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January 2017

Dear Valued Clients and Friends,

Last year, despite tempered expectations and sluggish economic growth forecasts, the stock market again showed investors a wild ride. At finish line, the S&P500 ended the 2016 up 9.5%. However, the market was in negative territory for much of the early part of the year and even fell back to a year-to-date loss at the end of June. Markets moved slightly higher in the summer and fall but really only rallied in the last 2 months of the year, with a total November + December gain of 5.3% (S&P500), accounting for over half the gains for the year. The NASDAQ Composite followed a similar pattern checking in with a mid-year loss of over 3% before rallying in the back half of the year to finish up 7.5%.

The 4th quarter saw a dramatic turn in the markets with the post-election rally. Prior to the election, markets appeared as though they might set up for a correction. With a Trump victory, the bulls took charge, giddy at the prospect of a large financial stimulus package, lower corporate and personal tax rates, and repatriations of billions of dollars in offshore cash on company balance sheets. Traders' zeal was most evident in the behavior of smaller company stocks whose revenues are more concentrated domestically. The Russell 2000 index of small company stocks had a post-election rally of 20% in the weeks immediately after the election.

S&P 500

Looking into 2017 however, analysts and economists have mixed views on the markets. On the negative side, a huge rally in the US dollar would challenge US exports while a Trump administration has talked up anti free trade rhetoric, even threatening to slap tariffs on some imported goods. Some analysts are concerned that the post-election rally simply borrowed the potential gains from 2017, already bringing stocks back to being fully valued (if not overvalued). If a reduction in the capital gains tax rate takes effect, undoubtedly some investors will take the opportunity finally sell their bull market winners.

On the positive side, the US economy does finally appear to be 'not too hot, not too cold,' with employment, wage growth, and GDP growth all trending positively but not excessively so. Corporate profits have resumed growth after almost two years of being depressed by declines in the fortunes of energy companies. With Republicans now controlling the Senate, House, and the Executive branch, some level of new stimulus is sure to be enacted. Markets will be watching the policy-making process closely as Trump has no experience in this area and the Senate in particular is unlikely to rubber stamp the Trump wish list. One area to watch on the policy side is a potential fractious split in Congress between the "no increasing the national debt" faction of House Republicans and those eager to push through tax cuts and stimulus spending.

Interest rates have jumped with the Fed finally raising rates and signaling intentions to increase rates further in 2017. Still, rates are near historic lows and increases seem unlikely to dampen the long slow recovery in home prices.

While we don't delve into tax advising we are not blind to the economic impacts of taxes on personal investing. Trump's proposed tax plan collapses the existing 7 marginal tax brackets into just 3 and may result in tax increases for a significant portion of investors that fall into these two income groups:
  • Individual tax filers: Between $112,500 and $190,150
  • Married or joint filers: Between $225,000 and $231,450
Ordinary Rate Brackets under Trump's Paln and Current Law

While it is too early to know how the personal income tax laws will change, changes are most certain to occur and this is a policy area where all of us will certainly be affected. Source: tax-plan-0/full

To future profits,

Don Lansing
Chief Investment Officer.

Garrett Beauvais
Portfolio Manager

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Thank you for your time and interest!

To obtain more information or to schedule a FREE personal consultation so you may fully understand the benefits our clients receive, please contact us at:

Phone: (512) 255-8722
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Advisors, Ltd.
3720 Gattis School Road #800-214
Round Rock, TX 78664-4660

About MarketTrend Advisors

MarketTrend Advisors is an investment advisory firm that specializes in the trend-following strategies outlined in this report. We offer a variety of strategies that can be used to build portfolios to meet almost any investment objective. We divide our strategies into two main groups: "Long" strategies and "Trend" strategies. The Trend strategies follow the trend up or down. The "Long" strategies are typical investment portfolios that usually remain fully invested, potentially raising cash or moving to income-focused investments when the market is weak. We have a variety of "Long" strategies depending on how aggressive or conservative you want to be. These strategies will make their money when the market is moving higher. The "Trend" strategies will provide protection in a down market and add to gains in an up-trending market. By combining the Long and Trend strategies you get all the components needed to build a successful long-term portfolio:
  1. A portfolio invested in the best performing indexes, ETFs, or stocks
  2. Substantial exposure to global growth through international holdings
  3. Protection for your overall portfolio from down-trending markets When the market is going up, you benefit as aggressively as you wish.
When the market is going down, your assets are protected, or even profiting. Over time, you will see returns that exceed the market if only by AVOIDING market corrections and bear markets. By using one of our more aggressive long strategies in an uptrend, you will see even better performance.

  1. MarketTrend Advisors, Ltd. is an independent registered in the States of California, Florida, New York and Texas.
  2. Other Securities Industry Affiliations or Activities. MarketTrend Advisors, is not registered as a broker or dealer, nor do we have any partners or employees who are affiliated with any broker or dealer. See Form ADV, Part II for official declarations.
  3. MTA portfolio strategies assume risk and no assurance is made that investors will avoid losses. No representation is made that clients will or are likely to achieve profits or incur losses comparable to those shown. Performance results are shown for illustration and discussion purposes only. The performance information has not been audited. However, the information presented is believed to be accurate and fairly presented. All performance figures in this presentation are net of management fees and commissions. Management fees are charged to actual client accounts on a monthly basis. Accounts include both taxable and non-taxable IRA accounts.
  4. Regarding the MTA Blend strategy: This strategy was migrated into the MTA Wealth Builder strategy and closed in December 2008.
  5. Regarding actual performance: Actual performance for all strategies includes all commissions as well as management fees (fees range from 1% to 2%). Actual performance statistics are based on the inception date of each strategy through the end of the last business day of the most recent month listed in the monthly performance section of this report. Starting with Q4, 2006, returns include only assets of Fidelity clients who were fully invested in their respective strategies. Returns before Q4, 2006 include all Fidelity client assets regardless of investment status. Results do not include the assets of clients at other brokerage firms.
  6. Regarding future performance: Past performance may not be indicative of future results. Therefore, you should not assume that the future performance of any specific investment or investment strategy will be profitable or equal to corresponding past performance levels.
  7. S&P 500 refers to the Standard & Poor's 500 Large-Cap Corporations Index. The index is designed to measure performance of the broad based US market and consists of 500 American companies. This index is used for comparative purposes only. (Data is taken from Yahoo! Finance.)
  8. MarketTrend Advisors is not liable for the usefulness, timeliness, accuracy, or suitability of any information contained in its web site or of any of its services. The user understands that the information given can and will fail to predict the direction and magnitude of market price movements and the user can lose money when using this information.
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