%


Fixed Income Yields 1 year 5 year 10 year 30 year
Municipals 0.85% 1.58% 2.26% 3.07%
US Treasuries 1.02% 1.92% 2.39% 3.01%


The equity markets are off to a strong start in 2017.  The markets continue to grind higher despite fearmongering about a sell-off being around the corner and the misguided notion that bull markets can die of old age alone. We fully concede the market has had an eight-year run from its March 9th, 2009 low; but we believe this was a multi-generational low that corresponded with a mass confluence of structural issues, many of which have been reconciled.  We further understand that economic cycles are quite natural and the emotions and politics that accompany these cycles are often predictable and repeated.  Below are some of the indicators we monitor that are NOT yet in place to derail the bull market:

  • An inverted yield curve/widening credit spreads. This is when long-term rates yield less than short-term rates. Translation: the debt market sees more risk in the short term than the long term.
  • Stock prices relative to earnings ratios excessively above norms. Earnings are still rising and no significant earnings warnings have been announced.
  • Euphoric buying/speculative excess in public equity markets. We see no signs of excessive speculation.
  • Heavy inflows into equity funds. Investment into equity funds vs. bond funds is nowhere near comparable peaks in the markets.
  • Significantly increased IPO activity. When companies “go public” in large numbers, this often correlates with the sign of a market top.
  • Rising real interest rates. Despite a recent rate increase by the Fed, rates are still fairly stagnant and certainly low by historical standards.
  • Excessive merger and acquisition activity. Merger and acquisitions picked up in 2015 but have faded in deal value and volume in 2016.
  • Declining corporate cash on balance sheets. Corporate cash is near record highs.


We regularly discuss the humility necessary for successful investing and admit that even with conviction comes measured decisions with risk; in other words, while we believe the market has more room to rise, we still acknowledge that any excessive short-term conviction is not grounded in the modesty consistent with the best investors.  We will never advise for our clients to jump from an all-in to an all-out approach with respect to your equity positions.  We believe your asset allocations should always be based on a multitude of factors, including but not limited to your personal risk tolerance, belief systems, longevity, and goals.

So, we continue to see the big picture and believe the market forces released from innovation and capitalism will continue to deliver the long-term, historical annual equity market averages of 10 percent.  With this history as our guide, along with the belief rooted in dynamism and the unquantifiable productivity unleashed through innovation, we continue to subscribe to the belief that over the long term your equity assets on average have the potential to double every seven years.

LYNCH & Associates is pleased to announce that Matthew W. Hampton joined our firm last August.  Matthew has been in the investment industry for 11 years, most recently as the manager of the local Scottrade office.  We are very excited about the energy and knowledge Matthew brings to us.  Also, this past quarter our equity commissions with Fidelity Investments have been lowered from $7.95 to $4.95 per trade for clients who receive electronic statements or who have over $1,000,000 in assets.

We genuinely appreciate your business and value the trust you have placed with us in the stewardship of your financial assets.  As always, we welcome and encourage you to schedule an appointment to review your personal financial situation.




Ryan T. Lynch, CFP® ChFC®



Form ADV Part II of the LYNCH & Associates Uniform Application for Investment Advisor Registration and the LYNCH & Associates Code of Ethics are available to all clients at any time. If you would like to receive a copy, please contact Jennifer Farless at (812) 853-0878 or jfarless@LNAonline.com.

Office: 10644 Newburgh Road, Newburgh, IN 47630