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Quarterly Commentary

Aug 05 2015
189

2015 Q2 Quarterly Commentary: Slowly Simmering – Barely Cooking!

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During the summer months some of us like to cook outside – and slow cookers seem to be all the rage this year! The food may seem to take forever to cook, and we often can become impatient waiting for signs of progress.

We may have the same feeling when contemplating most of the world investment markets. Investors have finally decided that a diet of foreign bonds paying negative interest is unhealthy. While in the U.S. we are still w-a-i-t-i-n-g for the Federal Reserve to raise interest rates. The latest forecast is for a September rate increase. We can only hope! In the meantime the bond markets are suffering and definitely cooling. We saw big declines in bond values and returns for the second quarter, as hope for an interest rate increase in June evaporated.

Consumers in the U.S. enjoyed a little relief as energy costs declined – a useful prelude to the summer driving season instead of the usual increases in gas prices. Housing is recovering, employment is stabilizing and, although excruciatingly slow – we are indeed cooking here!

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Apr 13 2015
211

2015 Q1 Quarterly Commentary

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“March Madness isn’t just for basketball anymore”

We experienced lots of thrilling and unnerving action both up and down the court in the markets. At year-end 2014, the S&P 500 was the All-star and International positions were the under achievers. The opposite proved true in the first quarter of 2015. The chart below captures the S&P 500’s volatility during various periods as it rotated between winning and losing for an overall quarterly return that was just under 1%. Lots of action – not much traction!

Uncertainty around the interest rate policy of the Federal Reserve has contributed much to the volatility. Fed Chair Janet Yellen’s last statement announced, unhelpfully, that the Fed is “data dependent” and the pace of interest rate increases could “speed up, slow down, pause, or reverse.” The main driver of the stock market is always corporate earnings, rather than political or media pronouncements. The strengthening U.S. dollar hurt U.S. companies’ foreign earnings, which were down 5.3% in the 4th quarter 2014. A strong dollar makes U.S. purchases abroad cheaper and foreign purchases of U.S. products more expensive. Most of the companies in the S&P 500 receive at least 50% of their earnings from abroad.

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Jan 28 2015
223

2014 Q4 Quarterly Commentary

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In our quarterly reports to clients, we always include commentary on the markets, economy and other financially relevant information. Our 2014 Q4 reports recently went out, and we wanted to share our commentary with you as well. We would also love to hear your questions and comments in the comments section below.

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New Year’s Resolution – “Do More of What Makes You Happy”

We think that would be a good resolution.  However, focusing on the financial markets around the world will rarely help!  The Media elicits emotions that cause lots of dissatisfaction and fear.

In 2014, for example, few categories did as well as big blue chip American companies.  The S&P 500 index did great, so now the news is full of advice about how you “should” have invested!  Of course with us, you DID invest in the S&P 500 – and your diversified portfolio also invested in bonds and other assets worldwide.  Remember 1987, 2000, and 2008 when the S&P 500 was, as the pundits later agreed, the one place to avoid investing in – EVER AGAIN! (Source)

Our society seems to love being unhappy about markets!  “Are they going to correct?”  Yes – we just don’t know which ones, when, and how badly.  “Did we miss out on the ‘best performance of the year/decade/century?”  “Which asset class was the one we should have exclusively chosen?”

If you had thought that the S&P 500 was the best place to be in 2014, think again.  The top performing market of 2014 was China (up 44%)!  Who would have guessed?!

We saw a fascinating report from the Medical Media about that other perennial New Year’s resolution – wanting to lose weight.  There exist as many, if not more, diets as there are sure fire ways to “beat the market”.  The American Medical Association threw up its hands and opined that although all diets may work, the only one certain to do so is “the one the patient will stick with!”  We think that makes a lot of sense, and we try hard to design investment portfolios that “the client can stick with.”

2015 will probably be the year the Federal Reserve raises interest rates – very carefully (Source).  We expect that our US bonds and stocks will weather the change well, despite turbulence and dire headlines.

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