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Monday, January 26, 2015

Weekly Update 1 24 2015

Word for the week is active.
"The future depends on what you do today." Mahatma Gandhi
"Sometimes life knocks you on your ass... get up, get up, get up!!! Happiness is not the absence of problems, it's the ability to deal with them." Steve Maraboli
"Never confuse movement with action." Ernest Hemingway
"Action expresses priorities." Mahatma Gandhi
"Action may not always bring happiness, but there is no happiness without action. " William James
"If not us, then who?
If not now, then when?" John E. Lewis
"I must do something or I shall wear my heart away..." Charles Dickens
"Action is the universal language of success." Steve Maraboli

Marrs Wealth Management will hold an Open House Tuesday February 10th to welcome Nathan Brammer, Stacie Hostetler and Andra Reason. 
Please join us between 12 pm and 4 pm to get to know more about our new team members.
A study in the Financial Analysts Journal in 2013 shared some interesting findings that add important pieces of information to the debate between using active or passive management strategies in investing.
The entitled; "Active Share and Mutual Fund Performance" written by Antti Petajisto.
The introduction to the article states; "Using Active Share and tracking error, the author sorted all-equity mutual funds into various categories of active management. The most active stock pickers outperformed their benchmark indices even after fees, whereas closet indexers underperformed. These patterns held during the 2008-09 financial crisis and within market-cap styles. Closet indexing has increased in both volatile and bear markets since 2007. Cross-sectional dispersion in stock returns positively predicts performance by stock pickers."

A review of Growth Fund of America shows the fund has changed over time from being very actively managed, to becoming more in line with an index fund.
Some have termed this phenomenon closet indexing.
In line with my intentions I must say this is not a recommendation to buy or sell any investment. I do not hold any position in Growth Fund of America.





Many funds and fund managers have become closet indexers.


What does this tell us about the claims that very few active managers outperform their benchmark index?


1.   The conclusion of the study showed that those managers that were truly active(measured by active share), did outperform closet indexers and mildly active management styles. This was even after fees and expenses.





2.   It is becoming more difficult to evaluate funds and manager benefit.

Someone could conclude it is better for investors to settle for passivity?

This only makes sense if you don't want to pay a professional to research and monitor for you, the investments and investment managers that could add value to you investment portfolio.
   
 

At Marrs Wealth Management we take great care to constantly research and monitor the investments and investment managers we use on behalf of our investors.




The S and P 500 index trended up this week. +1.60%
The Dow Jones World Index trended up this week. +1.89%
The 10 year Treasury Yield index trended up this week.
+.11%
The US Dollar index trended up this week. +2.42%
The CRB Commodities index trended down this week. -3.40%
The Gold Index trended up this week.  +1.08%
Inflation Linked Bonds trended up this week. +.76%
US Aggregate Bond Index trended up this week. +.10%
The International Aggregate Bond Index trended down this week.
-2.56%

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 1st qtr + 2.74%

2014 2nd qtr + 2.91%

2014 3rd qtr + 2.63%

The Ten Year Treasury Yield is down 18% Year to Date.

Gold is the leader 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, 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. 

Monday, January 19, 2015

Weekly Update 1 17 2015

Word for the week is collaboration.

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

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

Gettin' good players is easy. Gettin' 'em to play together is the hard part. Casey Stengel

"Training often gives people solutions to problems already solved. Collaboration addresses challenges no one has overcome before." Marcia Conner

"Collaboration is key, it takes innovation and creativity to the next room."  Shawn Lukas

"Collaboration allows teachers to capture each other's fund of collective intelligence." Mike Schmoker

If everyone is moving forward together, then success takes care of itself. Henry Ford

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

If I have seen further it is by standing on the shoulders of giants. Isaac Newton

The secret is to gang up on the problem, rather than each other. Thomas Stallkamp


At Marrs Wealth Management three new people have joined our Firm, to collaborate together with us, adding synergistic value, and enhancing the services to our clients.

Marrs Wealth Management is excited to announce that Nathan Brammer, has joined our firm. 

Nathan is an excellent addition to our firm and brings a wealth of knowledge, education and experience.
Nathan has worked in investment management for twenty one years, the last eleven years he has been an Investment Adviser at Vision Wealth Management and Vice President at Vision Bank in Ames.

Nathan holds an MBA degree, Masters in Business Administration concentrating in Finance and Marketing, from Bradley University.
 In addition Nathan holds a BA degree from Luther College concentrating in Psychology and Management.

Nathan grew up in Grinnell, Iowa and has lived in Ames for the last eleven years.

Nathan's assistant, Stacie Hostetler, has also joined us for added strength and service to our staff.

Marrs Wealth Management welcomes Nathan Brammer and Stacie Hostetler as a valuable addition and we look forward to the expertise and experience they will bring to our team.


We also welcome Andra Reason CPA, CSEP® to Marrs Wealth Management. Andra is an excellent addition to our firm and she also brings a wealth of knowledge, education and experience.

Andra has worked as a Certified Public Accountant and Certified Estate Planning Specialist, the last three years she has worked at LWBJ in Ames. 

Andra holds a Bachelor of Sciences degree in Accounting from the University of Northern Iowa.

Andra has specialized in Business and Tax planning at LWBJ in Ames, Deloitte in Des Moines and at SF and Company a regional firm in Pennsylvania.

Andra has fifteen years of experience working in accounting, tax planning, business planning and estate planning.


At Marrs Wealth Management Andra will hold the position of Chief Financial Officer and Director of Estate and Trust Planning. 

Marrs Wealth Management welcomes Andra as a valuable addition and we look forward to the expertise and experience she will bring to our team.

Defensive Sectors continue to Lead Year to Date.


Gold is the leader this week and Year to Date. 

The S and P 500 index trended down this week. -1.24%
The Dow Jones World Index trended down this week. -.45%
The 10 year Treasury Yield index trended down this week.
-7.91%
The US Dollar index trended up this week. +.90%
The CRB Commodities index trended down this week. -.59%
The Gold Index trended up this week.  +4.37%
Inflation Linked Bonds trended down this week. -1.28%
US Aggregate Bond Index trended up this week. +.50%
The International Aggregate Bond Index trended up this week.
+.03%

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 1st qtr + 2.74%

2014 2nd qtr + 2.91%

2014 3rd qtr + 2.63%

 

 

The Ten Year Treasury Yield is down 18% 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, 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, January 12, 2015

Weekly Update 1 10 2015

Word for the week is experience.


"Experience is one thing you can't get for nothing."  Oscar Wilde

"There are three kinds of men. The ones that learn by readin'. The few who learn by observation.
The rest of them have to pee on the electric fence for themselves." Will Rogers

"More people would learn from their mistakes if they weren't so busy denying them" Harold J. Smith

"I know enough of the world now to have almost lost the capacity of being much surprised by anything" Charles Dickens

"The most fatal illusion is the settled point of view. Since life is growth and motion, a fixed point of view kills anybody who has one." Brooks Atkinson

"How many things have to happen to you before something occurs to you?"  Robert Frost


"In the short term the market is like a voting machine, tallying up which firms are popular and unpopular. But in the long run, the market is like a weighing machine, assessing the substance of a company." Benjamin Graham


I have written much in the past of Benjamin Graham, the master of value investing. 

Warren Buffett has written in the past about his long time mentor Benjamin Graham: "Ben Graham, my friend and teacher, long ago described the mental attitude toward market fluctuations that I believe to be most conducive to investment success. He said that you should imagine market quotations as coming from a remarkably accommodating fellow named Mr. Market who is your partner in a private business. Without fail, Mr. Market appears daily and names a price at which he will either buy your interest or sell you his."

"Even though the business that the two of you own may have economic characteristics that are stable, Mr. Market's quotations will be anything but. For, sad to say, the poor fellow has incurable emotional problems. At times he feels euphoric and can see only the favorable factors affecting the business. When in that mood, he names a very high buy-sell price because he fears that you will snap up his interest and rob him of imminent gains. At other times he is depressed and can see nothing but trouble ahead for both the business and the world. On these occasions he will name a very low price, since he is terrified that you will unload your interest on him."

"If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren't certain that you understand and can value your business far better than Mr. Market, you don't belong in the game. As they say in poker, "If you've been in the game 30 minutes and you don't know who the patsy is, you're the patsy.""

A volatile week this week in the stock market, may add to the indications of the year ahead.
I wrote in the Wealth Management survey as a consultant adviser this fall, there may be a time of going nowhere fast in stocks the next several months, with a lot of volatility,?"

This has story has proved true over the last several months. I would expect more volatile times in the next several months.

A look at what is called the Buffett Valuation Indication, provided by Doug Short. Then the Tobin's Q Ratio.

Then a view of World Debt numbers.



Highest Valuations since 2000


Valuations of Q Ratio well above 1929 and 1966!

What about all the talk of deleveraging?


Many signs point to a very difficult year for stocks. It is a rarity to have the last few days of the previous year and the first week in January have accumulative losses.

Defensive sectors of Healthcare, Consumer Staples and Utilities again lead year to date, as they have the last six months of 2014.



Gold and US Bonds start of the year in the positive.







The S and P 500 index trended down ytd. -.68%
The Dow Jones World Index trended down ytd -1.21%
The 10 year Treasury Yield index trended down ytd.
-9.17%
The US Dollar index trended up ytd +1.70%
The CRB Commodities index trended down ytd. -1.91%
The Gold Index trended up ytd +2.78%
Inflation Linked Bonds trended up ytd. +.12%
US Aggregate Bond Index trended up ytd. +.85%
The International Aggregate Bond Index trended down ytd.
-2.27%

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 1st qtr + 2.74%

2014 2nd qtr + 2.91%

2014 3rd qtr + 2.63%



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. 

 
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. All decisions about investments should be made within parameters of risk, time frame, financial position and overall asset allocation.








Friday, January 2, 2015

Year End Update 2014

Word for the week is Happiness.

Wishing a Happy New Year to you all!

"Folks are usually about as happy as they make their minds up to be." Abraham Lincoln


"Don't cry because it's over, smile because it happened."  Dr. Seuss


"If more of us valued food and cheer and song above hoarded gold, it would be a merrier world."  J.R.R. Tolkien






In 2014:
The S and P 500 index trended up. +11.39%
The Dow Jones World Index trended up. +2.18%
The 10 year Treasury Yield index trended down. -28.29%
The US Dollar index trended up. +12.87%
The CRB Commodities index trended down. -17.92%
The Gold Index trended down. -1.79%
Inflation Linked Bonds trended down. -.25%
US Aggregate Bond Index trended up. +5.98%
The International Aggregate Bond Index trended down. -4.74%

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 1st qtr + 2.74%

2014 2nd qtr + 2.91%

2014 3rd qtr + 2.63%

Stocks led along with Real Estate.


If you were to look at rebalancing risk in your investment portfolio look to take profits from US Stocks and US Bonds and increase Commodity Related areas along with Non-US Stocks and Bonds.

Unlike many who are trying to predict the future in markets, this is more basic in strategy. Sell high and buy low a philosophy that many agree to, yet few follow.

No one knows the future and speculating is not investing!


Sectors that outperformed in 2014 were defensive in nature led by Healthcare, Utilities, Financials and Consumer Staples. Leadership may continue in these sectors into next year, though I believe they will not lift markets overall in the US to double digit returns as they have this year?
 




I often like to look at the broader NYSE Composite Index which represents over 1,900 companies. Approximately 400 of these companies are based outside the US.

The second half of 2014 became much more volatile than the previous 18 months and the NYSE Composite Index return has been flat over the last six months.

This may continue over 2015 with greater volatility and very little increase in price. There may be more of a chance of overall price depreciation?
  

NYSE Point and Figure Chart 2014


As far as predictions here is the outlook from Research Affiliates. 





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.



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. This is not intended as an an advisory recommendation. Personalized Advice must be determined on the basis of financial position, individualized goals and risk tolerance. 

 
  

Wednesday, December 31, 2014

Weekly Update 12 27 14

Word for the week is bias.

I know this was last weeks' word also.


"All of us show bias when it comes to what information we take in. We typically focus on anything that agrees with the outcome we want." Noreena Hertz

"Being deeply knowledgeable on one subject narrows one's focus and increases confidence, but it also blurs dissenting views until they are no longer visible, thereby transforming data collection into bias confirmation and morphing self-deception into self-assurance." Michael Shermer

"My point is that perceptual bias can affect nut jobs and scientists alike. If we hold too rigidly to what we think we know, we ignore or avoid evidence of anything that might change our mind." Martha Beck

"Hindsight bias makes surprises vanish." Daniel Kahneman

"Fortunately for serious minds, a bias recognized is a bias sterilized." Benjamin Haydon


This is a short post for several reasons. I hope you all have had a happy holiday season and wish for you a happy new year.

Following is a link to a very good presentation on "short term bias" and rely on "small sample biases". Instead investors need to focus on risk and having a long term view, and understand the consistent relationships investments demonstrate in intermarket dependencies.

Michael Gayed talks about how long term outperformance is built upon avoiding deep drawdowns and not on chasing after return.
Many investors have a short term bias, looking to invest where there has been recent high gains. This is seldom a good investment strategy!





Michael's father, Michael E.S. Gayed wrote the book; INTERMARKET ANALYSIS AND INVESTING, I recommend it if you want to attempt investing on your own.
Below is a link to a review of the book.




The S and P 500 index trended up last week. +.88%
The Dow Jones World Index trended up last week. +.81%
The 10 year Treasury Yield index trended up last week.
+3.40%
The US Dollar index trended down last week. +.53%
The CRB Commodities index trended down last week. -2.35%
The Gold Index trended up last week +.13%
Inflation Linked Bonds trended down last week. -.31%
US Aggregate Bond Index trended down last week. -.10%
The International Aggregate Bond Index trended down last week. -.09%

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 1st qtr + 2.74%

2014 2nd qtr + 2.91%

2014 3rd qtr + 2.63%

Stocks lead along with Real Estate. 



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.


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.
 


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, December 22, 2014

Weekly Update 12 20 2014

Word for the week is bias.

"All of us show bias when it comes to what information we take in. We typically focus on anything that agrees with the outcome we want." Noreena Hertz

"Being deeply knowledgeable on one subject narrows one's focus and increases confidence, but it also blurs dissenting views until they are no longer visible, thereby transforming data collection into bias confirmation and morphing self-deception into self-assurance." Michael Shermer

"My point is that perceptual bias can affect nut jobs and scientists alike. If we hold too rigidly to what we think we know, we ignore or avoid evidence of anything that might change our mind." Martha Beck

"Hindsight bias makes surprises vanish." Daniel Kahneman

"Fortunately for serious minds, a bias recognized is a bias sterilized." Benjamin Haydon


Do you have a home bias?

If we all think about it we think the things we are familiar with are the best.

Home is where you live or where the people you are the closest to live.
I know people who have moved to the Midwest and lived here for years yet, out east or out west is home.
Many people I know who grew up here and lived for a time away, now say they are back home.

Home bias flows over often into areas of geography or even race and status. Home bias also steps into areas of sports.
Of course we know that Iowa State University is the best University in the state, right?

Home bias also flows over into investing. We want to hold investments from our area, our company, our country.

These biases can cloud judgment and even be detrimental.

I remember the person who sat in my office and had all of his retirement funds invested in Enron stock, where he was employed.
After counseling him to diversify and limit his risk, he stayed where he was invested. A few months later Enron declared bankruptcy.

There are times when risk is warranted, however sometimes the risk is in being biased.


Many investors want all their eggs in the US basket but as the chart below shows, being biased against some areas can lead to missing out. 

There is also a recency bias that makes us want to chase after past winners. 





There is a reason that regulators want a disclosure stating "past performance is not a guarantee of future return. Chasing performance could be rather like chasing a dying animal. You might get catch it but it could still bite you as it is fading. 
It is rare that a best performer one year is the best performer the next year. 

Past performance is no guarantee of future return and all investments may lose value. 

Diversification is essential, to reducing risks and long term outperformance. Chasing prior or current winners is seldom the best opportunity. 

Even the best investors cannot predict the nest best place to invest. Seldom is the previous leader the next leader in return. 

Looking back and chasing returns from the past is never a great strategy for an investment philosophy.



Bias for the most recent and close to home is a good mix for Christmas gatherings, though not all that helpful for investment decision making. 


The S and P 500 index trended up last week. +3.41%
The Dow Jones World Index trended up last week +1.42%
The 10 year Treasury Yield index trended up last week.
+3.47%
The US Dollar index trended down up week +1.70%
The CRB Commodities index trended down last week. -1.42%
The Gold Index trended down last week -2.26%
Inflation Linked Bonds trended down last week -.57%
US Aggregate Bond Index trended down last week -.21%
The International Aggregate Bond Index trended down last week -1.23%

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 1st qtr + 2.74%

2014 2nd qtr + 2.91%

2014 3rd qtr + 2.63%

Stocks lead along with Real Estate. 


  


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.


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 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.