1. Registered Representative of and Securities and investment advisory services offered through Berthel Fisher & Company Financial
Services, Inc. (BFCFS) • Member FINRA/SIPC.1st & Main Investment Advisors is independent of BFCFS
*The interpretations and organizations of these ideas are the confidential thoughts of 1st & Main Investment Advisors
and do not represent the opinions of Berthel Fisher & Co. Financial Services, Inc.
www.1standmaininvest.com
OCTOBER 2016VOLUME 7, ISSUE 3
Q3 2016 Newsletter
As we enter the home stretch in terms of the
upcoming U.S. presidential election the number
of questions we are fielding from clients certain-
ly lends itself to the fact that it is on the top of
everyone’s mind. Especially when considering
one’s investments.
In terms of our Tactical Allocation Portfolio
(TAP) we have continued our conservative to
moderate approach dating back to Q4 2015 on
the equity side. This has not been in anticipation
of the election, rather a shifting of our model
asset allocation strategy as a result of 10% or
more corrections in both Q4 2015 and Q1
2016. Compounded by the Brexit vote which
we now know was a relative non-event. Even
our most aggressive portfolio took on a more
moderate approach, holding an above average
allocation to fixed-income. Slowly but surely
over the course of the year we have seen a shift
back to risk (as outlined in our weekly market
commentaries) yet feel confident that if indeed
the uncertainty of the election presents chal-
lenges we are well positioned to weather the
Q3 Market Briefing
Inflation & The
Fed
The primary job of
the Federal Reserve is to
control inflation while
avoiding a recession. It does
this with monetary policy.
To control inflation, the Fed
must use contractionary
monetary policy to
slow economic growth. If
the GDP growth rate is more
than the ideal of 2-3%,
excess demand can generate
inflation by driving up pric-
es for too few goods.
The Fed can slow this
growth by tightening the
money supply, which is the
total amount of credit al-
lowed into the market.
The Fed's actions re-
duce the liquidity in the
financial system, making it
becomes more expensive to
get loans. It slows economic
growth and demand, which
puts downward pressure on
prices.
Read More Here
storm. Now seems the time to exercise pa-
tience and have faith in the strategy and its risk
management protocals… just in case.
That said, our most sage advice - given the fact
that historically speaking election results have
had a relatively low impact on long-term global
market returns - is to stay the course. Remain
focused on your goals, your target rate of sav-
ings and broader economic trends that shape
U.S. and global economies. And while we
agree that this is a particularly unusual election
cycle we are not here to prognosticate the re-
sult come inauguration day in January. And
instead prefer to remain cautiously optimistic
as election day approaches. Should the market
continue in an upward trend we anticipate an-
other shift ahead, and a return to business as
usual.
As always we welcome your questions and
comments and wish you and your family a
well.*
Fraser, Dudley & Alex
Inside This Issue:
1Q3 Briefing
Did You Know? 1
Inflation 1
97 Main Street W103 Edwards, CO 81632 • 970.926.2500 • 135 S. Main Street Suite: 103 Greenville, SC 29601 • 864.990.2805
Economics is the study of how individuals, governments, businesses and other organizations
make choices that effect the allocation and distribution of scarce resources. There are two general
areas of economics – microeconomics and macroeconomics.
Microeconomics is the study of how individual consumers and producers make their deci-
sions. This includes a single person, a household, a business or a governmental organiza-
tion. Microeconomics ranges from how these individuals trade with one another, to how prices
are affected by the supply and demand of goods. Also studied are the efficiency and costs associ-
ated with producing goods and services, how labor is divided and allocated, uncertainty, risk, and
strategic game theory (Continued on Page 2…).
Did You Know?
*Source: www.investopedia.com
Election Returns 2
*Source: www.thebalance.com
2. Registered Representative of and Securities and investment advisory services offered through Berthel Fisher & Company Financial
Services, Inc. (BFCFS) • Member FINRA/SIPC.1st & Main Investment Advisors is independent of BFCFS
*The interpretations and organizations of these ideas are the confidential thoughts of 1st & Main Investment Advisors
and do not represent the opinions of Berthel Fisher & Co. Financial Services, Inc.
www.1standmaininvest.com
Did You Know?
97 Main St. W103 Edwards, CO 81632 • 970.926.2500 • 135 S. Main Street Suite: 103 Greenville, SC 29601 • 864.990.2805
Macroeconomics studies the overall, aggregate economy. This can include a distinct geographical region, a country or even the
whole world. Topics studied include government fiscal and monetary policy, unemployment rates, growth as reflected by changes
in the gross domestic product, and business cycles that result in expansion, booms, recessions and depressions.
Two of the most common schools of economic thought are called classical and Keynesian. The classical view believes that free
markets are the best way to allocate resources and the government’s role should be limited to that of a fair, strict referee. Howev-
er, the Keynesian approach believes that markets sometimes don’t work well at allocating resources. Therefore, the government
must step in from time to time and reallocate resources efficiently.
Most economic models are based on assumptions that humans act with rational behavior, seeking the most optimal level of bene-
fit or utility. Though this means that some economic models may be unattainable or impossible, they do provide key insights for
understanding the behavior of financial markets, governments, economies and human decisions. Read more: Economics 101 - Video
Presidential Elections and Stock Market Returns
*Source: www.investopedia.com
S&P 500 Stock Market Returns
Year Return Candidates
1928 43.6% Hoover vs. Smith
1932 -8.2% Roosevelt vs. Hoover
1936 33.9% Roosevelt vs. Landon
1940 -9.8% Roosevelt vs. Willkie
1944 19.7% Roosevelt vs. Dewey
1948 5.5% Truman vs. Dewey
1952 18.4% Eisenhower vs. Stevenson
1956 6.6% Eisenhower vs. Stevenson
1960 .50% Kennedy vs. Nixon
1964 16.5% Johnson vs. Goldwater
1968 11.1% Nixon vs. Humphrey
1972 19.0% Nixon vs. McGovern
1976 23.8% Carter vs. Ford
1980 32.4% Reagan vs. Carter
1984 6.3% Reagan vs. Mondale
1988 16.8% Bush vs. Dukakis
1992 7.6% Clinton vs. Bush
1996 23% Clinton vs. Dole
2000 -9.1% Bush vs. Gore
2004 10.9% Bush vs. Kerry
2008 -37% Obama vs. McCain
2012 16% Obama vs. Romney
*Source: DFS Matrix Book
