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A Guided Path Informs Your Decisions

December 22, 2017 |

This morning, the President signed the Tax Cuts and Jobs Act into law. We have highlight some notable points.


December 20, 2017 |

In recent months digital currencies like Bitcoin have caught the attention of the investment world due to their rapid price appreciation and potentially disruptive technologies.  We believe the “blockchain”or “dual ledger” technology has a lot of merit and potential to improve transactional efficiency and security in a number of industries.  We can also see the value in the use of Bitcoin (and other crypto currencies) as an alternative to traditional currencies, particularly in countries or markets where there is little faith in the stability of the currency or where there are significant transactional restrictions in place. Whether those use cases justify the current and potential future price appreciation still remains unclear.

December 20, 2017 |

On Friday evening, the House-Senate Conference Committee released the final version of the Tax Cuts and Jobs Act. Since that time, both the House and the Senate have passed the bill (the House did twice), and now the bill will head to the President for signature. In the attached summary we highlight some notable points.

December 15, 2017 |

It wasn’t that long ago that computing power grew to such a level that it enabled the “Moneyball” era, a reference to modern statistical analysis used in baseball to identify the most valuable players.  Can this approach work in predicting financial market outcomes?

In baseball, the decisions made based on a player’s statistics are unlikely to alter the player’s success.  However, in financial markets, the actions of humans and machines (artificial intelligence) do impact market results.  New data and interpretations emerge every day to tempt and challenge investors.  Having a disciplined process is critical to long-term investment success, avoiding the Siren’s song of the latest news headline.

December 4, 2017 |

Heading into the final month of 2017, the S&P 500 continues on the course of impressive gains. The index has posted a positive return for all 11 months this year, despite the headline noise from North Korea, tax reform uncertainty and other geopolitical events. A strong Q3 GDP estimate was revised upwards, and continued strength through Q4 is expected. The economy keeps chugging along helped by high consumer confidence, low unemployment, and stabilized oil prices.

November 13, 2017 |

Congress is busy at work on the Tax Cuts and Jobs Act. On Thursday, November 9, two tax reform bills were introduced, one by the Senate Finance Committee and the other (a revised version to their original bill introduced on November 2) by the House Ways and Means Committee. The bill aims to be the largest tax reform since 1986.

November 9, 2017 |

It has been a decade since the last equity bear market showed its claws. The S&P 500 hit a pre-credit crisis high of 1565.2 on October 9, 2007 before cratering all the way down to 676.5 during the “Great Recession” and a severe bear market followed. Of course, the stock market is now well-beyond that prior peak—the S&P 500 ended the past month near record highs at 2575.3. Yet even with a lengthy recovery under our belt, the prior downdraft is still fresh in the minds of many...

November 6, 2017 |

As investors await more concrete details of potential tax reform within the U.S., market indices continue to push to all time highs entering the final two months of the year. We are roughly half way through the Q3 earnings season and have seen solid results, 77% of S&P 500 companies have beaten EPS estimates. Despite the recent hurricanes, Q3 GDP within the U.S. was strong. Expectations are that the Federal Reserve remains on track to raise rates by 0.25% one more time in 2017. The current rate remains between 1% and 1.25%. The European Central Bank announced plans to extend their quantitative easing starting in January 2018, although at a reduced rate (€30B down from €60B per month). This extension will last through September 2018, and the terms were left open ended to further extend or increase the pace of purchases, should adverse economic conditions develop. The announcement came as no surprise to markets and is a continuation of easy monetary policy around the globe.

October 9, 2017 |

Stock markets have seen steady gains with little volatility in 2017—do not let the recent tameness instill a false sense of security as markets can periodically behave like wild beasts. The fall months in particular are often a time of increased volatility. But if the economy and corporate earnings stay on tracks and the Federal Reserve does not get overly aggressive with tightening, any pullbacks ought to be transitory and the bull should continue to run.

September 14, 2017 |

The gains for U.S. stocks continue. The S&P 500 index has not had a losing month yet this year, despite recently experiencing small bouts of volatility amid tax reform delays and geopolitical events (North Korea, Hurricanes Harvey and Irma). The recent severe storms have been devastating for residents of two populous regions of the country (Houston and Florida), but the bulk of the economic damage should be localized while the long-term impact to the national economy is limited. The energy markets have also been impacted, with fuel prices rising nation-wide as refineries along the Gulf Coast have been disrupted. While investors have recently shown some skepticism towards pricey U.S. equities, international stocks are still in favor thanks to widespread global economic growth and a falling U.S. dollar. With inflation nowhere to be seen, many are questioning whether the Federal Reserve will hike rates again later this year. Futures markets suggest the probability of another 2017 increase is now less than 30%.

September 14, 2017 |

The recent mega-fight between legendary boxer Floyd Mayweather and mixed martial artist Conor McGregor put quite a spotlight on the boxing world. And whether you are a fan of the “sweet science” as boxing is often referred to, or think the pugilistic sport is rather barbaric, the event was quite a spectacle. It also reminded us that in many ways boxing, although violent, can make for an appropriate analogy to investing. Both are skillful crafts that involve strategy and forethought.

It would not be surprising to see volatility land a few punches on the markets later this year, so now is not the time to get too aggressive with regards to portfolio allocations. But the economy is still relatively fresh and not likely to go down for the count, so it is not yet the time to throw in the towel on growth-oriented investments. If stocks take a hit, try to roll with the punches and look for any new opportunities.

August 16, 2017 |
Ho hum, just another boring month filled with record highs for U.S. stocks. Thank goodness for the ongoing political circus to distract us from the volatility-starved equity markets, though few would have predicted such strong and steady gains in the face of policy uncertainty.  
July 17, 2017 |

Safeguarding trusts set up for third party beneficiaries is much easier than protecting your own assets and currently only a limited number of states allow for Domestic Asset Protection Trust (DAPT).  Still with trust protection legislation in place, many practitioners in these states question how well these DAPT’s would stand up to judicial scrutiny. Such concerns have been put to ease, at least in one state. On May 25 of this year, the Nevada Supreme Court issued a ruling on Nevada Asset Protection Trusts (NAPTs), reaffirming their dominance as an asset protection vehicle. Read on to learn about how you might be able to better protect your assets.

July 12, 2017 |

The current environment of low interest rates and elevated equity valuations has many investors in a tight spot, as return expectations are lower than usual for both bonds and domestic stocks. Unless investors broaden their horizons to consider regional diversification and the inclusion of alternative strategies, satisfactory portfolio returns may be hard to come by.

July 12, 2017 |

Heading into the summer months, the S&P 500 continues to climb to new heights. Amid historically low volatility, the index has now posted gains in 15 out of the past 16 months, including a streak of eight in a row. Crude oil, on the other hand, has fallen back into a bear market, setting new lows dating back to last August as oversupply concerns continue to weigh on the market. As widely expected, the Federal Reserve hiked its policy rate by 25 basis points at their June meeting. Fed officials still expect to raise that rate once more in the second half of this year. Bonds markets reacted to Fed activity with a shrug. The bellwether ten-year Treasury note ended the month yielding 2.3% and has been in a relatively tight range for several months.

June 6, 2017 |

Many of you may recall the old fictitious Mad magazine character, Alfred E. Neuman, whose catchphrase line “What, me worry?” made light of the need to dwell on anything. The motto and the image of the gap-toothed grinning kid projected a devil-may-care attitude of someone who maintains a sense of humor when everything around him is going up in flames. But in real life, most folks find plenty to fret about. And an anticipation of problems—big or small, real or imagined—can often lead to counterproductive anxiety and a clouding of judgement. Worrying can often be a waste of energy, though when harnessed properly can help prepare for a variety of outcomes. And while there are plenty of things to be concerned about with regards to stocks, they are for now outweighed by improved earnings and a solid economic outlook.

June 5, 2017 |

The S&P 500 and Nasdaq Composite continued to hit new record highs in another month of gains for stocks. Earnings growth at U.S. companies in the S&P 500 index grew last quarter at the fastest pace in nearly six years, which may help investors justify elevated valuations. Calm was restored overseas as there were no surprises with the French presidential election, with pro-European Union candidate Emmanuel Macron winning in the second round. Subsequent to the election, the VIX index of volatility closed at its lowest level in over two decades. The U.S. dollar, meanwhile, broke to a six-month low, continuing to benefit international investments (in U.S. dollar terms). Given the strong labor market, it is likely the Federal Reserve will raise short-term rates by 25 basis points at their June meeting.

May 3, 2017 |

Being mediocre, by definition, signifies being simply adequate—neither great nor terrible. Nevertheless, the word tends to have a negative connotation. Whether it is sports, one’s job, or everyday activities such as driving, nobody dreams about being undistinguished and unexceptional. But perhaps when it comes to the economy, being mediocre does not deserve such a bad rap. 

May 1, 2017 |
U.S. stocks extended their gains as a series of upbeat earnings reports last month helped bolster optimism about the economy. The S&P 500 advanced for the 6th month in a row (the index has posted a positve return in 13 out of the past 14 months) while the technology-oriented Nasdaq broke through to a new record high. 
April 11, 2017 |

Most of us are familiar with the expression “Don’t put all of your eggs in one basket.” Sage advice for all walks of life—if the fate of everything is dependent on only one thing--the proverbial basket--then dropping the basket could be catastrophic. The proverb calls for diversifying, or placing the eggs in different baskets in order to reduce the risk of a mishap leading to the loss of all your eggs. Simple enough— the concept applies directly to investing. Investor portfolios are often diversified across a wide array of not only stocks (especially for those investing via mutual funds or ETFs), but also various asset classes (such as bonds and commodities) and geographic regions. Unfortunately, to the chagrin of many investors, while diversification sounds all well and good in theory, in practice it often feels as if it is not working.

April 10, 2017 |

Global Equity Markets enjoyed strong returns in Q1 led by the Emerging Markets. Growth stocks lead Value as Technology stocks were a significant driver of returns, accounting for more than 40% of the S&P 500 Index gains in Q1. Despite the Fed's 25 basis point rate hike, intermediate term investment grade bonds (Corporates and Munis) still squeaked out positive returns in Q1. Commodities and Natural Resource Equities were some of the weaker performers in the first quarter as oil prices retreated by about 7.5%. High hopes that tax reform, reduced regulation and a more pro-business agenda would jumpstart the next round of growth in corporate earnings, have eased in face of failure to repeal the Affordable Care Act. The Fed has introduced a new wrinkle to the equation by suggesting that they may consider reducing their balance sheet later this year which raises the possibility that they may slow the pace of rate hikes. The weakened currency and rebounding global economy's benefit on the European markets is reflected through the European Manufacturing Managers Index (PMI).

March 8, 2017 |

Stocks are off to a fast start in 2016. Gains in each of the first two months have propelled the S&P 500 to an early 6% year-to-date return. The gains are even more impressive going back to November’s election—the S&P 500 is up nearly 12% since then and regularly hitting new record highs. Given such a strong run, and considering that we have not experienced a correction (a price decline in excess of 10%) in more than a year, many investors may be getting a bit wary. After all, the average annualized return for U.S. large cap stocks over the past twenty years is only 7.5%. But in our opinion, a strategy of relying on these types of mathematical averages is a little fuzzy, as markets seldom act average. In fact, calendar year stock returns are usually anything but average.

March 7, 2017 |

The stock market rally continued more or less unabated in February, with U.S. stocks hitting new record highs on an almost daily basis. While hopes of faster growth as a result of proposed business-friendly policies from the new administration are a large part of the story, an actual recent improvement in fundamentals (corporate earnings and economic data) should not be overlooked. The earnings recession is now in the rear-view mirror, which helps to provide an underpinning for the equity market. As stock prices surge to previously unseen levels, investors are starting to pay attention to elevated valuations.

February 10, 2017 |

According to a well-recited traders’ omen, "As January goes, so goes the year." The so-called January Barometer, as first mentioned by Yale Hirsch of the Stock Trader’s Almanac, suggests the performance of stocks in the first month of the calendar year dictates where prices will head for the year overall. With the S&P 500 scraping out a 1.8% gain to kick off 2017 (the index’s first January gain since 2013), followers of this fortune-telling phenomenon are likely cheering the prospects of a prosperous year ahead. But do simple rules of thumb such as this, which are particularly alluring to fall back on during political and policy uncertainty, really work?

February 8, 2017 |

Stocks got off to a decent start in 2017 on continued optimism that the new administration's fiscal policies will ultimately spur economic growth. January has been a tough month for the markets in recent years, and though stocks once again wavered near the end in face of political turmoil, the S&P 500 still managed to rise 1.9% for the month. It was the first January gain since 2013. The Dow Jones Industrial Average, meanwhile, breached the 20,000 mark mid-month for the first time ever. International markets did even better, with returns for U.S.-based investors benefiting from a decline in the dollar (which logged its worst month in nearly a year). The MSCI EAFE index of developed overseas markets rose 2.9% in January (in dollar terms). Emerging markets were the biggest winner, gaining 5.5%.

January 13, 2017 |

Thanks in part to the prospects of an accelerated pace of Federal Reserve rate hikes, many expect continued strength in the U.S. dollar as we head into 2017. If that turns out to be the case, the tangled web of currencies and corporate earnings could make it tough for U.S. markets to maintain their recent dominance. While a rising dollar hurts the near-term performance of non-U.S. investments (when translated back into dollar terms), over longer timeframes weaker foreign currencies can improve the competitiveness of businesses outside of the U.S.. Emerging markets in particular may benefit from stronger potential growth and attractive valuations, making them a compelling long-term investment opportunity.

January 11, 2017 |

U.S. stock markets wrapped up 2016 on a strong note, as the post-election rally continued in anticipation of the new administration's proposed business-friendly policies. For the S&P 500, December's 2% advance (including dividends), capped off the index's 8th consecutive year of gains. On the international front, emerging stock markets notched their first positive year since 2012 on signs of improving fundamentals, but developed overseas markets (Europe in particular) continued to lag due to slow growth and structural concerns.