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Monday, September 15, 2014

Weekly Update 9 13 14

Word for the week is Education.

"Education is the most powerful weapon which you can use to change the world." Nelson Mandela

"My mother said I must always be intolerant of ignorance but understanding of illiteracy. That some people, unable to go to school, were more educated and more intelligent than college professors." Maya Angelou

"An investment in knowledge pays the best interest." Benjamin Franklin

"Education is not the filling of a pail, but the lighting of a fire." William Butler Yeats

"Education is learning what you didn't even know you didn't know." Daniel J. Boorstin

"It is the mark of an educated mind to be able to entertain a thought without accepting it." Aristotle

In investing there are no constants. The world is changing. Companies are changing. Your circumstances are changing. Adapting to change is the only way to achieve successful investing that matches the world, with your goals and needs.
It must be then, that education around all the things that add to a successful investment plan must be continual.
If you don't have time to keep up with economic data, geo-political events, investment product innovation, investment manager process and the ever changing environment in all of these areas, you may be better off handing the reins to professional investment advisor.

This past week I was in Kansas City and was briefed by a Washington DC insider about happenings in Iowa, listened to nine fund investment managers on their outlook and the processes within their particular fund disciplines and heard about some of the inside of decision making from a former General who was Chairman of the Joints Chiefs of Staff in the military under G. W. Bush.
Next Week I am in Des Moines learning about new Estate Planning Strategies and at Iowa State University Professional Advisor Conference.
I will tell you more about learnings at upcoming events for clients.
Today I want to point out some things about the following graphs and tables.
  1. You should notice that a comparison of Marrs Wealth Management's Benchmark Blended Index though on average is nearly equal to the S and P 500 Index in a blended 10 year return, outperformed in dollar weighted return and Compound Annual Growth Rate.
  2. You should also notice that given the downturn in the,       S and P 500 large Cap US Stock market in 2007-2009, it took until early this year 2014 for stocks to catch back up the blended benchmark index.
  3. Rebalancing and managing a portfolio make a difference in providing added value.
  4. Marrs Wealth Management does not primarily use index based investments, we find managers and investments with superior management, consistent value added risk managed outperformance and we continually review and monitor those investment strategies and investment managers based on the changes inherent in your world and individual circumstances.

This is for information only. Actual results may be different. This is not a recommendation for any investment or portfolio allocation. You cannot directly invest in an index. Investments may lose value. Please consider carefully you risk tolerance and investment objectives before making any investment.
 



The Marrs Benchmark is rebalanced quarterly and consists of the following: Barclays Capital 1-3 Year Gov Bond (4%), Credit Suisse Hedge Fund Index (5.75%), Hennessee Market Neutral Index (5.75%), Hennessee Global/Macro Index (5.75%), BlackRock Global Allocation I (5.75%), Barclays Capital US Agg Bond (4%), Barclays Capital US Corporate High Yield Bond (4%), Barclays Capital Global Agg Bond (4%), Barclays Capital Municipal Bond (4%), Hennessee Fixed Income Index (4%), MSCI World Index (9%), Hennessee Long/Short Equity Index (9%), MSCI Emerging Markets (1.5%), MSCI ACWI Commodity Producers Index TR NET (3.75%), PIMCO Real Return Instl. (3.75%), Greenhaven Continuous Commodity Index (3.75%), MSCI World/Metals & Mining TR Net (3.75%), MSCI World/Real Estate TR Net (3.2%), Barclays Capital US Intermediate Corporate (4.8%), S&P 500 (10.5%)



Despite outsized gains the last three years, some continue to believe the stock market carries no risk.

Most of the recent gains are a result of low borrowing costs to major investors, investment firms and companies buying stock.

All of this is artificially suppoorted by very loose monetary and fiscal policies that have not yet reached the overall economic environment to spur added growth.

With growth still below the Federal Reserves targets, Labor Force Participation dropping, entitlements growing, geopolitical tensions widening and stock price increases coming from price to earning expansion versus earnings growth, you may do better looking in other areas for investment exposure.


Marrs Wealth Management, LLC can help and guide you, with expertise that spans over the past 30 years through all types of market environments.

Alan Greenspan recently gave 9 reasons why the economy can't get going and why it won't anytime soon.

http://www.thinkadvisor.com/2014/09/12/9-reasons-why-economy-stinks-according-to-alan-gre?eNL=541349cd160ba07c417c62e5&utm_source=dailywire091214&utm_medium=enewsletter&utm_campaign=dailywire&_LID=77168108&page_all=1
 


The S and P 500 index trended down last week. - 1.10%
The 10 year Treasury Yield index trended up last week.
+6.22%
The US Dollar index trended up last week. + .53%
The CRB Commodities index trended down last week. -2.12%
The Gold Index trended down last week - 2.98%
Inflation Linked Bonds trended down last week - 2.49%
US Aggregate Bond Index trended down last week - .66%
The International Aggregate Bond Index trended down last week -.90%
The New York Composite Index trended down last week. -1.46%

The Dow Jones World Index trended down last week -1.41%
 

The NCREIF Index is aggregated and reported quarterly and is a total return broad representation including rents and appraisal of non-traded Commercial Real Estate.

2014 2nd qtr + 2.91%

Year to date US stocks, inflation linked securities and real estate lead. 


Many investors take the wrong approach looking primarily at recent return and average percentage rates. Overall risk measures and managing downside risk play an increasing role in end results.

Investors instead should be focused on managing Dynamic Beta exposure, evaluation Active Share, Sharpe ratios, Treynor ratios, Sortino ratios and Alpha ratios.

 
Please forward to anyone who may be interested in this information.

The above is for informational purposes only and not an offer or recommendation to buy or sell any Security. Past performance is no guarantee of future return. All decisions about investments should be made within parameters of risk, time frame, financial position and overall asset allocation.

Monday, September 8, 2014

Weekly Update 9 6 2014

Word for the week is Diversification.


"Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas." Paul Samuelson

"How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case."  Robert G. Allen

"The individual investor should act consistently as an investor and not as a speculator."  Ben Graham

"Diversify your investments." Sir John Templeton

I am not against investing in risky assets. All investments carry some risk. Even a mattress can burn up in a fire or become moldy.
I do think that failure to manage investments in any asset class or security is imprudent.
Evaluating value, diversification and selling or taking profits at appropriate times makes very good sense.
Many are frozen in a passive investment mindset, without any investment management strategy.
You can make a very good return in investing your money prudently with good management. A lot better return than the mattress, savings account or passively following a single investment.
Consider a column in the latest Financial Planning magazine by Craig Israelsen.

"Which Assets Deliver the Steadiest Returns?" Financial Planning Magazine, September 2nd 2014 by Craig Israelsen

"Investors tend to treat large-cap U.S. stocks as a basic portfolio building block. But large-cap U.S. stocks have not been one of the more stable portfolio ingredients in recent years."

"Last year's darling, the S&P 500, had an average three-year annualized return of 3.15%. That's the second-worst showing of all the asset classes, and not that much higher than cash, which had an average three-year return of 2.31%"

"This analysis is not aimed at denigrating the S&P 500 but rather to demonstrate that a variety of other asset classes offer impressive consistency and level of performance - and are worthy of consideration when building a portfolio."

 "A 12-ingredient, equally weighted model produced an average three-year annualized return of 8.15% - two and a half times higher than the S&P 500."


Israelsen gets at the matter very convincingly. There is more to investing than the stock market, yet many are only fixated on stocks.

If you had a well diversified and strongly managed portfolio of multiple assets, real estate, commodities and alternative investment strategies you would probably do just as well with a lot less risk. Maybe even a lot better. 


The Marrs Benchmark is rebalanced quarterly and consists of the following: Barclays Capital 1-3 Year Gov Bond (4%), Credit Marrs Wealth Management Blended Benchmark is a diversified blend of asset class indices reconstituted on a quarterly basis. Suisse Hedge Fund Index (5.75%), Hennessee Market Neutral Index (5.75%), Hennessee Global/Macro Index (5.75%), BlackRock Global Allocation I (5.75%), Barclays Capital US Agg Bond (4%), Barclays Capital US Corporate High Yield Bond (4%), Barclays Capital Global Agg Bond (4%), Barclays Capital Municipal Bond (4%), Hennessee Fixed Income Index (4%), MSCI World Index (9%), Hennessee Long/Short Equity Index (9%), MSCI Emerging Markets (1.5%), MSCI ACWI Commodity Producers Index TR NET (3.75%), PIMCO Real Return Instl. (3.75%), Greenhaven Continuous Commodity Index (3.75%), MSCI World/Metals & Mining TR Net (3.75%), MSCI World/Real Estate TR Net (3.2%), Barclays Capital US Intermediate Corporate (4.8%), S&P 500 (10.5%)



The above is not a recommendation for any investment product or portfolio allocation. This is for informational purposes only. Marrs Wealth Management designs individual portfolios and recommends products to implement investment plans based on an overall assessment of each individuals' personal financial position and goals. You cannot directly invest in an index. Past performance is not a guarantee of future return. Investments may lose value.


Diversification is all the more important as we move to higher levels within the various asset classes. Stocks are at a high point now. They may continue to move higher.
However, this is not the way investments usually behave. Investments in one asset category such as stocks seldom move up in a straight line.

Consider most of the deep value stock investment fund managers we utilize and follow are building up cash.
It was reported last week that Warren Buffett had increased cash holdings and now held about 55 Billion Dollars in cash. George Soros also recently began buying more gold as a defensive move.

This makes even more sense when you look at current valuations.

The chart below shows that at current Cyclically Adjusted Price to Earnings ratios, based on data since 1926, the average return is 0.9% for the next ten years in the large cap US Stock Index represented by the S and P 500 Index. 

The investment standard does not begin "buy high"!




Long only and passive buy and hold can be a great very long term policy. However if you were a passive index, buy and hold investor in 2007 it took you until early this year 7 years later to get back to even.

The stock market may continue its upward move for a while. However you may do better staying ahead through diversification. 


The S and P 500 index trended up last week. + .22%
The 10 year Treasury Yield index trended up last week.+ 5.04%
The US Dollar index trended up last week. + 1.29%
The CRB Commodities index trended down last week. - 1.62%
The Gold Index trended down last week - 1.45%
Inflation Linked Bonds trended down last week - 1.20
US Aggregate Bond Index trended down last week    - .28%
The International Aggregate Bond Index trended down last week - 1.57%
The New York Composite Index trended up last week. +.25%
The Dow Jones World Index trended up last week + .24%

The NCREIF Index is aggregated and reported quarterly and is a total return broad representation including rents and appraisal of non-traded Commercial Real Estate.

2014 2nd qtr + 2.91%

Year to date US stocks, inflation linked securities and real estate lead. The yield on the ten year treasury is down 19% year to date.



Many investors take the wrong approach looking primarily at recent return and average percentage rates. Overall risk measures and managing downside risk play an increasing role in end results.

Investors instead should be focused on managing Dynamic Beta exposure, evaluation Active Share, Sharpe ratios, Treynor ratios, Sortino ratios and Alpha ratios.

 
 The above is for informational purposes only and not an offer or recommendation to buy or sell. Past performance is no guarantee of future return. All decisions about investments should be made within parameters of risk, time frame, financial position and overall asset allocation.

Tuesday, September 2, 2014

Weekly Update 8 30 2014

Word's for the week preparedness and patience.

"It usually takes me two or three days to prepare an impromptu speech." Mark Twain

"It is not often that a man can make opportunities for himself. But he can put himself in such shape that when or if the opportunities come he is ready." Theodore Roosevelt

"The secret of success in life is for a man to be ready for his opportunity when it comes."  Benjamin Disraeli

"The key to everything is patience. You get the chicken by hatching the egg, not by smashing it." Arnold H. Glasow

 "Opportunity doesn't make appointments, you have to be ready when it arrives."  Tim Fargo

"Your responsibility to be ready for the fight, never ends."  James Yeager

"Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish." John Quincy Adams

 "Chance favours the prepared mind." Louis Pasteur

"He that can have patience can have what he will."


"Be Prepared"; this is the Boy Scout Motto! Oh yes, I was a boy scout. It was a great way to learn about responsibility, service and preparedness.
I was nominated to become part of "Order of the Arrow". In order to become officially part of that order, I had to stay out in a wooded state park for a weekend with other initiates. We could only have two matches, some food, a knife and a sleeping bag and a back pack with some clothes.
That was one cold late October weekend that I will remember. It did teach me that I could make it, with a minimal amount of resources and to rely on others in a team effort.

As an Investment manager I am always reviewing, studying and analyzing.
Investing is a game of preparing and patience.
There are times of extreme overconfidence and extreme fear that steer the investment landscape away from fundamental realities.  
Nervousness or speculation are dangerous postures when making investment decisions.

The last two years there have been developments that may be coming to a point where you may not have be prepared for, or if you have prepared you might be losing patience.
The Stock market has been going up and up with little concern, yet this is at some point unsustainable.
Unless we are patient and prepared we might get caught up in the noise and not hear the real message.



In the Business Insider August 5th, 2014 Henry Blodget wrote a piece titled "Now It's Time To Think About What Will Happen When Companies Stop Buying Back So Much Stock ..."


St Louis Fed

Blodgett states; "As corporations have borrowed more and more money, the level of corporate debt relative to the size of the economy has continued to increase. As the chart below shows, this ratio is now at its highest level ever - even higher than it was in 2007, before the last debt-fueled economic implosion. Importantly, corporate net debt - the amount of debt that corporations are carrying minus the cash they have on hand (green line below) - is also at its highest level ever as a percent of the economy."




Also on August 5th 2014 Doug Short wrote a piece in Seeking Alpha titled "The Q Ratio And Market Valuation: Monthly Update".

Tobin's Q Ratio is a way to value companies and financial markets. It is a ratio derived by James Tobin of Yale University. Tobin is a Nobel laureate in economics. The Q ratio is the markets value of a company divided by that companies replacement value based on total assets.

Doug Short "Quick take: Based on data extrapolations through the end of July, the Q Ratio is 72% above its arithmetic mean and 85% above its geometric mean. If we use the calculation method of Nobel Laureate James Tobin, the ratio is 90% above its arithmetic mean and 108% above its geometric mean."



Doug Short "Unfortunately, the Q Ratio isn't a very timely metric. The Z.1 data is over two months old when it's released, and three additional months will pass before the next release."




Mark Hulbert wrote an article last January in Marketwatch titled; "Six Ratios Say This Market Is Way Overbought".
 In the article he states;
  • "Price/earnings ratio. Calculated by dividing stock price by earnings per share, this is perhaps the most widely followed of all valuation ratios. Based on the previous 12 months' earnings, the S&P 500's current P/E ratio is 18.6, which is higher than those that prevailed at 24 of the 35 bull market tops since 1900. (Data before 1957 are for the S&P Composite Stock Index, since the S&P 500 didn't exist yet.)
  • Cyclically adjusted P/E ratio. This is the version of the P/E championed by Yale University Professor Robert Shiller, the recent Nobel laureate in economics. It is calculated by dividing a company's stock price by the average of its inflation-adjusted earnings of the preceding decade. For the S&P 500, this ratio currently stands at 25.6, which is higher than what prevailed at 29 of the 35 tops since 1900.
  • Dividend yield. This is the percentage of a company's stock price that is represented by its total annual dividends. Since this yield tends to fall as prices rise, and vice versa, the market should register some of its lowest readings near its tops. The S&P 500's yield currently stands at 2.0%, which is lower than the comparable yields that prevailed at all but five of the bull-market tops since 1900.
  • Price/sales ratio. This is calculated by dividing a company's stock price by its per-share sales. Though it is lesser known, it still is championed by many investors because it is based on data that are less susceptible to manipulation than earnings. For the S&P 500, the price/sales ratio currently stands at 1.6, which is higher than the comparable readings that prevailed at all but two of the bull market tops since 1955, which is how far back data are available.
  • Price/book ratio. This is another lesser-known valuation indicator, calculated by dividing a company's stock price by its per-share book value-an accounting measure of net worth. For the S&P 500, this ratio currently stands at 2.7, which is higher than all but five of the 28 bull-market tops since the mid-1920s, which is how far back data are available.
  • "Q" ratio. This indicator is based on research conducted by the late James Tobin, the 1981 Nobel laureate in economics. It is similar to the price/book ratio, except that book value is substituted by the replacement cost of assets."

The S and P 500 has continued rambling forward this year, though to many it was evident that the 2013 return had gotten way ahead of normal value metrics.
I don't think we could expect this steady march up to continue without risk increasing significantly. 



The S and P 500 index trended up last week. + .75%
The 10 year Treasury Yield index trended down last week.
-         2.50%
The US Dollar index trended up last week. + .40%
The CRB Commodities index trended up last week. + 1.41%
The Gold Index trended up last week + .44%
Inflation Linked Bonds trended up last week + 1.14%
The US Aggregate Bond Index trended up last week + .40%
The International Aggregate Bond Index ended the week even.
The New York Composite Index trended up last week. +.90%
The Dow Jones World Index trended up last week + .57%

The NCREIF Index is aggregated and reported quarterly and is a total return broad representation including rents and appraisal of non-traded Commercial Real Estate.

2014 2nd qtr + 2.91%

Year to date US stocks, gold, inflation linked bonds and real estate lead. The yield on the ten year treasury is down 20% year to date.



Many investors take the wrong approach looking primarily at recent return and average percentage rates. Overall risk measures and managing downside risk play an increasing role in end results.

Investors instead should be focused on managing Dynamic Beta exposure, evaluation Active Share, Sharpe ratios, Treynor ratios, Sortino ratios and Alpha.

 
Please forward to anyone who may be interested in this information.



Monday, August 25, 2014

Weekly Update 8 23 14

Word's for the week process, consistency, and conviction.

"There must be consistency in direction."  W. Edwards Deming 

 
"If you can't describe what you are doing as a process, you don't know what you're doing." 
"Excellence is a continuous process and not an accident." A. P. J. Abdul Kalam
"The good life is a process, not a state of being. It is a direction not a destination." Carl Rogers
"We now accept the fact that learning is a lifelong process of keeping abreast of change. And the most pressing task is to teach people how to learn." 
"If you're not consistently carrying out your plan ninety percent of the time, you really don't have a plan at all." Alwyn Cosgrove

"Small disciplines repeated with consistency every day lead to great achievements gained slowly over time." John C. Maxwell

"Core passions and aspirations should be consistent and in sync." Lorii Myers,

"Work on your goals, one step at a time. Remain focused and do not stop. You will be amazed how much you can accomplish over the years. In most things in life, it is not the speed but the consistency that matters." Roopleen


"Conviction is worthless unless it is converted into conduct."  Thomas Carlyle

"You cannot build a dream on a foundation of sand. To weather the test of storms, it must be cemented in the heart with uncompromising conviction." 

"To yield readily--easily--to the persuasion of a friend is no merit.... To yield without conviction is no compliment to the understanding of either."  

"Internal conviction drives external action." 

"Growth of consciousness does not depend on the might of the intellect but on the conviction of the heart." Wayne Gerard Trotman


 

I could call this discipline revisited, again. (See the update from the last two weeks)
Discipline in Wealth Management involves a consistency in methodology along with a conviction to maintain processes and strategies of implementation.
Last week I focused on the processes and areas of expertise in Financial Planning.

True Wealth Managers are conversant and adept at both Financial Planning and Investment Advisory processes.

A distinguishing factor between typical investors and Investment Advisors is a focus on process and not product.

Investment Advisors are consultants, not sales people. Investment Advisors chiefly manage investment assets for fee, they should not be taking commissions or selling products.

The selling of products by collecting compensation from the product vendor or earning commissions based on the product sold produces a conflict of interest.
Brokers as product distributors have a different role than an Investment Advisor.

I have often heard investors and brokers go on about the most recent returns on an investment, stock, bond or mutual fund.
It seems like yesterday or the last year is only what matters.
This clearly points to a view that they are uncertain in the long term about reaching their desired objective.

There is no clear plan or process of which they are confident of implementing.

Investment Advisors, in contrast, follow the path of a fiduciary. They must look after the best interest for those whom, they on behalf of, manage investments.
They must follow a Prudent Investment Process as laid out in the table below.

The illustration and guidelines are produced by FI360®!



Even before these processes begin with individual investors, we are evaluation with due diligence investments and investment managers, in order to qualify them for use with investment portfolios.
We also examine how asset allocations fit in with current market and economic environs. Continually testing and monitoring investments and investment allocations. We rebalancing and readjust investments in a disciplined process of review.

Marrs Wealth Management diversifies portfolios through a model of seven low correlated and non-correlated Asset Classes.
Cash, Fixed Income, US Stocks, Global Stocks, Alternatives, Hard Assets and Real Estate.
In deeper analysis we diversify, within each asset class, with low correlated investments.

The most mysterious asset class to most people is Alternatives, more clearly alternative strategies. This may be because there are so many strategies that fit into the alternatives category. Not all are appropriate for every investor. 
The purpose of the alternative strategy within the portfolio is a very important decision on which strategies will be best. 

A study below done by Invesco® shows the benefit of using alternatives to enhance long term returns and lower risks involved with higher volatility.




Our own model benchmark over the last ten years has kept pace with large cap US Stocks, as represented by the S and P 500 Index.
Yet our diversified benchmark model has had nearly half of the volatility risk. 


Past Return is not a guarantee of future performance. All of the measurements above are comprised of index returns and you cannot directly invest in an index. The above is not a recommendation for an investment portfolio and individual results of investors may be different from what is shown.

Wealth Managers take on the role of both Financial Planner and Investment Advisor.  
Wealth Managers have designations such as CFP® Certified Financial Planner or CHFC® Chartered Financial Consultant plus CIMA® Certified Investment Management Consultant®, AWMA® Accredited Wealth Management Advisor and AIF® Accredited Investment Fiduciary.  



The S and P 500 index trended up last week. + 1.71%
The 10 year Treasury Yield index trended down last week.
-  2.47%
The US Dollar index trended up last week. + 1.15%
The CRB Commodities index trended down last week. - .43%
The Gold Index trended down last week - 1.94%
Inflation Linked Bonds trended up last week + 2.14%
The US Aggregate Bond Index trended down last week - .27%
The International Aggregate Bond Index trended down last week 
- .67%
The New York Composite Index trended up last week. +1.4%
The Dow Jones World Index trended up last week + 1.21%

The NCREIF Index is aggregated and reported quarterly and is a total return broad representation including rents and appraisal of non-traded Commercial Real Estate.

2014 2nd qtr + 2.91%

Year to date US stocks, gold, inflation linked bonds and real estate lead. The yield on the ten year treasury is down 20% year to date.




Many investors take the wrong approach looking primarily at recent return and average percentage rates. Overall risk measures and managing downside risk play an increasing role in end results.

Investors instead should be focused on managing Dynamic Beta exposure, evaluating Active Share, Sharpe ratios, Treynor ratios, Sortino ratios and Alpha.




Tuesday, August 19, 2014

Weekly Update 8 16 14

Word's for the week consistency and conviction.

"There must be consistency in direction."  W. Edwards Deming 

 
"If you're not consistently carrying out your plan ninety percent of the time, you really don't have a plan at all." Alwyn Cosgrove

"Small disciplines repeated with consistency every day lead to great achievements gained slowly over time."  John C. Maxwell

"Core passions and aspirations should be consistent and in sync."  Lorii Myers,

"Work on your goals, one step at a time. Remain focused and do not stop. You will be amazed how much you can accomplish over the years. In most things in life, it is not the speed but the consistency that matters."  Roopleen


"Conviction is worthless unless it is converted into conduct."  Thomas Carlyle

"You cannot build a dream on a foundation of sand. To weather the test of storms, it must be cemented in the heart with uncompromising conviction." T.F. Hodge

"To yield readily--easily--to the persuasion of a friend is no merit.... To yield without conviction is no compliment to the understanding of either."  Jane Austen

"Internal conviction drives external action." Todd Stocker

"Growth of consciousness does not depend on the might of the intellect but on the conviction of the heart." Wayne Gerard Trotman

I could call this discipline revisited. (See the update from last week)
Discipline in Wealth Management involves a consistency in methodology along with a conviction to maintain processes and strategies of implementation.

There are basics of financial planning.

  • Cash Flow Structure- Income, Fixed Expenses, Discretionary Expenses, Savings Needs/Goals. Etc.
  • Protection from catastrophic loss with low cost insurance solutions.
  • Short term savings first; checking plus savings account. Twelve to eighteen months of fixed expense.
  • Medium Term Savings; Money Market, Short Term Bonds, two to three year Certificates. Liquid for an emergency, or goal within 4 years.
  • Investments; long term savings beyond five years.
  • Beneficiary, aging, longevity, gift and legacy planning.

These are the areas of expertise of a Financial Planner. Financial Planners often can be your representative and consultant for you to interact with other professionals such as attorneys, accountants, insurance professionals, investment advisors and accountants.

Investment Advisors (Not Brokers) are experts in managing investment portfolios; analyzing investment allocations, selecting investments, investment strategies or investment managers.

Investment Advisors are consultants not sales people. Investment Advisors chiefly manage investment assets for fee, they should not be taking commissions or selling products.
The selling of products by collecting compensation from the product vendor or earning commissions based on the product sold produces a conflict of interest.
Brokers as product distributors have a different role than an Investment Advisor.

Wealth Managers essentially take on the role of both Financial Planner and Investment Advisor. (Beware names can be deceiving)

True Wealth Managers gain expertise in both world's Financial Planning and Investment Advisory.
Wealth Managers have designations such as CFP® Certified Financial Planner or CHFC® Chartered Financial Consultant plus CIMA® Certified Investment Management Consultant®, AWMA® Accredited Wealth Management Advisor and AIF® Accredited Investment Fiduciary.  
Wealth Managers demonstrate expertise both as a Financial Planner and an Investment Advisor.

I am going to pick back up with the basics of the Investment Advisor Role next week and continue with my theme of consistency and conviction next week.
For now I feel like I am getting a little long winded on this front.

I want to conclude by highlighting the area of saving!
Craig Israelsen has put together data in the latest Financial Planning Magazine that highlights the deficit in Financial Planning by many, they save very little or begin saving late.





The point is, if you need to live off your investments for twenty to thirty years during retirement, you may need significant help in both areas Financial Planning and Investment Advisory.

More on discipline, consistency and conviction next week.



The S and P 500 index trended up last week. + 1.22
The 10 year Treasury Yield index trended down last week.
-         2.90%
The US Dollar index ended even to where it started last week.
The CRB Commodities index trended down last week. - .85
The Gold Index trended down last week - .39%
Inflation Linked Bonds trended down last week - 1.94%
The US Aggregate Bond Index trended up last week + .48%
The International Aggregate Bond Index ended even to where it started last week.
The New York Composite Index trended up last week. +.98
The Dow Jones World Index trended up last week - 1.67%

The NCREIF Index is aggregated and reported quarterly and is a total return broad representation including rents and appraisal of non-traded Commercial Real Estate.

2014 2nd qtr + 2.91%

Year to date gold and real estate lead. The yield on the ten year treasury is down 22% year to date.


Many investors take the wrong approach looking primarily at recent return and average percentage rates. Overall risk measures and managing downside risk play an increasing role in end results.

Investors instead should be focused on managing Dynamic Beta exposure, evaluation Active Share, Sharpe ratios, Treynor ratios, Sortino ratios and Alpha.

The above is for informational purposes only and not an offer or recommendation to buy or sell. Past performance is no guarantee of future return. All decisions about investments should be made within parameters of risk, time frame, financial position and overall asset allocation.