The economy has been sending out some very positive signals this year. In the first and second quarters, we saw large amounts of corporate spending on capital projects. These range from new facilities, new equipment, and new computers to major new projects. Some of this spending has been possible from the repatriation of money from overseas.

We humans don’t like change. When change comes slowly, we learn to accept it. When change happens quickly, without our understanding of what the change portends, we become worried. The anxiety we feel results in a seeming lack of direction. If we know “what the deal is”, we can take measures to assimilate the change. Currently, our society is going through a number of changes, resulting in a disruption of the status quo.

In looking at the investment markets for the year, thus far, volatility is an important factor. The stock market, as measured using the S&P 500, began the year at 2674. It proceeded to go up to 2873 by early February, a gain of 7.4%. Most investors were very happy thinking that 2018 would be a continuation of the rapid increases from 2017. This was not to be the case.

Last year I wrote about the high earnings multiples of U.S. stocks. One of the easiest measurements of a stock, or stock market, is the relationship of earning to prices. For example: if Company A earns $1 over one year and the price of the stock is $20, its price earnings ratio is 20 (take the earnings and divide it into the share price). If Company B had earnings of 80 cents and it too had a stock price of $20, its price earnings ratio would be 25 (20 divided by .8). Currently, the trailing price earnings ratio (past years’ earnings) for the S&P 500 is 24.91.

Last year I kept waiting for the stock market to make a correction. As I pointed out several times, the price earnings ratio was out of line with historic values. During 2017, in addition to not having a correction, we saw volatility at extremely low levels. The combination of these two gave many investors the belief that the market couldn’t go down during such good times. This led some of our investors to indicate that they wanted to take more risk in their portfolios. As I told each of them, when the market is rising, you think you can take the downturn, until it occurs.

The U.S. House and Senate have each separately passed a bill that will create sweeping tax reforms. There are substantial differences in the two bills. A joint group of Republicans from the House and Senate are working to incorporate their differences into one bill. Unlike the last major tax reform that took place in 1986, this bill is not retroactive to the beginning of tax year 2017, but will be implemented in 2018. One tax provision that will be enacted may impact many of our clients negatively. Beginning in 2018, a cap of $10,000 on state and local tax deductions will be enacted.

People are asking me lately whether the stock market is at or near a peak. Of course, I was also getting this same question at the beginning of the year.

The S&P 500 is generally used as a gauge of the overall stock market. It also has some rather unique qualities. It consists of 505 stocks, which are weighted so that the top 40 stocks make up approximately 45% of the value of the index. In and of itself, that is not so bad considering the Dow Jones Industrial average has only 30 stocks and is also considered a key measure of how large stocks are doing.

Since Donald Trump’s election victory, the stock market has risen in a significant way. At the same time, bonds have tanked! What does this mean?

At this time of the year, I find myself thinking of all the blessings we have. Sometimes our minds are filled with all of the negatives in this world. Our senses can become overloaded with the constant battering of the media, trying to get our attention by telling us all that is wrong in the world. The workplace can be a place of stress and worry. To pick your head up and look around at what is good can become hard.