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401(k) Quarterly Newsletter


One of the things that occupied my time while I was growing up was the sport of Baseball. Like so many of my friends I was certain to be a major league ball player. I memorized some of the very most basic concepts of playing ball – keep your head down while fielding grounders, “watch the ball into your mitt” and “keep your eye on the ball”. I was fearless about catching grounders until one day while watching the ball into my mitt, the ball hit a divot and I caught the ball with my eye. It was that experience that caused me to have serious reservations about keeping my head down and watching the ball into my mitt.

Staying consistent with keeping our eye on the ball in the investment world, let’s review where we stand on three key pieces of data that play important roles in determining the landscape of the investment environment – U.S. GDP, Interest Rates and the Stock Market.


Like a pitch that gathers steam as it approaches home plate, the U.S. economy is gathering momentum. First quarter GDP was a positive 2.2%, followed by the second quarter’s number of 4.2%. Third quarter GDP is estimated to rush by at a rate of 3.6%. Adding those numbers together brings us to an average growth rate of 3.3%. Our forecast made back in January was

anticipating a growth rate for the year of 3.0%. If the fourth quarter delivers a 2.0% rate of growth we will hit the three percent growth target, we forecasted.

Interest Rates

Prices are moving higher – homes, apartment rents, health care, gasoline, food, restaurant prices, wages, mortgage rates – just about everything has a bit of an upward hop or skip to it. Higher prices translate into a higher inflation rate, which in turn lead to higher interest rates. The Federal Reserve Board has raised short term rates three times this year and seems to be ready to do one more before year end. We projected the U.S. Treasury 10 year Note to reach a yield of between 3-3.25% by year end. Currently we are at a 3.17% yield and we believe that rate will move higher by the close of the year.


The S&P 500 index of stocks has recorded a 10.56% total rate of return, with dividends reinvested, through the first three quarters of the year. We felt this index would generate a return around 8-10% for the 2018 year. We think the stock market will finish out the year on a strong note. While large tech companies have led the charge thus far, we believe there is room for mid-size U.S. based companies to move higher and that international companies have lagged by more than they should. For now, we are keeping our current asset allocation in place.

Thank you for the opportunity to work with you!

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