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Monday, March 23, 2015

Weekly Update 3 21 2015

This week's theme is uncertainty.

"I wanted a perfect ending. Now I've learned, the hard way, that some poems don't rhyme, and some stories don't have a clear beginning, middle, and end. Life is about not knowing, having to change, taking the moment and making the best of it, without knowing what's going to happen next.
Delicious Ambiguity."  Gilda Radner

"I have learned that if you must leave a place that you have lived in and loved and where all your yesteryears are buried deep, leave it any way except a slow way, leave it the fastest way you can. Never turn back and never believe that an hour you remember is a better hour because it is dead. Passed years seem safe ones, vanquished ones, while the future lives in a cloud, formidable from a distance." Beryl Markham


"Il n'est pas certain que tout soit incertain.
(Translation: It is not certain that everything is uncertain.)"  Blaise Pascal

"But nothing is solid and permanent. Our lives are raised on the shakiest foundations. You don't need to read history books to know that. You only have to know the history of your own life."
 Ron Rash

"Uncertainty is one of government recipes."  Toba Beta

"As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality."  Albert Einstein


"When the future is fogged and ahead lays opportunity but risk, it is better to tread a careful path through the uncertainty than to wait for the mist to clear, if it ever does."  Anonymous

 This week was a much anticipated Federal Reserve Board meeting. As expected they removed the word patient from their statement.
The overall sentiment from other parts of the statement indicate they will not raise rates in June but they left room to do so if they thought things looked more healthy in the economy by then.
The consensus is they believe the recent slowdown is weather related and not indicative of the overall health of the economy.
The stock market had no uncertainty everyone, it seems, believe that monetary policy will be dovish for quite a long time.

However, they are all very uncertain and in uncertainty it is best to be widely diversified and nimble in your investment strategy. In all likelihood we will not see a rate hike before fourth quarter, if at all this year.
In my opinion, volatility in markets will continue to increase.


This Bloomberg article summed up the key points of the thinking of Federal Reserve Policy Makers.



1. Policy makers expect to raise their benchmark interest rate more slowly than they had previously thought 
2. The committee mentioned exports for the first time since March 2009
3. Officials cut their projections for economic growth sizably, across multiple years
 4. The Fed now expects lower inflation 










http://seekingalpha.com/article/3012536-celebrations-over-qe-that-doesnt-work-so-bring-more-qe?ifp=0





http://seekingalpha.com/article/3012536-celebrations-over-qe-that-doesnt-work-so-bring-more-qe?ifp=0




http://seekingalpha.com/article/3011916-pushing-on-a-string-the-feds-spectacular-failure-to-stimulate-housing?ifp=0 



The health of the economy certainly seems to be slowing over the last several months. Whether this indicates a recession on the horizon or not, no one knows. The fact is recessions are usually recognized after they happen.
The only way to deal with this uncertainty in investing is to prepare for the unexpected!


The S and P 500 index trended up this week. +2.66%
The Dow Jones World Index trended up this week. +3.26%
The 10 year Treasury Yield index trended down this week.
-8.62%
The US Dollar index trended down this week. -1.28 %
The CRB Commodities index trended up this week. +1.62%
The Gold Index trended up this week.  +2.26%
Inflation Linked Bonds trended up this week. +2.74%
US Aggregate Bond Index trended up this week. +1.01%
The International Aggregate Bond Index trended up this week.  +2.5%

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%

2014 4th qtr +3.04%



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, March 16, 2015

Weekly Update 3 14 15

This week's theme is overcoming.


"You must see challenges as virtues of opportunities for personal development. You will then have the strength to overcome the challenge." Lailah Gifty Akita

"We could never learn to be brave and patient, if there were only joy in the world." Helen Keller

"I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel." Maya Angelou


"Courage doesn't always roar. Sometimes courage is the quiet voice at the end of the day saying 'I will try again tomorrow.'"
Mary Anne Radmacher

"What if I told you that 10 years from now, your life would be exactly the same? I doubt you'd be happy. So, why are you so afraid of change?" Karen Salmansohn


"When you get into a tight place and everything goes against you ... never give up then, for that is just the place and time that the tide will turn." Harriet Beecher Stowe


"I was taught the way of progress is neither swift nor easy."
Marie Curie

"Life is a succession of lessons which must be lived to be understood." Helen Keller


The world is certainly an adverse environment for ease and comfort. If you are a conservative investor or saver; bonds offer very little yield and interest on savings accounts even less.
Those planning on a 4% or 5% withdrawal rate from savings during retirement have been rapidly spending down their nest egg.

A different model of being cautious and investing during retirement is going to be needed for those boomers retiring within the last fifteen years and beyond.



I was accused of quoting only men last week. This week I am posting the entire blog from Danielle Park, who I follow and read on the website, "SEEKING ALPHA".

Fed in Deflation Penalty Box by Danielle Park , CFA



"Price deflation is the natural outcome of mammoth excess capacity and shrinking demand from aging, indebted consumers. Lower asset values are a key part of the cure needed to fix global imbalances and restore rational investment math and consumption ability once more for the middle class."
"But for bankers...this is a nightmare of their own foolish, greedy design. Rate-cutting powers now gone, and future consumption already spent as demand the past few years, the next global recession is advancing to force a much needed cleansing of reckless policies and players. Couldn't happen to a more deserving bunch of folks..."



Some would have us believe that the slowdown in GDP Growth, Prices and Sales is from the bad winter and falling gasoline prices. However there is evidence that more is going on than a temporary soft patch.




To win in the next phase of financial markets, you will need to be diversified to a greater extent and more nimble in your approach.
I really don't believe buying and holding a market index will be a very desirable strategy for the years to come!
Many studies have provided evidence that recent winners will not continue to be leaders going forward. 



The S and P 500 index trended down this week. -.86%
The Dow Jones World Index trended down this week. -1.41%
The 10 year Treasury Yield index trended down this week.
-5.71%
The US Dollar index trended up this week. +1.78 %
The CRB Commodities index trended down this week. -4.29%
The Gold Index trended down this week.  -1.35%
Inflation Linked Bonds trended up this week. +.47%
US Aggregate Bond Index trended up this week. +.26%
The International Aggregate Bond Index trended down this week. -2.82%

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%

2014 4th qtr +3.04%



This week's theme is overcoming.


"You must see challenges as virtues of opportunities for personal development. You will then have the strength to overcome the challenge." Lailah Gifty Akita

"We could never learn to be brave and patient, if there were only joy in the world." Helen Keller

"I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel." Maya Angelou


"Courage doesn't always roar. Sometimes courage is the quiet voice at the end of the day saying 'I will try again tomorrow.'"
Mary Anne Radmacher

"What if I told you that 10 years from now, your life would be exactly the same? I doubt you'd be happy. So, why are you so afraid of change?" Karen Salmansohn


"When you get into a tight place and everything goes against you ... never give up then, for that is just the place and time that the tide will turn." Harriet Beecher Stowe


"I was taught the way of progress is neither swift nor easy."
Marie Curie

"Life is a succession of lessons which must be lived to be understood." Helen Keller


The world is certainly an adverse environment for ease and comfort. If you are a conservative investor or saver; bonds offer very little yield and interest on savings accounts even less.
Those planning on a 4% or 5% withdrawal rate from savings during retirement have been rapidly spending down their nest egg.

A different model of being cautious and investing during retirement is going to be needed for those boomers retiring within the last fifteen years and beyond.



I was accused of only listening too or more specifically quoting only men last week. This week I am posting the entire blog from Danielle Park, who I follow and read on the website, "SEEKING ALPHA".

Fed in Deflation Penalty Box by Danielle Park , CFA



"Price deflation is the natural outcome of mammoth excess capacity and shrinking demand from aging, indebted consumers. Lower asset values are a key part of the cure needed to fix global imbalances and restore rational investment math and consumption ability once more for the middle class."
"But for bankers...this is a nightmare of their own foolish, greedy design. Rate-cutting powers now gone, and future consumption already spent as demand the past few years, the next global recession is advancing to force a much needed cleansing of reckless policies and players. Couldn't happen to a more deserving bunch of folks..."

 



Some would have us believe that the slowdown in GDP Growth, Prices and Sales is from the bad winter and falling gasoline prices. However there is evidence that more is going on than a temporary soft patch.





 


To win in the next phase of financial markets, you will need to be diversified to a greater extent and more nimble in your approach.
I really don't believe buying and holding a market index will be a very desirable strategy for the years to come!
Many studies have provided evidence that recent winners will not continue to be leaders going forward. 



The S and P 500 index trended down this week. -.86%
The Dow Jones World Index trended down this week. -1.41%
The 10 year Treasury Yield index trended down this week.
-5.71%
The US Dollar index trended up this week. +1.78 %
The CRB Commodities index trended down this week. -4.29%
The Gold Index trended down this week.  -1.35%
Inflation Linked Bonds trended up this week. +.47%
US Aggregate Bond Index trended up this week. +.26%
The International Aggregate Bond Index trended down this week. -2.82%

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%

2014 4th qtr +3.04%



 

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, March 9, 2015

Weekly Update 3 7 2015

This week's update is movie themed; "Back to the Future" and "Get Smart".



"Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him."
Dwight D. Eisenhower

"It is always wise to look ahead, but difficult to look further than you can see."
Winston Churchill

"If you think in terms of a year, plant a seed; if in terms of ten years, plant trees; if in terms of 100 years, teach the people."
Confucius

"The empires of the future are the empires of the mind."
Winston Churchill

A great team of actors came together in the "Back to the Future" movies.
I really like Michael J Fox but I find Christopher Lloyd one of the most versatile character actors in movies and television.


Marty McFly: Hey, Doc, we better back up. We don't have enough road to get up to 88.
Dr. Emmett Brown: Roads? Where we're going, we don't need roads.

Marty McFly: Calvin? Wh... Why do you keep calling me Calvin?
Lorraine Baines: Well, that is your name, isn't it? Calvin Klein? It's written all over your underwear.

Marty McFly: Since when can weathermen predict the weather, let alone the future

Mr. Strickland: I noticed your band is on the roster for the dance auditions after school today. Why even bother, McFly? You don't have a chance. You're too much like your old man. No McFly ever amounted to anything in the history of Hill Valley!
Marty McFly: Yeah, well, history is gonna change.


One of the big stories this past week was the Nasdaq Composite Index climbing back to where it was in early 2000.
It quickly retreated over the week.



Imagine a buy and hold index advocate buying fifteen years ago and still not back to even.
No one of course did that, even gamblers cut their losses at some point.
Smart investing is not at all like gambling.
To invest you need a diverse allocation and you need a defined buy and sell strategy.



Buying and holding an, S and P 500 Index tracking investment, would have been a little better. You could have only waited 13 years to get into positive territory.
Although you would already after two years be very concerned about valuations and economic uncertainties.

Cheap does not mean low cost, easy does not often translate to excellence, and big does not translate to safe or better.

No you will most likely do much better with a diversified strategy that is professionally managed or at least periodically rebalanced.



Get Smart.
 
Don Adams and Barbara Feldon were a good team in the original television version of Get Smart.


Maxwell Smart: [Maxwell and Agent 99 swing towards a window but they hit the wall] Missed it by that much! 

Maxwell Smart: [99 is trying to get knife out of his pocket by grabbing it with her bare feet] That's not my knife! 
Agent 99: Inside there's a pill, if captured it will cause death in nine seconds.
Maxwell Smart: Great, but how exactly do I get them to take it?
[pause]
Maxwell Smart: Not much of a laugher are you? 
Maxwell Smart: Chief, I hit you in the head with a fire extinguisher!
The Chief: No, no, we're not ready yet! 
The Chief: You'll have to bear with me, I'm still a little fuzzy. I got a pretty good hit in the head yesterday.
[Knowing he did it, Max lies]
Maxwell Smart: Yes, it was... dark in there... you probably tripped... I hurt my knee... it was smoky too. 

 

If you like index related investments there may be a smarter way to invest than traditional Capitalization Weighted index investments.
It is only common sense that you should have a better reason to invest in a company than simply size.
Fundamental strength matters when investing.



"How Does Smart Beta Stack Up Against Value Indexes? "
"Hsu argues that traditional indexes suffer from two drawbacks: one is the previously discussed problem of market-price-weighted indexes' overemphasis on stocks that have risen in value."
"But another flaw involves index construction methodologies that tend to overrepresent industries where low price-to-book ratios are typical, such as finance and energy. "

"In contrast, smart beta looks for value stocks across the economy, and it favors stocks with value characteristics within an industry."

 
Investing takes work, thought, patience and a defined strategy.


The S and P 500 index trended down this week. -1.56%
The Dow Jones World Index trended down this week. -1.66%
The 10 year Treasury Yield index trended up this week.
+11.89%
The US Dollar index trended up this week. +2.46 %
The CRB Commodities index trended down this week. -1.76%
The Gold Index trended down this week.  -4.07%
Inflation Linked Bonds trended down this week. -5.28%
US Aggregate Bond Index trended up this week. -.94%
The International Aggregate Bond Index trended down this week. -3.31%

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%

2014 4th qtr +3.04%


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, March 2, 2015

February 2015 End of Month Update

Word for the week is perspective.

"The fact that we live at the bottom of a deep gravity well, on the surface of a gas covered planet going around a nuclear fireball 90 million miles away and think this to be normal is obviously some indication of how skewed our perspective tends to be." Douglas Adams

"We can complain because rose bushes have thorns, or rejoice because thorn bushes have roses." Abraham Lincoln

"Some people see the glass half full. Others see it half empty.
I see a glass that's twice as big as it needs to be."  George Carlin

"If you look the right way, you can see that the whole world is a garden." Frances Hodgson Burnett

"Nothing is really work unless you would rather be doing something else."  J.M. Barrie

"I will love the light for it shows me the way, yet I will endure the darkness for it shows me the stars." Og Mandino

"Often it isn't the mountains ahead that wear you out, it's the little pebble in your shoe."  Muhammad Ali

"For what you see and hear depends a good deal on where you are standing: it also depends on what sort of person you are."
 C.S. Lewis

"Distance lends enchantment to the view."  Mark Twain


It is the end of another month and time to step back to gain some perspective.
It is important in gaining perspective to look at the present from another person's set of eyes!

Doug Short keeps an eye on perspectives in financial markets and updates data weekly.





Doug Short explains: "What are the Implications of Overvaluation for Portfolio Management?
  • The S&P 500 is likely to decline severely during the next recession, and future index returns over the next 7 to 10 years are likely to be low.
  • Given this scenario, over the next 7 to 10 years a buy and hold strategy may not meet the return assumptions that many investors have for their portfolio.
  • Asset allocation in general and tactical asset allocation specifically are going to be THE important determinant of portfolio return during this time frame. Just buying and holding the S&P 500 is likely be disappointing.
  • Some market commentators argue that high long-term valuations (e.g., Shiller's CAPE) no longer matter because accounting standards have changed and the stock market is still going up. However, the impact of elevated valuations -- when it really matters -- is expressed when the business cycle peaks and the next recession rolls around. Elevated valuations do not take a toll on portfolios so long as the economy is in expansion."



It is true the past is not the present. I have often quoted Sir John Templeton's words: "The four most dangerous words in investing are; 'this time it's different'".

It is also important to remember that past performance does not guarantee future returns.
Perspective on recessions and market valuations do not tell us what is going to happen today or tomorrow.
We do not know what will happen.
The importance of being widely diversified and tactically positioned in investment portfolios always makes more sense than not gaining the perspective of the past.

Marrs Wealth Management builds widely diversified portfolios with diverse asset categories and alternative investment strategies.
 



Gold win out this week.




The S and P 500 index trended down this week. -.28%
The Dow Jones World Index trended up this week. +.25%
The 10 year Treasury Yield index trended down this week.
-6.41%
The US Dollar index trended up this week. +.95%
The CRB Commodities index trended down this week. -.30%
The Gold Index trended up this week.  +.81%
Inflation Linked Bonds trended down this week. -.41%
US Aggregate Bond Index trended up this week. +.55%
The International Aggregate Bond Index trended down this week. -1.26%

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%

2014 4th qtr +3.04%



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.