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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.


Tuesday, August 12, 2014

Weekly Update 8 9 2014

Word for the week discipline.

"Discipline is the bridge between goals and accomplishment."Jim Rohn

"Effective leadership is putting first things first. Effective management is discipline, carrying it out." Stephen Covey

"It was character that got us out of bed, commitment that moved us into action, and discipline that enabled us to follow through." Zig Ziglar

"Discipline is the refining fire by which talent becomes ability." Roy L. Smith


"Seek freedom and become captive of your desires. Seek discipline and find your liberty.Frank Herbert 

 

 "We must all suffer one of two things: the pain of discipline or the pain of regret or disappointment." Jim Rohn


I mention Benjamin Graham in my writing quite a bit. He wrote a book titled; "The Intelligent Investor". He was the mentor to Warren Buffett on investing. These men have very disciplined value oriented investing principals that have made them stand out in the results they achieved.
Another person who stands out as having a very disciplined value oriented approach is Sir John Templeton.

What these men taught us in a demonstrable way is the starting point and ending points in successful investing is in knowing value, based on fundamental valuation methods. They help us to understand when to invest in undervalued securities and how to avoid those which are overpriced.

We at Marrs Wealth Management search hard for deep value oriented investments or investment managers who are very much oriented to a deep value oriented style.

We realize there is a debate about what constitutes discipline in investing.

Some would say discipline involves a strict buy and hold mentality. These people might also say passive indexing is what matters most. Buy the entire market and hold on.
In a manner they are correct. Average investors don't do better than those who buy and hold the market averages for a long time.


The problem is investors get skittish and sell when investments get less expensive. They then turn around and buy when investments become more expensive.
This is why in a multitude of studies it has been shown typical investors realize less than half of the average return of the overall market.

The other way to be disciplined is to have a diversified allocation that is rebalanced in a regular disciplined manner and is tactically managed based on asset valuations.
This is the approach of great investors such as Graham, Buffett and Templeton. 
Yes they would be disciplined to hold on to investments that were fairly valued or undervalued, however they were equally willing to sell when overvalued.

To be sure any disciplined approach works more often than what the typical investor achieves. The question is, what disciplined approach achieves superior results?


Gregg S. Fisher (http://www.forbes.com/sites/greggfisher/) details some the benefits of disciplined rebalancing of diversified investment portfolios.

In his article titled, "Discipline's Reward" he says;
"Implemented over extended time periods, systematic rebalancing tends to improve a portfolio's risk-adjusted returns quite substantially. For example, we looked at two portfolios comprised of 60%stocks, 30% bonds and 10% commodities from January 1, 1992 to May 31, 2012.* We rebalanced the first portfolio quarterly and never rebalanced the second one. Result: the rebalanced one returned 7.66% annualized, compared to 7.19% for the second one. Due to the power of compounding, a $100,000 investment in the rebalanced portfolio grew to $451,000, compared to only $413,000 in the case of no rebalancing, a 12% greater profit. Rebalancing reduced portfolio volatility quite dramatically , from 10.79% to 9.47 %. Overall, rebalancing resulted in a 21% improvement in the portfolio's reward/risk ratio.

In his piece on "Why Tactical Asset Allocation is Changing the Investment World" Ken Faulkenberry demonstrates the value of tactically moving away from expensively priced assets to underpriced assets makes sense.

"A tactical asset allocation is the value investors most important strategy tool. Buy and hold has failed for most investors. This is partly because it doesn't work well in secular bear markets, and partly because investors let their emotions cause them to make poor decisions. This can be corrected by concentrating on value."
"We know from history that when asset prices are lower than their fundamental or intrinsic value they provide higher than average rates of return in the long run. When asset prices are expensive compared to their fundamental value they provide lower than average rates of return in the long run."
"Investors can take advantage of portfolio volatility if they understand market emotions affect asset prices. When focusing on value, investors can look for opportunities in assets that are experiencing extreme pessimism, and look to take profits in assets that are experiencing a buying euphoria."


In follow up Ken gives strategic advice for Investors or Investment Advisors to follow. "5 Value Strategies For Asset Allocation" by Ken Faulkenberry

"1. Time and Long Term Value Investing
In our fast paced world, with internet trading and instant gratification, it is popular to look for quick returns through schemes and strategies that carry undue risk. Benjamin Graham and Warren Buffett have taught the virtue of patience and the willingness to hold investments for long periods of time."

"2. Valuation Timing - Take Advantage of Mis-priced Markets
Graham used the parable of Mr. Market to illustrate the fact that investments are often mis-priced, sometimes overvalued, and other times undervalued. It makes sense to capitalize on mis-priced investments in order to increase your probability of making a profitable investment. Valuation timing is the discipline of weighting your asset allocation based on valuation. Asset categories which are expensive should be avoided or underweighted, and categories that are bargains may deserve an overweighting."

"3. Require a Margin of Safety
Purchasing investments at a deep discount reduces the risk of owning that asset. The margin of safety allows for problems, mistakes, or unforeseen disasters. Negative surprises may have less impact on an asset that is already priced low."

 
"4. Portfolio Rebalancing & Weighting
At the same time there is more upside to investments bought at a large discount to its real or intrinsic value. To be a successful investor you need to understand how compounding works for you and against you."

 
"5. Capital Preservation
Preservation of capital should be an investor's highest priority. Warren Buffett famously said; "Rule # 1: Never Lose Money; Rule # 2: Never forget Rule #1."If you lose 50% and gain 50%, you still have a 25% loss! These rules of mathematics make capital preservation extremely important."

 

 
These are the same rules for investing that we utilize at Marrs Wealth Management. We are vigilant to look to value, be diversified and manage the risk to avoid the peril of a deep downside event.

Some may say why not just buy and hold. On top of the examples of Graham, Buffett and Templeton. Others have shown empirically that a focus on value and tactical investment management can add value above passive buy and hold only.



"Value and Momentum Tactical Asset Allocation" published in March 2012 a study. A summary of some of their findings in the study is below.


"We analyze 3 papers in the "value and momentum" series. Our primary focus is on a paper by Peng Wang at the Georgetown Investment Office ("PW"), which offers the most practical and straight forward analysis of applying value and momentum."
"PW shows that a model combining momentum, timing, and value signals can significantly improve overall performance. The other papers highlight the same basic result."
"Adding MA rules on top of value and momentum increases portfolio attractiveness."



"***E: Equal weighted market; E(M): EW Momentum Strategy; E(MT): EW Momentum and Timing Strategy;
E(MT&V): EW Momentum, Timing and Value Strategy
Source: Applying Value and Momentum across Asset Classes in a Quantitative Tactical Asset Allocation Framework"



Now, to be clear, timing of the ups and downs of assets is not a disciplined approach to investment management, apart from a disciplined strategy of valuation and rebalancing between diversified asset classes. The strategy must be based on fundamental and quantitative measures.

 
Discipline, related to tactical asset allocation, does not mean jumping in to hot often speculative investments or jumping out of an investment that is falling in price.

 
Discipline means having a solid, proven and well researched investment strategy and following through with that strategy.

"Discipline is the refining fire by which talent becomes ability." Roy L. Smith


The S and P 500 index trended up last week. + .33
The 10 year Treasury Yield index trended down last week.
- 3.59%
The US Dollar index ended even to where it started last week.
The CRB Commodities index ended even to where it started last week.
The Gold Index trended up last week + 1.19%
Inflation Linked Bonds trended down last week - .32%
The US Aggregate Bond Index trended up last week + .12%
The International Aggregate Bond Index trended down last week. - .21%
The New York Composite Index ended even to where it started last week.
The Dow Jones World Index trended down last week - .91%

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, real estate and inflation linked securities lead. Stocks are outperforming bonds. 



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.

Monday, August 4, 2014

Weekly Update 8 2 2014

Words for the week syn·er·gy ˈsinərjē noun
noun: synergy; plural noun: synergies; noun: synergism; plural noun: synergisms

1.    the interaction or cooperation of two or more organizations, substances, or other agents to produce a combined effect greater than the sum of their separate effects.


"Synergy is almost as if a group collectively agrees to subordinate old scripts and to write a new one."  Stephen R. Covey

"Synergy: The combined effect of individuals in collaboration that exceeds the sum of their individual effects."  Stephen R. Covey 

"The whole is greater than the sum of its parts."  Aristotle


This weeks' update is written by our summer intern Jim Kain. Marrs Wealth Management looks forward to the synergy he brings to us, to make us a better Investment Advisor, for the greater good of all who have entrusted us with their financial wellness.

 
Jim holds a degree from Iowa State University in Accounting and will earn a Master's Degree in Finance, next May, from the University of Iowa. Jim will join us full time next year as an Investment Advisor Representative.




 
Roger is on a much deserved vacation and has asked me to fill in as author of this week's update.   I am in the waning stages of what has been a terrific internship at Marrs Wealth Management.  Craig, Roger, Judy, Kent, and Dylan have provided me a tremendous opportunity and I have learned a great deal over the past weeks.  I cannot wait to begin my full-time career here next summer and to continue meeting the wonderful clients and people associated with this business.  In the meantime, I will complete my MBA at the University of Iowa.

Marrs Wealth Management is not the typical landing point for those completing an MBA program.  Many of my classmates will work for large corporations such as Amazon, Dell, Disney, and Hershey.  While these companies are attractive, they cannot provide the career experience I desire.  Roger has written about Marrs Wealth Management being held to a fiduciary standard in prior updates, and this is an important differentiator that requires our firm to do what is best for our clients, not merely what is suitable.  This differentiation is what appeals most about Marrs Wealth Management and sets it apart from alternative career paths.  The fact that it is located in the community in which I was raised makes it the perfect fit.

In my short time at Marrs Wealth Management, I have approached the firm's investment philosophy with a critical eye.  I am thankful that Craig and Roger have welcomed this approach and have been willing to have open discussions on various topics.  In hindsight, this willingness to listen to my opinions proves how truly aligned their interests are with the interests of their clients.  Ultimately, the process of researching funds, creating rating systems, and looking at simulated portfolios has resulted in the realization that our investment philosophies are aligned and are truly in the best interest of our clients.  

The consultative component of Marrs Wealth Management is another unique service not common in the industry.  Not only does Marrs Wealth Management offer investment advice for investable assets, but it is also available to answer any questions relating to any personal financial situation that may arise.  These situations can include debt reduction advice, real-estate decisions, college planning, and much more depending on individual circumstances.  This is advice that should be asked of trusted professionals with many years of experience and not of the deep depths of Google's great algorithm. 

I am excited to be joining the Marrs Wealth Management team and am especially looking forward to achieving my goal of being in a position to make a positive impact in the lives of others.  It is reassuring to know that when I talk with clients, my sole objective is to be truthful, unbiased, and helpful in the advice I provide.  This philosophy is what makes Marrs Wealth Management a respected firm in the community.  I look forward to working with existing and future clients and to adding value to the services provided at Marrs Wealth Management.

Jim Kain



The S and P 500 index down last week. -2.69
The 10 year Treasury Yield index trended up last week.
+ 1.46%
The US Dollar index was up last week. + .35%
The CRB Commodities index trended down last week. - 1.96%
The Gold Index trended down last week - 1.02%
Inflation Linked Bonds trended down last week - .70%
The US Aggregate Bond Index ended even to where it started last week.
The International Aggregate Bond Index trended down last week. - .12%
The New York Composite Index ended down last week. -2.67
The Dow Jones World Index trended up last week + 2.37%



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, real estate and inflation linked securities lead. Bonds are outperforming stocks.



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.