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Monday, October 20, 2014

Weekly Update 10 18 2014

Word for the week is alternatives.

"Success has no other shortcuts apart from the ones that tell you; control thoughts, delete negativity, alternate actions and shift attitudes to become positive! Click on passion, it opens a new window for you to sign in on time!"  Israelmore Ayivor


"Peace is not the absence of conflict but the presence of creative alternatives for responding to conflict - alternatives to passive or aggressive responses, alternatives to violence." Dorothy Thompson






In continuation of the last two weeks updates, we will continue to look at what brings added value in investment portfolio construction.

We have looked at the outperformance that has been added in focusing on fundamental outcomes of looking at value oriented investment decisions rather than chasing high returns through growth oriented investing decisions.
Buying value and rebalancing value has been shown to provide long term benefit.

Second we looked at how managing downside risk and avoiding deep drawdowns during times of stress could add to long term performance.
The focus upon defensive strategies outperform by giving added stability during times when markets reach stress points and become highly volatile.


Today the focus is on how diversification through adding alternative assets and alternative management strategies can be shown to add stability and return to portfolio construction. 


Ibbotson Associates®



Ibbotson Associates®


Defining Alternatives, or Alternative Strategies.
"At Ibbotson Associates, we define alternative investments as asset classes or investment strategies that are outside of traditional stock, bond, and cash categories and that generally display different performance characteristics than these traditional investment categories. It is the different performance characteristics, or low correlations, that make alternative investments a potentially beneficial addition to a traditional portfolio."
"Our definition of alternative investments can be further broken down into two subcategories."
"Alternative Alpha-Investment strategies that have low correlations to traditional investments. Examples would include long short equity, merger arbitrage, and managed futures."
"Alternative Beta-Asset classes that have low correlations to traditional investment. These would include commodities, private equity, and Treasury Inflation-Protected Securities."
by 
Scott Wentsel, CFA, CFP Vice President, 
Senior Portfolio Manager, Ibbotson Associates®

Lucian Marinescu, CFA Consultant, 
Ibbotson Associates®




Marrs Wealth Management's "Stability Rating" on Fund Managers, includes factors in relation to the S and P 500 stock index, which may provide for return that has low correlation, while adding value through diversification. These factors include; yield greater than four percent, expense ratio one or lower, annualized return since inception above four percent, standard deviation below ten percent, Beta below sixty percent, Alpha greater than two percent, Sharpe ratio above seventy percent, up capture higher than down capture and an Asymmetry Ratio above seventy percent. 



The following chart demonstrates how various funds using alternative strategies could be evaluated in order provide a range of factors that may add value to portfolios through diversification. Some strategies even appear to provide a negative correlation increasing stability in the overall portfolio allocation. 




Our "Stability Rating" includes factors in relation to the S and P 500 to provide for return that has low correlation adding value through diversification. These factors include; yield greater than four percent, expense ratio one or lower, annualized return since inception above four percent, standard deviation below ten percent, Beta below sixty percent, Alpha greater than two percent, Sharpe ratio above seventy percent, up capture higher than down capture and an Asymmetry Ratio above seventy percent.

 
The asymmetry ratio study brings extra insight to long term performance as the up capture may be even lower than down capture however and still significantly add to portfolio return.

 
It is more important to limit extreme down turns than to capture all of the upside return of the market. This is counter intuitive however mathematically sound.

 
It may be even more important to integrate alternative strategies into portfolios given the level of current interest rates and the likelihood that bonds will not provide the same benefit as in the last 30 years of falling interest rates?


The S and P 500 index trended down last week. - 1.02%
The Dow Jones World Index trended down last week - .76%
The 10 year Treasury Yield index trended down last week.
-         4.68%
The US Dollar index trended down last week. - .88%
The CRB Commodities index trended down last week. - 1.07%
The Gold Index trended up last week + 1.24%
Inflation Linked Bonds trended up last week +.55%
US Aggregate Bond Index trended up last week + .28%
The International Aggregate Bond Index trended up last week  
+ .45%

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%

Bonds retake leadership along with real estate. The ten year treasury yield is down over 27% year to date.

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, 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. 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.


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

You can also follow updates at: www.marrswealthmanagement.blogspot.com


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, October 13, 2014

Weekly Update 10 11 2014

Word for the week is steady.

"Slow but steady wins the race." Aesop

 "Offense sells tickets; Defense wins championships". Coach Paul "Bear" Bryant Jr.

As a continuation of last week where we examined how value stocks outperformed growth stocks and the overall market, from Research Affiliates and Rob Arnott. This week continuing that theme we will look at some work done by Michael A. Gayed and Charlie Bilello of Pension Partners.

Michael and Charlie wrote two award winning papers this year on Intermarket Analysis and how defensive positions can help to signal high risk periods in Intermarket relations.

Michael Gayed's father wrote the definitive book, "Intermarket Analysis and Investing; Integrating Economic, Fundamental and Technical Trends" Published in 1990 and reissued last year.

These studies along with the work of Andrew Lo, who is the head of the Finance Department at MIT, in his development of the Adaptive Market Hypothesis call into question the idea of efficiency in markets.

Indeed, it does appear there are periods of mispricing, with the need for more active management and some tactical overlays upon strategic asset allocations.
In an October 1st posting Charlie Bilello wrote a column entitled "Defense Wins Championships: The Defensive Sector Anomaly"



Why is there lower volatility risk and higher return seen in defensive sectors?

Bilello argues;  "The reason for its persistence is likely similar to that of the low-volatility stock anomaly, whereby several behavioral factors are at play. The most important among these factors is that investors tend to shun low volatility areas of the market for more exciting lottery type "story stocks" that have the potential (in their minds) for higher upside. This, in combination with an overconfidence in their ability to assess the future, causes investors to overpay for higher volatility story stocks. Unfortunately, the reality oftentimes doesn't match the initial story and lower returns on average are the result. While some of these stocks indeed achieve higher returns and meet expectations, most do not."

 
"The same arguments can be applied to cyclical and defensive sectors, where investors are passing over the boring defensive sectors in favor of paying up for the more exciting cyclicals. Over time this has led to subpar performance, particularly on a risk-adjusted basis."

 
As in the Value versus Growth story last week, it pays to be steady and stable paying close attention to valuation as opposed to chasing winners.

 
In their paper; "An Intermarket Approach to Tactical Risk Rotation Using the Signaling Power of Treasuries to Generate Alpha and Enhance Asset Allocation" 

 
Bilello and Gayed again show persistent rebalancing to lower risk investments and taking gains as they are realized from risky assets wins out in the long run.

 
They say; "...it is important to understand why risk avoidance and superior risk-adjusted returns are so critical, beyond the obvious benefits.  As investors are inherently emotional beings, they are more likely to abandon a strategy with a higher drawdown and higher volatility at precisely the worst time.  Regardless of their stated risk tolerance, when faced with a 50% drawdown in their stock portfolio, many investors will panic and begin to sell."





At Marrs Wealth Management we pay close attention to risk as a strategy to outperform long term on a risk adjusted basis. As can be seen readjusting your risk and attempting to avert your portfolio from large drawdowns could help in success of reaching your return goal.

You do not have to keep up with the upside of market returns, in a buy and hold strategy, owning the entire market, as some would try to persuade is the best strategy.

You do need to limit large drawdowns!

 
Andrew Lo on Wealth Track

 


 "Offense sells tickets; Defense wins championships". Coach Paul "Bear" Bryant Jr.

You can see that the Defensive Sectors of Consumer Staples and Utilities as well as Real Estate were favored during this last week of down trending stock market. Gold and bonds also increased this week.






The S and P 500 index trended down last week. - 3.14%
The Dow Jones World Index trended down last week - 2.87%
The 10 year Treasury Yield index trended down last week.
-         5.72%
The US Dollar index trended down last week. - .86%
The CRB Commodities index trended up last week. - .37%
The Gold Index trended up last week + 2.57%
Inflation Linked Bonds trended up last week +2.26%
US Aggregate Bond Index trended up last week + . 73%
The International Aggregate Bond Index trended up last week  +1.29%

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%

Bonds retake leadership along with real estate. 



Many investors take the wrong approach looking primarily at recent return and average percentage return 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 of 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, October 6, 2014

Weekly Update 10 4 2014

Word for the week is foresight.

"The best way to keep something bad from happening is to see it ahead of time... and you can't see it if you refuse to face the possibility." William S. Burroughs

"One can have only as much preparation as he has foresight."
 Jim Butcher

"Through adversity, not only are we given an opportunity to discover our inner strength, we are also given the gift of foresight so we can shine a light for others who go through the experience after us." Rachael Bermingham

"Vision is the foresight or forecast or insight into the future. Vision is the picture of one's destiny or accomplishment, or simply what a person is meant to do or become."  Israelmore Ayivor,

Business, more than any other occupation, is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight. Henry R. Luce

"I'm a Great Believer in Luck. The Harder I Work, the More Luck I Have" Thomas Jefferson


"What helps luck is a habit of watching for opportunities, of having a patient but restless mind, of sacrificing one's ease or vanity, or uniting a love of detail to foresight, and of passing through hard times bravely and cheerfully." Victor Cherbuliez

"If you don't know where you are going, you'll end up someplace else."  Yogi Berra


Investing for a long term future advantage takes both patience and foresight.
There are long term investment truisms that point to a way of investment success.
Legendary investment professionals Sir John Templeton, Benjamin Graham and Warren Buffett have all followed the formula that relative value wins over flashy growth in the long run.

Another value follower Robb Arnott of Research Affiliates has written extensively on what in the past has been a long term predictor of outperformance.
Larger stable companies, with fundamentally strong balance sheets and growing dividends win out in the long run.
He calls this insight Clairvoyant Value. 

In the spring of 2009 Arnott and Co- Authors , Feifei Li and Katrina F. Sherrerd wrote in "The Journal of Portfolio Management" an entry entitled "Clairvoyant Value and the Value Effect"
The authors conclude; "A comparison of regression coefficients indicates that the market ... paid about 50% more of a premium for growth stocks, relative to value stocks."

In the summer of 2009 the authors presented another paper in the "The Journal of Portfolio Management" an entry entitled "Clairvoyant Value II: The Growth/Value Cycle"

In this study the authors conclude that markets are not efficient and there is often mispricing in certain market cycles that inevitably revert back to a mean.

"The dispersion of valuation multiples justified by clairvoyance is almost always below the actual dispersion observed in the market." say the authors.

In the summer of 2012 Denis B. Chaves and Rob Arnott again write in the "The Journal of Portfolio Management" an entry entitled "Clairvoyant Value II: The Growth/Value Cycle" The following chart from their paper shows the value effect when you separate stocks by price to book value ratios.




The authors conclude; "It is well known that value portfolios empirically outperform growth portfolios over long horizons. The source of this return is not as deeply understood as we might expect after so many years of study. ... the value portfolio wins because with each rebalance, the portfolio sheds some lower yielding stocks that no longer qualify as value stocks and buys new deep-value stocks that offer much improved yield."

If such rebalancing produces additional yield and lower valuation as an entry point, this might also point to the benefit of Fundamentally Weighted Index methodology or possibly to deep value as an actively managed strategy?
Which we heartily endorse at Marrs Wealth Management.
Finally Arnott, Li and Warren write again in "The Journal of Portfolio Management" fall of 2013 an entry entitled "Clairvoyant Discount Rates"

Here the author's show that the "size effect" claim that small cap stocks investors claim is indeed and allusion and relies only on a few outliers which outperform. They state; "we can see that investors in growth stocks, especially small cap growth stocks, must have historically been content to earn anemic returns-even a negative risk premium- on their average holdings. They were (and perhaps still are) lottery investors, looking for a few big winners to offset a very large number of losing individual investments." CV (clairvoyant value) offers us insights that we can only see with hindsight."


Below is a link to a video with Robb Arnott talking about Clairvoyant Investment Analysis.


It is a truism, and if you gain this foresight you are well on your way to becoming a good investor, value and risk management really matter.

Lowering volatility, increasing dividends, paying close attention to valuations and not chasing after big winners and shooting stars all may seem a little boring. Remember investing is about reaching for and achieving a financial goal.
Gambling is about going to Las Vegas or buying a lottery ticket, those are not the best ways to reach financial success.
Don't chase after returns. Winning asset classes and low risk premium investments generally fall back to a mean return over time.
Investing is all about finding value where it is overlooked or underappreciated.



The S and P 500 index trended down last week. - .75%
The Dow Jones World Index trended down last week - 1.96%
The 10 year Treasury Yield index trended down last week.
-3.47%
The US Dollar index trended up last week. + 1.22%
The CRB Commodities index trended down last week. - 1.41%
The Gold Index trended down last week - 2.22%
Inflation Linked Bonds trended down last week - 1.08%
US Aggregate Bond Index trended up last week + .37%
The International Aggregate Bond Index trended down last week - .73%

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 stocks and real estate lead. The ten year Treasury yield is down 19% year to date.


Many investors take the wrong approach looking primarily at recent return and average percentage return 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. 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 30, 2014

Weekly Update 9 27 14

Words for the week are focused, attentive, mindful, centered.

"Compassion may be defined as the capacity to be attentive to the experience of others, to wish the best for others, and to sense what will truly serve others." Joan Halifax

"Surely it is time to examine into the meaning of words and the nature of things, and to arrive at simple facts, not received upon the dictum of learned authorities, but upon attentive personal observation of what is passing around us."         Frances Wright

"It will appear evident upon attentive consideration that equality of intellectual and physical advantages is the only sure foundation of liberty, and that such equality may best, and perhaps only, be obtained by a union of interests and cooperation in labor." Frances Wright

"Concentrate all your thoughts upon the work at hand. The sun's rays do not burn until brought to a focus."          Alexander Graham Bell
"I don't focus on what I'm up against. I focus on my goals and I try to ignore the rest." Venus Williams

"A mind at peace, a mind centered and not focused on harming others, is stronger than any physical force in the universe."

"You can't depend on your eyes when your imagination is out of focus." Mark Twain

This is a fast paced world. The news cycle is never ending. We have numerous opportunities for activity and entertainment. Sometimes it is very difficult and even strange to have a minute of quiet, reflection and solitude.

The pace of life may make us feel like we are being very productive. Doing things constantly may be a search for finding happiness.

Multi-Tasking may give the appearance of giving more us more time or getting more done

Research says that is not the case.


Consider the article referenced below.

"The Cognitive Costs of Multitasking"

  • "Multitasking can reduce productivity by approximately 40-percent according to some researchers."
  • "Switching from one task to another makes it difficult to tune out distractions and can cause mental blocks that can slow down your progress."

"Recent research, ... has demonstrated that that switching from one task to the next takes a serious toll on productivity. Multitaskers have more trouble tuning out distractions than people who focus on one task at a time. Also, doing so many different things at once can actually impair cognitive ability."


At the University of Iowa Hospital they have an eight week course in "Mindfulness-Based Stress Reduction"

 

On their website it states: "Mindfulness-Based Stress Reduction is an eight week program that assists people who want to learn to use their own internal resources to respond more skillfully to stress, medical and psychological conditions, and promote healthy living. Research suggests that mindfulness practice can positively affect stress resilience; physical and mental health; academic skills; self-regulation of emotional reactivity; interpersonal skills; general well-being and happiness."

Wealth, not only has to do with financial health, it should focus on overall well-being.
If you haven't given your advisor a look at all your life; financial goals, beneficial goals, and personal life dreams, you may be missing out on the benefit of a fully attentive focus from the expertise they could share.
Focusing on the gifts you have, being centered in the opportunity to do what you want and being compassionately attentive with what you pass on to others is a very rewarding experience.
Here are some practical applications of mindfulness that you could take with your financial advisor.
  1.   Sit down in a quiet uninterrupted place and think about what most concerns you. Write it down along with reasons it is so concerning. (listen to yourself)
  2.   Talk with your spouse, children or a close confidant about what you want to provide for yourself and them in the future.(honestly face any real or perceived obstacles)
  3.  Decide to let go of past regrets or unfulfilled expectations. Forgive yourself and others. (remove non-judgmental assessment that could stand in the way)
  4.   Have a focused, open and honest discussion with your advisor about the importance of what you have discovered. (Share in depth your, goals and resources with the person entrusted to helping you achieve success.)

Your Financial Advisor should be kept up to date with your tax returns, compensation packages, work place retirement accounts, other investments and savings, near term and long term needs, beneficiary information, wills and trust arrangements.

Here are few things to note:

A.   Marrs Wealth Management is able serve as a directed Financial Advisor, with a local Iowa Bank Trustee we work with as a partner, serving as Corporate Trustee. It may be a good idea to set up a Corporate Trustee as a Successor Trustee in case of incapacitation or death.

B.    A recent ruling in the Supreme Court has put the protection of beneficial IRA's at risk. If you want to maintain the stretch IRA option for your heirs, you may want to name a Stand Alone Trust for your IRA as a contingent beneficiary. Remember only a spouse can inherit an IRA and have it be their own IRA.

 C.   Marrs Wealth Management can help with tax planning and gift planning. We manage a Donor Advised Fund that is administered by the Greater Des Moines Foundation and the Story County Community Foundation. Please take look at our new gift planning area to our website.


D. Remember to always consult with your legal adviser and tax adviser. Marrs Wealth Management can help in the process of communication with your overall adviser team. Family visits with parents, children and a team of advisers can be exceptionally beneficial in bringing everyone onto the team playing well together.

The following information is a weekly update of several investment asset classifications. This does not reflect investments recommended or portfolio construction for our portfolios. You cannot invest directly to an index. This is for informational purposes only. This is not a recommendation to buy or sell any security.


The S and P 500 index trended down last week. - 1.37%
The Dow Jones World Index trended down last week - 2%
The 10 year Treasury Yield index trended down last week.
-2.01%
The US Dollar index trended up last week. + 1.05%
The CRB Commodities index trended up last week. + .31%
The Gold Index trended down last week - .12%
Inflation Linked Bonds trended down last week - 1.02%
US Aggregate Bond Index trended up last week + .17%
The International Aggregate Bond Index trended down last week - 1.42%

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 stocks and real estate lead. 



Many investors take the wrong approach looking primarily at recent return and average percentage return 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. 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 22, 2014

Weekly Update 9 20 14

Word for the week is Speculation.

"In practical life we are compelled to follow what is most probable; in speculative thought we are compelled to follow truth."  Baruch Spinoza

"Most areas of intellectual life have discovered the virtues of speculation, and have embraced them wildly. In academia, speculation is usually dignified as theory." Michael Crichton

"Whenever you hear the consensus of scientists agrees on something or other, reach for your wallet, because you're being had." Michael Crichton

 "The writers in the newspapers could sounds smart because they did not have the responsibilities of decision, and they could sound bold by enunciating positions which they were not required to implement." Elton Trueblood

"It is remarkable that persons who speculate the most boldly often conform with the most perfect quietude to the external regulations of society. The thought suffices them, without investing itself in the flesh and blood of action." 

"There are two times in a man's life when he should not speculate: when he can't afford it, and when he can."

"Speculation is an effort, probably unsuccessful, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little."  Fred Schwed Jr.

There are some who believe all investing is speculation. After all, prices rise and fall with no seeming point.

 
I know there are people, all day, which will tell you this market reacted to this and that market reacted to that.

 
In truth they are entertainers selling info-tainment (so called "news").
Or those who purport to know why this or that happened are trying to sell something!

 
I listened to two fund manager calls yesterday, and of course, they want you to buy or stay invested in their fund.

 
At Marrs Wealth Management we look deeper.

 
Yes, we are interested in the outlook of the manager.
We look deeper though, what is the basis for your outlook, what is the data behind your outlook, what is the process you use in management, what is your history, what is your risk profile, how are you able to provide diversity and balance to other investments we use, I could go on!

 
The point is it is all speculation, unless you have a process and proven strategy and ways to consistently achieve your stated goals.

There are really only two basic factors to look at investments without being speculative.

 
1.   Look to valuations and processes that can help you to invest related to how that investment is assessed value.

 
2.   Be widely diversified in order to mitigate large unexpected down turns in any one investment.
As money continues to pour into, mainly a few large U.S. companies, it is wise to remind oneself of past history.

Quantitative Easing in the form of large asset purchases is ending next month. The Federal Reserve Board has added $3.5 Trillion to its balance sheet in assets. They have also set up a facility to manage the sale and reduction of net assets.  

Consider this posting yesterday at Bloomberg Business.

 
Fed's New Cap on Reverse Repos Heightens Volatility Risks
By Liz Capo McCormick and Matthew Boesler September 19, 2014

 
"Analysts predicted sporadic dislocations, including sliding money-market rates at quarter-end periods when dealers typically pull back from the repo market to shrink their balance sheets."

 
"In an overnight reverse repo, the Fed borrows cash from counterparties using securities as collateral. The next day, it returns the cash plus interest to the lender and gets the securities back. The per-counterparty limit was lifted to $30 billion from $10 billion."

 
The last time the Federal Reserve went through a round of asset purchases, on a much smaller scale, was 1961 to 1966.
There is a debate going on right now whether current PE ratios or Cyclically Adjusted PE ratios are relevant or evident of current price conditions. So I have included both.

 
Throughout you can see both are at points that indicate high points. Only the period at the end of the 1920's and 1990's show prices related to earnings blasting past current levels.

 

I am not speculating whether the S and P 500 is at a high point. It may vault higher. However data shows we are at price related to earnings valuation peaks.


Source: www.stockcharts.com




Below are returns of the S and P 500 in the twenty years following the end of asset purchases in 1965.
Unless growth is accelerated at a much higher pace or speculation reaches the "irrational exuberance" pace, the US stock market may be at a turning point? 



http://dqydj.net/sp-500-return-calculator/

Robert Lenzner quoted Jim Bianco in June in Forbes.
"Here's Jim Bianco of Arbor Research, a widely respected bond analyst, on what he expected in a report to investors last fall. "QE has been extraordinarily effective in boosting stock prices and the FOMC (the Federal Reserve Open Market Committee) is correct to worry what happens when they stop. Restated, the bull market of the last 4+ years has a lot to do with FOMC  stimulus. If history is any guide, its removal would figure to be a profound negative for equity prices.""

This week at Bloomberg, Mohammed El-Erian stated;
Mohamed A. El-Erian at M.El-Erian@bloomberg.net.
"The U.S. Federal Reserve is trying to squeeze a bit more out of a stimulus policy that relies heavily on artificially boosting stock and bond markets to generate growth. In doing so, it is running a higher risk of financial instability, and increasing its dependence on a Congress that shows little sign of being able to handle fully its economic responsibilities."

The case can be made many investors should consider scraping off profits from US Stocks and looking for less pricey areas of investment.

 
I thought this quote should be repeated!
"Speculation is an effort, probably unsuccessful, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little."  Fred Schwed Jr.


I am only "speculating" because I have no idea where markets will go or when they will turn. The US stock market may climb higher, go down or remain in a very flat and volatile long term trading pattern.
We may be in for two decades of very flat returns and slow growth? In the 1970's this was called stagflation.
I do know that there are a lot of varying ideas right now and much of it is simply speculation.

We sort out and diffuse the noise and focus on investment fundamentals.
At Marrs Wealth Management we build portfolios that carry about 30% to 50% the risk of the S and P 500 depending on income need, total return need, risk profile and personal financial positions and we have experienced very competitive returns.
Past returns are not a guarantee of future performance.

The following information is a weekly update of several investment asset classifications. This does not reflect investments recommended or portfolio construction for our portfolios. You cannot invest directly to an index. This is for informational purposes only. This is not a recommendation to buy or sell any security.



The S and P 500 index trended up last week. +1.25%
The Dow Jones World Index trended up last week 
+ .32%
The 10 year Treasury Yield index trended down last week. -1.03%
The US Dollar index trended up last week. + .74%
The CRB Commodities index trended down last week. - .89%
The Gold Index trended down last week - 1.19%
Inflation Linked Bonds trended down last week 
- 1.02%
US Aggregate Bond Index trended up last week 
+ .21%
The International Aggregate Bond Index trended down last week - 1.02%

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 stocks and real estate lead. 




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