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Tuesday, May 19, 2015

Weekly Update 5 16 15

This week's theme is caution.

"Fools rush in where angels fear to tread."  Alexander Pope

"Don't ever take a fence down until you know why it was put up." Robert Frost

"It is hard to be defensive toward a danger which you have never imagined existed."  John Christopher


"It is a dangerous position to be in when you can't see, can't hear and won't listen..." Stella Payton

"We must learn by experience to avoid either trains of thought or social situations which FOR US (not necessarily for everyone) lead to temptations. Like motoring-don't wait till the last moment before you put on the brakes but put them on, gently and quietly, while the danger is still a good way off."  C.S. Lewis

"Let's be cautious about relying so much on material things that we have no energy left for the spiritual aspects of our lives." James A. Forbes
"If I advocate cautious optimism it is not because I do not have faith in the future but because I do not want to encourage blind faith." Aung San Suu Kyi

"To buy when others are despondently selling and to sell when others are euphorically buying takes the greatest courage, but provides the greatest profit" Sir John Templeton

"In the world of investing, being correct about something is not at all synonymous with being proved correct right away." Howard Marks

"Caution: Cape does not enable user to fly." Warning label on Batman Costume
Economic reports this week were not very positive, yet the US Stock Market was able to make a small gain. Biggest winner of the week was gold.

There is a fine line between being optimistic and hiding your head in the sand. One of my golfing friends every time I see him tells me how he hates what I write weekly in my update.
Although he says he likes the quotes!

All I can do is present the updates as they are reported. You the reader must decide if you need to take action.





Retail sales are approximately 70% of GDP in the US. Declining retail sales began well before the last two recessions. 




"Sales growth estimates for companies around the world began sliding towards the middle of 2014 as the price of oil began its months-long setback. In the first chart below we show the average and median company's next 12 month sales growth estimate for the MSCI World Index which shows that the level of expected sales growth took a significant step down into the first quarter of 2015."

 Company values go up either by expected sales growth or productivity increases.




These are some of the comments I have read or heard this past week from investment experts I respect.

"Between market values and fundamentals there is a disconnect. Either fundamentals need to improve significantly or market valuations need to come down significantly."

"There is a new class of investors currently buying in this market they are called by some "price insensitive buyers" or by others "value agnostic investors".



Three Truths
1.   No one knows what the future holds, whether stocks or the economy will continue to go up or have a downturn.
2.   US stock valuations are high, a prudent investor would reevaluate their investment allocation.
3.   Interest Rates are at all-time lows, a prudent investor would look for other ways to diversify their investment allocation. 




"The idea of "investing" has been sold to people as some sort of high risk & high reward pursuit. So we inevitably end up thinking about "the stock market" when we think about asset allocation.

 
In reality, we should be thinking about the full menu of options out there and they're much more expansive than just stocks. We actually shouldn't even think about "investing" as "investing". We should think of it purely as an allocation of savings. But the allure of "market beating" returns and getting rich in the markets is too powerful to convince people to pursue a more pragmatic approach."

If you saw last weeks' update you would have seen that of the last ten years eight of those years the 7 asset class diversified portfolio had the highest ten year rolling returns. Stocks only the last two years.

 
Many are over weighted in long only stock managers or stock market cap weighted index products. It could be more likely they would better reach their investment goals through a more widely diversified investment portfolio.


The S and P 500 index trended up this week. +.31%
The Dow Jones World Index trended up this week. +.78%
The 10 year Treasury Yield index trended down this week.
-.42%
The US Dollar index trended down this week. -1.71%
The CRB Commodities index trended up this week. +1%
The Gold Index trended up this week.  +3.21%
Inflation Linked Bonds trended up this week. +.22%
US Aggregate Bond Index trended down this week. -.12%
The International Aggregate Bond Index trended up this week.  +1.9%

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%

2014 3rd qtr + 2.63%

2014 4th qtr +3.04%

2015 1st qtr +3.57%



It pays to stay diversified and not chase prior winners!


Many investors take the wrong approach looking primarily at recent return.

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 of Active Share, Sharpe ratios, Sortino ratios and Alpha.


Please forward this on to anyone who you think may be interested. You can view past weeks updates at;  





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. Decisions on making any investment should be made only subsequent to a thorough professional analysis of the overall individual financial picture and the goal for the investments. This writing is not to be construed as an offer of personal advice or an offer to follow any recommendation. Any investments should only be entered into after a thorough analysis from your personal Adviser and related to your current financial picture and goals.

Any investments can lose value. Diversification is not a guarantee against loss.


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, May 12, 2015

Weekly Update 5 9 15

This week's theme is pain and gain.

"Behind every beautiful thing, there's some kind of pain." 

"Do you not see how necessary a world of pains and troubles is to school an intelligence and make it a soul?" John Keats


"Adventures are all very well in their place, but there's a lot to be said for regular meals and freedom from pain." Neil Gaiman

"We, unaccustomed to courage
exiles from delight
live coiled in shells of loneliness
until love leaves its high holy temple
and comes into our sight
to liberate us into life.

Love arrives
and in its train come ecstasies
old memories of pleasure
ancient histories of pain.
Yet if we are bold,
love strikes away the chains of fear
from our souls.

We are weaned from our timidity
In the flush of love's light
we dare be brave
And suddenly we see
that love costs all we are
and will ever be.
Yet it is only love
which sets us free."  Maya Angelou

"The pain of parting is nothing to the joy of meeting again."
Charles Dickens


No pain no gain is a common thought among elite performers. Growth and gain in investments is often two steps forward and one step back. Markets do not reward those who jump in and out of solid investments and well planned portfolio allocations.

There is always some uncomfortable periods you must endure in securing investment goals.
Many say they can take more pain then is actually tolerable when it hits. Athletes often talk about hitting the wall and investors experienced that deep pain in the early and late periods of the last decade.

In this month's Financial Planning Magazine, Craig Israelsen talks about an investment ratio called the "Pain Ratio".
The results?
 A diversified portfolio of multiple asset classes and various investments carried the least amount of pain in ratio to the gain received.
This is great news for investors! Like an elite athlete we now have it defined, how we can best reach out to get the greatest benefit in relation to the least endured pain, when the inevitable times of taking steps back occur.





Craig Israelsen writes; "If performance were the only consideration, the 100% U.S large-cap investment model would be superior in 53% of the rolling 10-year periods, with the seven-asset portfolio capturing the other 47%."
"If volatility were the primary consideration, on the other hand, a 100% U.S. large-cap portfolio would never be the winner, and the 60/40 portfolio prevailed a bit less than 20% of the time. The broadly diversified seven-asset portfolio had the lowest 10-year standard deviation roughly 80% of the time."
"But we don't consider either of these alone. And as measured by the Pain-to-Gain Ratio, a 100% large-cap portfolio has been a bust. It never had the lowest PGR in any of the 10-year rolling periods. Its average 10-year PGR over the total 45-year period was 3.05."

Israelsen continues;
"The average PGR for the 60/40 portfolio was 1.42."
"The seven-asset portfolio dominated in terms of PGR, winning nearly 80% of the time and producing an average 10-year PGR of 1.08 over the 45-year period - delivering a roughly 1-to-1 pain-to-gain trade-off."
"For patient investors, the reality is that respectable performance and modest volatility are compatible goals, but only if committing to a diversified philosophy. Investors who focus on stocks exclusively will often generate impressive returns but will experience dramatic shifts of fortune. This doesn't occur with a diversified approach. Nonetheless, since the diversified approach creates a performance pattern that is more stable, it will lag a less-diversified approach during some time periods."



Marrs Wealth Management models portfolios with a seven asset class and multiple investment strategy that is personalized to each client's situation and goals.
All investments carry risk and may lose value. Past performance in investments is no guarantee of future return.



The S and P 500 index trended up this week. +.37%
The Dow Jones World Index trended up this week. +.32%
The 10 year Treasury Yield index trended up this week.
+1.56%
The US Dollar index trended down this week. -.57%
The CRB Commodities index trended up this week. +.53%
The Gold Index trended down this week.  -.85%
Inflation Linked Bonds trended down this week. -.42%
US Aggregate Bond Index trended down this week. -.06%
The International Aggregate Bond Index trended up this week.  +.19%

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%

2014 3rd qtr + 2.63%

2014 4th qtr +3.04%

2015 1st qtr +3.57%



It pays to stay diversified and not chase prior winners!

Many investors take the wrong approach looking primarily at recent return.

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 of Active Share, Sharpe 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. Decisions on making any investment should be made only subsequent to a thorough professional analysis of the overall individual financial picture and the goal for the investments. This writing is not to be construed as an offer of personal advice or an offer to follow any recommendation. Any investments should only be entered into after a thorough analysis from your personal Adviser and related to your current financial picture and goals.


Please forward this on to anyone who you think may be interested. 

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.

Monday, May 4, 2015

Monthly Update 5 1 15

This week's theme is growth.


"The harder the conflict, the more glorious the triumph. What we obtain too cheap, we esteem too lightly; it is dearness only that gives everything its value. I love the man that can smile in trouble, that can gather strength from distress and grow." Thomas Paine

"For a seed to achieve its greatest expression, it must come completely undone. The shell cracks, its insides come out and everything changes. To someone who doesn't understand growth, it would look like complete destruction." 

"We find comfort among those who agree with us - growth among those who don't."  Frank Clark

"When life is sweet, say thank you and celebrate. And when life is bitter, say thank you and grow."  Shauna Niequist,

"The greatest thing in this world is not so much where we stand as in what direction we are moving." 


"No matter what happened yesterday it is insignificant when compared to what lies within the core of your being today." Sandy Brewer,

"Someone once told me that we move when it becomes less painful than staying where we are"." Anne Hines

Growth in life and in economies is cyclical. There are times when growth of markets and consumption take a step back. The depth and length of these growth reversals depends upon how far off from the path, expectations have traveled.

In the United States the ebb and flow of growth has been in cycles of between five and twenty five years. Following short bursts of disproportionate growth usually following are deeper and lengthier periods of sideways ups and downs.

Given the last two years of marked increases in valuations, investors may want to take steps to take profits and rebalance investment portfolios. 



http://www.advisorperspectives.com/dshort/updates/Real-GDP-Per-Capita.php?referrer=feed43.com 



"The standard measure of GDP in the US is expressed as the compounded annual rate of change from one quarter to the next. The current real GDP is 0.2 percent. But with a per-capita adjustment, the data series is currently at -0.6 percent (-0.59 percent to two decimal places). The 10-year moving average illustrates that US economic growth has slowed dramatically since the last recession."


Safe havens of cash and bonds may not be the best place to relocate assets? Real Negative Yields on these assts may persist for some time?








P/E10 is the price of the market adjusted for inflation adjusted market earnings averaged over the past ten years.
Right now earnings may be near a peak in US stocks, though the ratio has been higher.


April is typically one of the strongest months for returns in the US Stock Market, along with March and January. This year these three months were cumulatively down. For April the leaders were Commodities, Global Bonds and Global Stocks.

Looking at alternatives assets to stocks and bonds may make sense.
Also alternative strategies such as long-short and tactical management that focuses on finding value could be more effective to reaching long term goals then buy and hold benchmark centric investments. 





The S and P 500 index is flat for April
The Dow Jones World index is positive for April. +2.02%
The 10 year Treasury Yield index is positive for April. +4.23%
The US Dollar index is negative for April. -3.63%
The CRB Commodities index is positive for April.
+7.11%
The Gold index is negative for the April. -.19%
Inflation Linked Bonds is positive for April. +4.52%
US Aggregate Bond index is negative for April. -.20%
The International Aggregate Bond index is positive for April.  +3.20%

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%

2014 3rd qtr + 2.63%

2014 4th qtr +3.04%

2015 1st qtr +3.57%


It pays to stay diversified and not chase prior winners!

Many investors take the wrong approach looking primarily at recent return.

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 of Active Share, Sharpe 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. Decisions on making any investment should be made only subsequent to a thorough professional analysis of the overall individual financial picture and the goal for the investments. This writing is not to be construed as an offer of personal advice or an offer to follow any recommendation. Any investments should only be entered into after a thorough analysis from your personal Adviser and related to your current financial picture and goals.


Please forward this on to anyone who you think may be interested. 

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.


Monday, April 27, 2015

Weekly Update 4 25 2015

This week's theme is collaboration.

"Alone we can do so little; together we can do so much"  

"Choose to collaborate (abundance perspective) and 
watch your competitors (scarcity perspective) become your allies."  Jennifer Ritchie Payette

"When you invite people to share in your miracle, 
you create future allies during rough weather."  

"Open collaboration encourages greater accountability,
 which in turn fosters trust." Ron Garan,

"Many ideas grow better when transplanted into another 
mind than the one where they sprang up."  
Oliver Wendell Holmes

"Coming together is a beginning, staying together is 
progress, and working together is success."  Henry Ford

We have told you of all the additions in our office this year. 
Working with a team of people brings in support, new ideas, 
additional areas of expertise and a broader range of services.

One of the areas I will highlight this week is Trust and 
Estate planning services.You cannot have a solid 
financial base without planning for contingencies. 
The world is not that stable and neither are our lives.

Just as you need contingencies in investment allocations,
 you need even more contingencies in planning for retirement 
goals, asset transition, tax contingencies, beneficiary contingencies, 
and legacy design.



Article by Rachel F. Elson; "9 Estate Planning Pitfalls to Avoid"

Rachel Quotes Jeff Scroggin an estate planning attorney.
"Changes in both demographics and tax laws require a massive rethinking of estate planning strategies, planners were told Tuesday morning at one of the first sessions 
at FPA Retreat."
"The goal was to pass as much wealth to the next generation as possible, and do 
it in as tax-free a manner as possible, said Atlanta estate planning attorney Jeff Scroggin. But with the high estate tax exemption, he said, the estate-planning focus should 
now be to protect and preserve the family."
"The focus shifts to legacy," he said."
Here are the nine pitfalls for Advisors to avoid when helping clients plan. You can follow the link above to learn more.

1. No contingency planning for retirement assets.
2. Failing to account for unique personal property.
3. Not planning for Dad's new romance.
4. Cutting corners in the estate plan.
5. Coming up short on incapacity planning.
6. Failing to plan for aging parents.
7. Not getting appraisals of assets that are not readily marketable assets.
8. Failing to ask clients: Who do you trust? 
9. Not considering income tax consequences of trusts. 

Many of you have met Andra Reason, she is our Chief Financial Officer and Director of Trust, Estate and Tax Planning.
Andra is a Certified Public Accountant and Certified Specialist in Estate Planning.
This week Andra attended an Estate Planning Symposium in Kansas City. 
Andra has also been asked to present at a graduate level Estate Planning class at Iowa State University this May.


 
Announces New Services

Marrs Wealth Management now has a Relationship with West Bank Trust Services

To fully take advantage of our long-term planning and investment strategies, we needed to develop a plan that outlives all of us.  We spent years looking for a trustworthy team that is available to provide corporate trustee and executor services.  We have confidence West Bank Trust Services will provide peace of mind for you and your loved ones.

Marrs Wealth Management will work with your family and West Bank's trust department to continue to pursue your financial goals to preserve and transfer wealth across generations. 
A corporate trustee is preferred over an individual in some situations.
+        Corporate trustees have experience administering trusts and estates

+        An independent trustee can reduce or eliminate strains on family relationships and friendships caused by decisions made with regard to disbursements to beneficiaries

+        Individuals bear potential personal liability for mismanagement of trusts which can be relieved by using a corporate trustee 

+        Eliminates the perception that beneficiaries may influence the individual trustee

We would love to share how our relationship with West Bank could benefit your family.


Additional news of note in our office:

 
As you know Jim Kain will be joining us this summer. Jim is Graduating from his MBA program in May to add to his Accounting Degree from Iowa State University and several years as a corporate accountant.
This past month Jim and some fellow team members at the University of Iowa were invited to New York, as one of five finalist financial teams from around the country, to present in a case study competition.

 
Craig spent time again this past month, as a member of the investment committee for the Iowa State University Foundation Board, investigating investment allocations and investment managers.

 
Nate, Craig and Roger were asked again this semester, to present on Risk Management in Investing, for an Advanced Level Finance class at Iowa State University.

 
Nate and Roger were asked to teach an Ames High School class on what it is like to be a Wealth Manager.

 
Nate will also give a presentation at a career day at Ames High School on having a career as a Financial Advisor.

 
Roger will also talk at a career day at Gilbert High School.
Collaboration with the Marrs Wealth Management team could be one of the most important pieces that help you to put your financial life on the right track?



The S and P 500 index trended up this week. +1.75%
The Dow Jones World Index trended up this week. +1.64%%
The 10 year Treasury Yield index trended up this week.
+3.62%
The US Dollar index trended down this week. -.62%
The CRB Commodities index trended up this week. +.05%
The Gold Index trended down this week.  -1.99%
Inflation Linked Bonds trended up this week. +1.21%
US Aggregate Bond Index trended down this week. -.12%
The International Aggregate Bond Index trended up this week.  +.22%

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%

2014 3rd qtr + 2.63%

2014 4th qtr +3.04%

2015 1st qtr +3.57%



It pays to stay diversified and not chase prior winners!

Many investors take the wrong approach looking primarily at recent return.

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 of Active Share, Sharpe 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. Decisions on making any investment should be made only subsequent to a thorough professional analysis of the overall individual financial picture and the goal for the investments. This writing is not to be construed as an offer of personal advice or an offer to follow any recommendation. Any investments should only be entered into after a thorough analysis from your personal Adviser and related to your current financial picture and goals.


Please forward this on to anyone who you think may be interested. 

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.