2015 Year End Report:

​In the past year, we experienced many things—a prelude to a Presidential election, a renewal of terrorist concerns,—but in the investment markets, we will look back and yawn. Despite some entertaining ups and downs, particularly in the third quarter of the year, the markets ended pretty much where they began, eking out small gains and losses pretty much across the board. The final three months of the year provided investors with gains that were tantalizingly close to wiping out the losses of the previous three quarters. What's going to happen in 2016? Of course, nobody knows with any degree of certainty. But many professional investors are approaching the new year with an unusual degree of caution. By most metrics, U. S. stocks are slightly pricier than their historical averages. That doesn't mean they can't get more so, but it seems unlikely that people will pay a lot more for a dollar of earnings in the coming year than they will today. Meanwhile, economic growth is moderate at best, which suggests that, in aggregate, U. S.-based companies will only be able to increase their value at moderate rates as well. And, yes, there are some warning signs on the horizon. Nobody seems to know exactly what to make of the high-yield bond market. Is the recent downturn is a sign of some long-term problems or a blip on the screen? One could make the argument that emerging market governments and companies with low credit ratings have gotten away with giving their lenders extremely low (by historical standards) interest rates. If rates rise, investors may want to sell those bonds, and there could be a sudden rush for the exits, potentially causing liquidity problems for the funds that are holding them. But one would expect those funds to be preparing for this possibility, and similar dour forecasts have, in the past, had a habit of not showing up in the real world. Another possible warning sign is China, which is becoming the 800 pound gorilla of the global markets. The Shanghai Composite Index lost 43% of its value during a frightening summer selloff, and China's economic growth has clearly slowed from the pell-mell double-digit growth rates of the past 20 years. But lost in the hand-wringing is the fact that China's primary index finished the year with a 9% gain overall. The selloff simply wiped out most of an enormous bull run in the first three months of the year. More troubling than the losses is the government's willingness to try to manipulate its equity markets, which means it's hard to discern the fair value of individual Chinese stocks. Finally, we've finally seen the Federal Reserve Board's first tentative effort to let the short-term fixed income markets find their natural level, which has already led to higher mortgage rates. Nobody knows if or when the Fed will raise rates again in the new year, or what the impact would be, but the fact that it's an election year, and the economy is still not exactly robust, suggests that the central bank's policymakers will proceed very cautiously. None of this is a traditional recipe for a powerful bull run in 2016, but the truth is, we have no idea what returns will be in the coming year. We do, however, have confidence that any future bear market will be followed by a subsequent recovery, and eventually (who knows when?) the U. S. and European markets will again be testing and surpassing their previous record highs. Will that happen in the next 12 months? All we can say is that the markets often punish those who try to outsmart them. If the market goes down in the coming year, it will mean that we all will be able to buy stocks at cheaper prices in anticipation of the next rise—whenever and however it arrives. CURRENTLY – the markets are in an oversold position reacting to the exogenous events that are plastered all over the news headlines. We could be experiencing what is called a "seller's stampede" with people rushing to the exits. These "stampedes" usually last 17 to 23 days and we are currently in what would be day 5. Now is the time to focus clearly on your long term goals with the expectation of low valuations creating a great buying opportunity in the coming weeks. You should not change your long-term plans based upon short-term headlines. As always, we are here to answer any questions or concerns that you may have and would be happy to review your portfolio with you. ITEMS OF NOTE! We have a NEW website- that includes a Blog and a Facebook page – Please take a look, follow us and like us on Facebook. If you have any topics you think would be interesting discussions or informational pieces please feel free to email us your suggestions and we can add them to our line up! Also, we have brought on a new assistant Maegan Norman, she is catching on quickly and a great addition to our office – please welcome her to our 'family'. Here is to wishing you a VERY happy & healthy (and prosperous) New Year! We have completed our move and our new address, phone numbers and emails are: Attentive Investment Managers, Inc. 5345 N El Dorado St Ste 5 Stockton, CA 95207 P: 209-636-4931 F: 209-370-9095 mike@attentiveinv. com athena@attentiveinv. com miriam@attentiveinv. com