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Monday, August 31, 2015

Weekly Update 8 29 2015

This week's theme is Emotional Intelligence.
 
"It is better to experience moment of discomfort in the achievement of your dreams than to be comfortable without accomplishing your dreams."  Lailah Gifty 
 
"I've always thought that the best moments can come from the worst times." Carla H. Krueger
 
"Will is intention favored by emotions."  Raheel Farooq
 
"Emotion will never seize to prevail logic."  Markus W. Lunner
 
"When time and emotions gel, a new awareness forms."  
 
"It isn't stress that makes us fall - it's how we respond to stressful events."  Wayde Goodall
 
"Emotional self-control-- delaying gratification and stifling impulsiveness- underlies accomplishment of every sort" 
 
Daniel Goleman has written extensively on "Emotional Intelligence" and how developing our ability to harness the power within our emotions can translate to success in life.
 
This week I thought of a famous story told by Warren Buffett about "Mr. Market". 

The entire piece can be accessed at the link below.
 



Buffett says about Mr. Market; "sad to say, the poor fellow has incurable emotional problems".

Later Buffett claims; "Mr. Market is there to serve you, not to guide you. Further on he says; "If he shows up some day in a particularly foolish mood, you are free to ignore him or to take advantage of him, but it will be disastrous if you fall under his influence."

The point is, making decisions based on sound judgement and not getting caught up by the emotion of the day is difficult. We all get caught up in that trap on occasion.

Put together a plan. Know your comfort level for volatility and allocate investments appropriately.

Mr. Market often emotionally overreacts, don't make moves based on Mr. Market's instability.

At Marrs Wealth Management we take into account each client's situation and needs. We tailor portfolios to fit you and to withstand Mr. Markets various mood swings. 

Tuesday, August 18, 2015

Weekly Update 8 15 2015

This week's theme is making adjustments.
 
 
"When it is obvious that the goals cannot be reached, don't adjust the goals, adjust the action steps." Confucius

"I think the biggest thing for me is being able to adjust to the way the game has changed. It's basically a 180-degree turn from the style I like to play. That's what I think I'm most proud of, being able to fit into this style of game and still be fairly successful." Brett Hull

"This crisis is not simply a more severe version of the usual business cycle recession, the typical downturn in which economies ultimately adjust and stabilize." Timothy Geithner
 
"When there's downward pressure on growth, one choice is to adjust economic policy, increase deficits, and relax monetary policy. That might have a short-term benefit, but may not be beneficial for the future." Li Keqiang
 
"I can't change the direction of the wind, but I can adjust my sails to always reach my destination." Jimmy Dean

"There are things I can't force. I must adjust. There are times when the greatest change needed is a change of my viewpoint." Denis Diderot

Buy and hold investing is a good option if you don't want to keep up with changing landscapes in the investment horizon.

Also if you are driven by emotions and pull out on downturns and invest after investments have experienced high returns, buy, hold and don't look at, is a way to avoid disastrous results.

Unfortunately this is the experience of most people who do not employ a professional investment advisor. Most investors buy high and sell low.

This past week I have heard and read about China almost from every news source and investment provider that I know.

"China's stock market is crashing"; "China is starting a currency war by devaluing their currency"; "China is going to pull the world into global recession" and on and on more hyperbolic rhetoric of disaster.
 

 
Last month it was Greece that was going to destroy economies globally.
 
Here is a better way rebalancing or reallocation investments within a diversified investment portfolio by taking profits during upturn and adding to investments after downturns.

I am not talking about timing markets. I am talking about a systematic strategy of rebalancing and readjusting investment portfolios as markets inevitably shift.

I am talking about having a disciplined practice of reviewing your investments in an objective way that moves beyond emotional trading and buy and hold investing.
 
Below you see a chart of the China market, Vanguard Total Stock Market Index, and Vanguard Total International.
 
For illustration only. Not a recommendation to buy or sell any security. This is not intended as personal investment advice.
 
The China stock market shows considerably more volatility than the US stock market or the overall international market. This is true both to upside movement and downside.

In limited amounts and with some rebalancing one might benefit in added return by having a limited exposure to China and rebalancing in order to realize some gains.

China would add some diversification at the very least.

However buying after seeing high return and selling out of down turns would not be a winning strategy.
Yet this the behavior of many investors.


The strategy of rebalancing may help with less volatile and diverse markets such as total stock market indexes and total bond market indexes.




US Stocks may be at a point of realizing a long expected correction. The New York Stock Exchange Composite index is approximately at the same level as last year at this time.
 
Five takeaways.
1.   All investments carry risk and may lose value.
2.   Limited exposure to some very volatile investments may be good idea in a widely diversified portfolio of investments.
3.   It may not be the best strategy to buy and hold.
4.   Disciplined adjustments to investment portfolios, such as rebalancing and realizing gains, is more preferred to selling and locking in a loss.


The S and P 500 index trended up this week. +.67%
The Dow Jones World Index trended down this week. -.41%
The 10 year Treasury Yield index trended up this week.  +.97%
The 10 year Treasury Price index trended down this week.
 -.10%
The CRB Commodities index trended down this week. -.18%
The Gold Index trended up this week.  +1.77%
The US Dollar index trended down this week. -1.04%
Inflation Linked Bonds trended down this week.-.29%
US Aggregate Bond Index trended up this week. + .88%
The International Aggregate Bond Index trended up this week. +1.15
 
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 3rd qtr + 2.63%
 
2014 4th qtr +3.04%
 
2015 1st qtr +3.57%
 
2015 2nd qtr + 3.14%



It pays to stay diversified and not chase prior winners!


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

Overall risk measures and managing downside risk play an increasing role in end results.

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


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


The above is for informational purposes only and not an offer or recommendation to buy or sell. Past performance is no guarantee of future return. Decisions on making any investment should be made only subsequent to a thorough professional analysis of the overall individual financial picture and the goal for the investments. This writing is not to be construed as an offer of personal advice or an offer to follow any recommendation. Any investments should only be entered into after a thorough analysis from your personal Adviser and related to your current financial picture and goals.
 
Any investments can lose value. Diversification is not a guarantee against loss.

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




Monday, August 10, 2015

Weekly Update 8 8 2015

This week's theme is "the main thing".
 
 
"Setting a goal is not the main thing. It is deciding how you will go about achieving it and staying with that plan." Tom Landry
 
"It is not enough to have a good mind; the main thing is to use it well." Rene Descartes
 
"The main thing is to keep the main thing the main thing."Stephen Covey
 
It is no surprise that I quote Stephen Covey, he has had a very strong impact on leadership principles.

Other quotes from Covey similar to the one above are; "Put first things, first", "If the ladder is not leaning against the right wall, every step we take gets us to the wrong place faster" And "The key is not to prioritize what's on your schedule, but to schedule your priorities".
 
Reminds me of a quote I heard from Yogi Berra; "If you don't know where you are going you might end up someplace else."
 
What is the main thing in investment advice is planning. As the quote above from a great leader-coach Tom Landry says, setting goals is not the main thing.

The main thing is planning how to achieve that goal and sticking to the plan.

In order to optimize performance great business people, top athletes and high performers often employ a coach or an adviser.

There are far too many investment product sales people out there. Looking at only "suitability" is a trap that can be used by unscrupulous or poorly trained investment product salespersons.

Planning involves research, analysis, implementation, monitoring, adjusting and that is a continual process. Investment Advising involves a discipline of planning as the main thing here are the basic steps.


1.   Cash Flow Management.
 Whether still earning or living off income from retirement savings, plan for fixed expenses first and budget for discretionary expense.
I see a lot of people working who make a lot and spend it all and I see a lot of people who overspend and end up dwindling their savings to nothing. Plan around cash flow. I also see people who are not high earners, they save and end up millionaires.
 
2.   Cash Reserves or Emergency Fund.
 Investments are not reserves or emergency funds, a cushion is needed for downturns and difficult market conditions. Plan for a six month cushion of cash or income from dividends and interest that keep you from dipping into investments at low points.
 
3.   Debt Management-Elimination.
Remember debt that is carried becomes a fixed expense. Save at least 20% of your house purchase before you buy a home. Remember there are additional expenses besides the mortgage payment, it isn't an even exchange in cash flow from rent to a house payment. The same is true of a car payment the monthly payment is just one part of the fixed payment of owning.
 
4.   Low Cost Insurance, with Adequate Coverage, to help Loved Ones reach your goals.
A low cost term insurance policy is adequate and necessary. Very few people under certain circumstances should buy a permanent or whole life insurance policy. Also you can probably find a lower cost option than enrolling in your employer's life insurance plan. Disclosure we do not sell life insurance, however we can help you research the best options.
 
5.   Fill up tax deferred investment plans first.
You put money in tax qualified plans such as IRA's and workplace retirement plans at a fraction of the after tax cost and it grows tax deferred, putting more money to work for a longer period of time. This is how to increase wealth; Amount invested, compound time and return, less cost.
 
6.   Diversify Investments.
Have not only different investments, but diversify different asset classes of investments and diversify different investment strategies; with regular review, rebalancing and realignment and risk management in view.
 
Below is an analysis of an index that uses multiple asset classes along with multiple investment strategies to diversify investment risk adjusted return.
Disclosure you cannot invest directly in an index. Risk is inherent to investing. All investments may lose value and past return is not a guarantee of future return. This illustration does not show an actual client portfolio.




The Model Benchmark indicated above is the S and P 500 Index with dividends reinvested (red circle), the model is the blended index model (red square, see index allocation below) and the yellow square is the S and P Target Risk Moderate Index. 


Diversification may be able to help your planning, in possibly increasing long term return and lowering risk. Steady and consistent wins the race. Diversification is not a guarantee against loss. 


The S and P 500 index trended down this week. -1.27%
The Dow Jones World Index trended down this week. -.89%
The 10 year Treasury Yield index trended down this week.           -1.36%
The 10 year Treasury Price index was flat this week.
The CRB Commodities index trended down this week. -2.1%
The Gold Index trended down this week.  -.08%
The US Dollar index trended up this week. +.24%
Inflation Linked Bonds trended down this week.-1.92%
US Aggregate Bond Index was flat this week.
The International Aggregate Bond Index was flat this week.
 
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 3rd qtr + 2.63%
 
2014 4th qtr +3.04%
 
2015 1st qtr +3.57%
 
2015 2nd qtr + 3.14%


It pays to stay diversified and not chase prior winners!

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

Overall risk measures and managing downside risk play an increasing role in end results.

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


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

The above is for informational purposes only and not an offer or recommendation to buy or sell. Past performance is no guarantee of future return. Decisions on making any investment should be made only subsequent to a thorough professional analysis of the overall individual financial picture and the goal for the investments. This writing is not to be construed as an offer of personal advice or an offer to follow any recommendation. Any investments should only be entered into after a thorough analysis from your personal Adviser and related to your current financial picture and goals.
 
Any investments can lose value. Diversification is not a guarantee against loss.

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

 

Monday, August 3, 2015

Month End Update 7 31 2015

This week's theme is self-deception.

"The human brain is a complex organ with the wonderful power of enabling man to find reasons for continuing to believe whatever it is that he wants to believe."  Voltaire

"Nothing is so difficult as not deceiving oneself."  Ludwig Wittgenstein

"You can fool yourself, you know. You'd think it's impossible, but it turns out it's the easiest thing of all." Jodi Picoult,

"Science is what we have learned about how to keep from fooling ourselves."  Richard Feynman

"We should not delude ourselves into thinking that our historical narratives, as commonly constructed, are anything more than retrofits."  Niall Ferguson

"Everybody makes excuses for themselves, they wouldn't be prepared to make for other people."  Rebecca Goldstein

"Of course, that rationalization didn't work at all. It would have helped if I'd had some Oreo cookie ice cream to eat that the same time. I've learned that self-delusion is much easier when there's something sweet in your mouth." Lee Goldberg


If you have been a participant in a sport, tried to stop a bad habit or simply wanted to change your mind, you have probably heard about visualization techniques.
Yes we can often fool our minds into changing. Often we fool ourselves easily, we don't need to try.
However it is usually a bad thing when we are self-deluded without even trying. It is best to know what direction you want your mind to direct itself to in order to become better in one way or another.

Political Scientists Brendan Nyhan and Jason Reifler have studied people's reactions when they have a belief that is inaccurate and these persons are presented with the truth. They have discovered what they call the "backfire effect". When presented with truth that is the opposite of what is believed people often reject the truth and become more strongly convince of the inaccuracy of their opinion.
It seems we all create what is called and "echo chamber" of likeminded people as associates and follow media outlets that carry similar biases. We confirm inaccuracies by not investigating other information opposite viewpoints.

How do we get people to change their minds or attitudes? We do have at some level a desire to know what is correct, this is called "Accuracy Motivation."

Presenting information in graphic form seems to help. That can go both ways. Propaganda can be as powerful as truth.

We all have an idea of how things work and we want information to validate our ideas. Even if presented with facts that don't fit in with our ideas or contradicts our beliefs, we often choose to dismiss the information, rather than reconsider our assumptions.

Above is information Adapted from an Article in "Rotarian" magazine for August 2015, written by Frank Bures. The article is titled: "Beyond belief: What happens when what you know turns out to be wrong?"

Speaking of seeking out accurate information.
We have a new tool on our Website.

Do you know the risk you are taking in your investments?

Go to our website link below and click the button that says,
"Free Portfolio Risk Analysis".



We have a built in self deception called recency bias, that causes us to believe that things will continue as they have been, in the most recent past. 
In truth with financial markets there are cyclical ups and downs.
We can't time those cycles but it is important to keep our portfolios aligned with our risk and return objectives.
Have you rebalanced your investment portfolio recently?



The S and P 500 index trended up in July. +1.27%
The Dow Jones World Index was flat in July.
The 10 year Treasury Yield index trended down in July. -8.81%
The 10 year Treasury Price index trended up in July. +1.71%
The CRB Commodities index trended down in July. -9.59%
The Gold Index trended down in July.  -6.23%
The US Dollar index trended up in July. +.96%
Inflation Linked Bonds trended down in July. -1.63%
US Aggregate Bond Index trended up in July. +1.19%
The International Aggregate Bond Index trended up in July.
+.63%

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 3rd qtr + 2.63%

2014 4th qtr +3.04%

2015 1st qtr +3.57%

2015 2nd qtr +3.14



It pays to stay diversified and not chase prior winners!

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

Overall risk measures and managing downside risk play an increasing role in end results.

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

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

The above is for informational purposes only and not an offer or recommendation to buy or sell. Past performance is no guarantee of future return. Decisions on making any investment should be made only subsequent to a thorough professional analysis of the overall individual financial picture and the goal for the investments. This writing is not to be construed as an offer of personal advice or an offer to follow any recommendation. Any investments should only be entered into after a thorough analysis from your personal Adviser and related to your current financial picture and goals.

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

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





Tuesday, July 21, 2015

Weekly Update 7 18 15

This week's theme is relax.

Together with a culture of work, there must be a culture of leisure as gratification. To put it another way: people who work must take the time to relax, to be with their families, to enjoy themselves, read, listen to music, play a sport. Pope Francis


We will be more successful in all our endeavors if we can let go of the habit of running all the time, and take little pauses to relax and re-center ourselves. And we'll also have a lot more joy in living. Thich Nhat Hanh


"Relax. Refresh. Renew. Play. Sing. Laugh. Enjoy. Forgive. Dance. Love. Hug. Share. Kiss. Create. Explore. Hope. Listen. Dare. Trust. Dream. Learn. TODAY!"  Steve Maraboli

"Relax and refuse to let worry and stress rule your life. There is always a solution to every problem. Things will work out for you when you take time to relax, refresh, restore and recharge your soul."  Lailah Gifty Akita

My family and I had a chance to get away for a week this week to relax and recharge. Won't take a lot of time to write this weeks' update.

The best way to be relaxed as an investor is to make sure your comfortable with your investment allocation and that a professional is monitoring the investments. Have an investment review and then relax.



The S and P 500 index trended up this week. +2.41%
The Dow Jones World Index trended up this week. +1.91%
The 10 year Treasury Yield index trended down this week. -2.81%
The 10 year Treasury Price index trended up this week. +.24%
The CRB Commodities index trended down this week. -1.7%
The Gold Index trended down this week.  -2.67%
The US Dollar index trended up this week. 1.9%
Inflation Linked Bonds trended down this week.-.70%
US Aggregate Bond Index trended up this week. +.44%
The International Aggregate Bond Index trended down this week. -1.32%

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


2014 2nd qtr + 2.91%

2014 3rd qtr + 2.63%

2014 4th qtr +3.04%

2015 1st qtr +3.57%



It pays to stay diversified and not chase prior winners!


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

Overall risk measures and managing downside risk play an increasing role in end results.

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


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


The above is for informational purposes only and not an offer or recommendation to buy or sell. Past performance is no guarantee of future return. Decisions on making any investment should be made only subsequent to a thorough professional analysis of the overall individual financial picture and the goal for the investments. This writing is not to be construed as an offer of personal advice or an offer to follow any recommendation. Any investments should only be entered into after a thorough analysis from your personal Adviser and related to your current financial picture and goals.

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

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

Tuesday, July 14, 2015

Weekly Update 7 11 2015

This week's theme is facing fear.

"If you are pained by external things, it is not they that disturb you, but your own judgement of them. And it is in your power to wipe out that judgement now." Marcus Aurelius

"There is no illusion greater than fear." Lao Tzu

"Men are not afraid of things, but of how they view them."
Epictetus

"If you want to catch your dreams, you have to drop your fears." Anton Rubaclini

"I know a little something about fear, honey. I know what a relief it feels like to give into it at first. It's not hard to persuade yourself that you're doing the right thing-that you're making the smart, safe decision. But fear is insidious. It takes anything you're willing to give it, the parts of your life you don't mind cutting out, but when you're not looking, it takes anything else it damn well pleases, too."  Andrea Lochen,

We can easily forgive a child who is afraid of the dark; the real tragedy of life is when men are afraid of the light. Plato

The only thing we have to fear is fear itself. Franklin D. Roosevelt

We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful. Warren Buffett

Fear is a catalyst for bad decision making. Emotional decisions from either fear, uncertainty or what was coined as "irrational exuberance" seldom make for great outcomes.

This week in Greece and the European Union, China and even in our own financial markets there was some of this behavior exhibited. China restricted trading across its national exchange. For a seemingly unknown reason the Wall Street Journal, United Airlines and the New York Stock Exchange halted services for a period, this week. A technical glitch was blamed.

Nate Brammer in our offices recently wrote this piece on, not letting fear guide your decisions.

DO NOT LET FEAR DRIVE YOUR INVESTMENT DECISIONS     

I remember one of the first lessons I learned as a child regarding investing.  Bernice was much like a grandmother to me and my brothers and sister.  She was raised on a farm in NW Iowa and taught 3rd grade most of her career in Muscatine.  In actuality, she was the first cousin to my maternal grandfather, but she treated us like her own.  You can never have too many grandmothers. 

 
Bernice and I were visiting one afternoon and somehow the topic turned to investing.  She mentioned the stocks of companies she owned during the market crash of 1929 and the subsequent depression.  Many of the company names I remember being familiar.  I made the remark, "Wow, you must have lost a lot of money."  Bernice stopped, turned and looked at me quizzically.  She finally said, "I didn't lose any money.  I didn't sell."  So 50 years later, she planted a seed in me that has fully blossomed.  Do not let fear drive your investment decisions.

 
Fundamentals are the best driver of our investment decisions.  Having well thought out buy and sell strategies for our portfolios and being diversified among diversified asset classes, before the markets become turbulent, help us to adhere to those strategies through the turmoil.  Diversification will be our anchor through the economic storms. 

One of the more challenging things regarding investing is not being our own worst enemy.  Investing is enjoyable when our account values are increasing every quarter.  However, inevitably when the market becomes volatile or there is a significant downturn, many investors panic and head for the exits.  Investing is one of, maybe a few purchases, people will make fewer of as the price goes down and want more of as the price increases.  This behavior is counter to the old adage; "Buy low and sell high."  That is something we would never do when it comes to purchasing groceries or clothes.

 It is not often easy to set aside our emotions and make a rational decisions when on T.V. commentators are telling us that the sky is falling.  It is a better idea to access personalized advice.

 
Nate this week is at training this coming week and will earn his Accredited Investment Fiduciary designation. This will make a total of three AIF® designees in our office.

Marrs Wealth Management is committed to acting in the best interest of you, who put your trust and financial life under our care.



The S and P 500 index was flat this week.
The Dow Jones World Index trended down this week. -.77%
The 10 year Treasury Yield index trended up this week.
+1%
The 10 year Treasury Price index was flat this week.
The CRB Commodities index trended down this week. -2.81%
The Gold Index trended down this week.  -.63%
The US Dollar index trended down this week. -.18%
Inflation Linked Bonds was flat this week.
US Aggregate Bond Index trended down this week. -.14%
The International Aggregate Bond Index was flat this week.

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


2014 2nd qtr + 2.91%

2014 3rd qtr + 2.63%

2014 4th qtr +3.04%

2015 1st qtr +3.57%



It pays to stay diversified and not chase prior winners!



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

Overall risk measures and managing downside risk play an increasing role in end results.

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


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


The above is for informational purposes only and not an offer or recommendation to buy or sell. Past performance is no guarantee of future return. Decisions on making any investment should be made only subsequent to a thorough professional analysis of the overall individual financial picture and the goal for the investments. This writing is not to be construed as an offer of personal advice or an offer to follow any recommendation. Any investments should only be entered into after a thorough analysis from your personal Adviser and related to your current financial picture and goals.

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

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