May 17, 2017

On this day, 225 years ago, twenty-four merchants gathered together to create what we now know as the New York Stock Exchange. Much has changed since the Buttonwood Agreement. We no longer quote stock prices in fractions. There are no paper tickets strewn across the floor of the exchange. And, now the NYSE handles but a small fraction of the total stock trading volume on any given day.

Our fascination with the Dow Jones Industrial Average continues, however. With the DJIA having climbed past 21,000 recently, clients are asking “how high can it go?” Surely, clients in the 1950s must have felt the same way when the DJIA went from 201.79 in January of 1950, to 517.81 in August of 1956. Likewise, the index skyrocketed from 561.28 in June of 1962 to 983.51 in January of 1966, a little less than four years later.

Early in my career when cold-calling for new clients, and caught up in the fervor of the DJIA having topped 5,000, I encountered a grouchy seasoned investor on the phone. “Mr. Jones, do you currently have over $100,000 invested in the equity markets?” I asked, boldly. The conversation was short, but I’ll never forget it. He snapped back, “I have a lot more than that, young man. I tell you what. Call me when the Dow goes below 3,500 again.” It never did. So, I never did.

But, the lesson stuck. We have seen extraordinary swings in the markets over the last two decades. The clients who have consistently enjoyed the greatest financial successes have been those who have ridden out the tough times, knowing better times were ahead. We are in a period of unprecedented calm in the markets. By any measure, volatility (or more simply put, price swings) is at historic lows. History tells us this will not continue forever. What the catalyst will be for the return of volatility to the markets is hard to predict. Will it be financial? Geopolitical? We don’t know.

What we do know is that great companies strive to continue to pay dividends, even in difficult markets. These dividends become more and more important to us as investors as we look for ways to enhance income. We also know that volatility presents us with our best opportunities to buy great companies at better prices.

As always, we stand ready to guide our clients through sometimes confusingfinancial times. We value the trust and confidence you have placed in us; and strive to earn that trust every day.
Best regards,
Brad

Bradley L. Newman

Managing Director, Branch Manager

PIM Portfolio Manager

Duncan-Newman Associates

30300 Agoura Road. Suite 280

Agoura Hills, CA 91301

Tel: 818-964-0105

Fax: 818-964-0103

Robert Duncan, CFP

Managing Principal

Duncan-Newman Associates

Zachary Breverman

Executive Vice President

Fariba Samtani

Senior Registered Account Administrator

Laura Tully-Cox

Senior Registered Account Administrator

The views expressed by the author are his own and do not necessarily reflect the opinion of Wells Fargo Advisors Financial Network or its affiliates.

Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations.

Investments in fixed-income securities are subject to market, interest rate, credit and other risks. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in the decline in the bond’s price. Credit risk is the risk that an issuer will default on payments of interest and/or principal. This risk is heightened in lower rated bonds. If sold prior to maturity, fixed income securities are subject to market risk. All fixed income investments may be worth less than their original cost upon redemption or maturity.

Dividends are not guaranteed and are subject to change or elimination.

Wells Fargo Advisors Financial Network, LLC, member SIPC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. Any other referenced entity is a separate entity from Wells Fargo Advisors Financial Network.

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