Letters category: Archives

January 2016.  October 1987. 2008.  2001-2002.  For those who remember, 1973-1974.

What do those dates have in common?  Those are all times in the “recent” (everything is relative depending on your age…) past that bring terror to our hearts.  They are all times in which the markets spun in irrational and uncontrollable ways, teasing us and taunting us, and showing us who really is boss.  No matter what anyone says, it is not possible to legally time the market and benefit.  A stopped clock is right twice a day.  There are some times when a money manager or analyst will “get it right.”  It’s rare to see the same analyst/money manager get it right twice.

Our emotions take us away on roller coaster rides that don’t end… until we least expect it.  The greatest challenge with trying to time the market, and move in and out of the market at presumably highs and lows, is that we don’t know until we’re looking back where those highs and lows are.

We have created well-diversified portfolios for you that we believe will outperform the relevant benchmarks (indices) over long periods of time.  We rebalance your portfolios as opportunities are available.  We have to recognize that in order to benefit in the up markets, we must tolerate and ride through the challenging times — the times that make us doubt the long-term historical performance of the markets.  Is it over?

Is it different this time?

If you weren’t aware, January 2016 has so far been the worst start of a year for the DOW since 1897.  That’s 119 years.  “According to estimates from Morningstar and AGF Investments, markets experience drops over 10% more frequently than they see gains over 10%.  Between January 1992 and December 2014, there were 77 weeks where the S&P 500 registered losses of more than 10%.  There were only 45 weeks with gains of over 10% during the time period.  The cumulative value of the losses over the 77 weeks was -1096%.  The cumulative value of the gains over the aforementioned 45 weeks was 612%.”

In January of 1992, the S & P 500 was at 417.09.  It closed December 2014 at 2058.90. 

They go on to say, “This is why limiting downside risk can actually help investors win more in the long term. Investors can win more by losing less.  A steady approach that balances risk by diversified investment in both global equity and bond markets can help investors in limiting their losses.” (from Yahoo Finance “How You Can Win More By Losing Less,” November 20, 2015) 

Last year (2015) was one of the most difficult years to make money in the last 78 years. According to data from Societe Generale, “the best-performing asset class of 2015 was stocks, whose meager 2 percent total return (that is, including dividends) still surpasses those of long-term bonds, short-term Treasury bills and commodities.  These minimal gains make 2015 the worst year for finding returns since 1937, when the cash-like 3-month Treasury bill beat out other major asset classes with a return of 0.3 percent.”  Please see the link below for the article.

The market does not move predictably.  You are well diversified in your portfolio; however, in these markets, just about all assets classes are down and not showing any mercy as yet.  We believe that when we look back from 2026, this may very well be a great buying opportunity.  Just like March 2009, November 1987, 2003, and December 1974 when the DOW closed down 27.57% at 616.24.  Even at year-end 2008, the DOW was 8776.39.  The DOW, even after the 7% correction, is now at 16,346.04.

We care about your investment performance.  We have a strategy that we believe will work but we have to have patience in this market.  In my 41 years in this industry, I believe that our investment strategy is stronger than ever.  I have confidence that the strategy will carry us through these markets.

Let’s keep things in perspective.  (See the attached slide on Crisis and Events.)  Turn off your televisions and XM Radios and take a walk in the woods.

Please feel free to call us.  We look forward to talking to you.

Why Are Stocks Falling?

Written by RiverFront Investment Group.  Reprinted with permission from RiverFront Investment Group.  Redistribution is prohibited.

Oil Crushing Market; Beware the “Aggregation Bias”

Written by Jeremy Siegel.  Reprinted with permission from Jeremy Siegel.  Redistribution is prohibited.

Positive Fundamentals Clash with Negative Technicals – Raising Cash Again

Ouch!, Great Jobs Report; the Fed Should be on Hold

Written by Jeremy Siegel.  Reprinted with permission from Jeremy Siegel.  Redistribution is prohibited.

Poor Year Ends on Downtick; Looking Ahead to 2016

Written by Jeremy Siegel.  Reprinted with permission from Jeremy Siegel.  Redistribution is prohibited.

P-Es look Worse than they Are; Have we seen the Low for Oil?

Written by Jeremy Siegel.  Reprinted with permission from Jeremy Siegel.  Redistribution is prohibited.

2016 Outlook Highlights: Shifting Gears

Written by RiverFront Investment Group.  Reprinted with permission from RiverFront Investment Group.  Redistribution is prohibited.

Fed Hikes into Deflationary Storm; Equities to Struggle

Written by Jeremy Siegel.  Reprinted with permission from Jeremy Siegel.  Redistribution is prohibited.

Eurozone: Policy and Earnings Are Key

Written by RiverFront Investment Group.  Reprinted with permission from RiverFront Investment Group.  Redistribution is prohibited.