4th Quarter 2012
December 31, 2012

Happy New Year!

We wish everyone the best as we embark into 2013. The excitement and enthusiasm of a new year is definitely in the air, and we look forward to the opportunity to serve you as we move forward.

The end of 2012 brought much drama in the US with the fiscal cliff dragging on until the 13th hour. The markets were fully expecting a deal not to happen. When an agreement was announced, it produced little more than a shrug. For the calendar year, equities and bonds produced excellent results. The S&P 500 and the Dow were up by 16% and 10%, respectively, and bonds were above their long term averages. The economy is continuing to grow, albeit slow and not with much confidence, but the longer term concern is government spending and the amount of national debt. Structurally, those two concerns will be with us for years, as Congress and our leaders attempt to navigate the current scenario, which is complicated task.

There are reasons that give us hope of a brighter future. As many of you might remember from our meetings this year, the energy industry is amidst major transformation here in the US and abroad. The shale oil and gas developments, through the use of new fracking technology, will transform us as a country over the next 10-20 years. We continue to see signs of manufacturing returning to the US because of cheaper raw material costs, transportation and better quality control among others.

Another area that has been improving over that last year is housing. We have seen prices bottom out in many areas, and actually rebound significantly in others. Housing developments and building permits continue to show signs of strength, a good predictor that values will continue to stabilize. The psychological effect of this is enormous for the average consumer. With two-thirds of the economy coming from the consumer, this is paramount for us to have a real economic recovery.

We can’t go without mentioning our transition to Waterway Wealth Management in December. We thank you for your commitment and loyalty during this process. We are fully moved into the new space in The Woodlands and look forward to serving you in this New Year.

Dan Michalk, CFP®, ChFC