Monthly Commentary

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February 2014
  • The Fed is handing the baton to back to the markets for pricing risk, sending volatility higher on its path back to normal.
  • Emerging markets health is vital to global growth, as they have doubled their contribution to global GDP over the past decade to nearly 40%.
  • S&P 500 corporations derive half of their revenue from overseas; global consumerism and manufacturing provide ongoing support.
  • Broad global diversification across equity and fixed income markets is the best way to protect against volatility.
January 2014
  • While the U.S. market was dominant in 2013, broad global equity diversification contributed to positive investment returns.
  • Surging equity markets were an example of “upside risk” that hit some investors hard in 2013.
  • Effective diversification should be meaningfully global within equity and fixed income, distributed broadly across asset classes and rebalanced on a periodic basis.
  • If you invest like everyone else, you likely will experience the same sub-par returns that everyone else does.
December 2013
  • Forecasts for: S&P earnings, interest rates, oil, inflation and other key metrics
  • How global economic expansion may sustain the bull market in 2014
  • How global manufacturing and global consumers may drive worldwide growth
  • How tectonic shifts in energy, technology, trade and frontier markets may pave the way to long term expansion

April 2013
  • Despite the hoopla over first quarter market performance, it paled in comparison to the first three months of 2012.
  • Driven in part by the extremely accommodative monetary policy, the U.S. economy is gaining traction, but Europe continues to flounder.
  • After their first negative print in three years during the third quarter, S&P 500 companies returned to positive earnings growth in the fourth.
  • A broad, globally diversified portfolio is the best way to balance the desire for wealth accumulation with an appreciation of volatility.
March 2013

Highlights from this month's views include:

  • The U.S. equity market is on a roll, still cheering investors after a multiyear bull market.
  • U.S. equities have dominated emerging markets for three straight years
  • While U.S. large-cap equities get the headlines, mid and small caps have continued to excel.
  • Frontier markets have picked up the slack as major emerging markets stumble.
  • Global risks persist, though U.S. fundamentals appear solid.
  • The move toward U.S. energy independence should soon result in a trade surplus, boosting GDP.
February 2013
  • Investors responded to abated risks in Europe, temporary relief from fiscal cliff concerns and the largesse of the Fed punchbowl with the best January returns in years.
  • Nevertheless, fundamentals ultimately drive markets, and concerns —notably, weak third quarter earnings and the threat of the coming “sequester” — remain
  • The rally highlights the folly of gaming diversification —holding cash is a costly response to market uncertainties — and we hope January’s enthusiasm will help lure groundhog-savers out of their holes
January 2013

Global equity and fixed income markets in 2012 all had a banner year led by Global REITs, Midcap, Smallcap and EAFE, which all topped the S&P 500's 16% total return. A last minute Congressional deal on the Fiscal Cliff sparked an end of year rally, setting the stage for an impressive relief rally to start off the first day of trading of 2013. The market has not digested the full economic ramifications of the new law -or inevitable follow-up changes yet to come -but that is for later. For a deeper analysis and answers to many questions on the minds of investors please review our "2013 Forecast: Good Economy, Challenged Markets", summarized below.

  • Global and U.S. economies are at reasonably good levels, but markets pay for and demand growth.
  • Negative S&P 500 corporate profit growth for 3rd quarter 2012 is signaling a defensive posture to start 2013.
  • The consumer remains the game changer with a boost from a resurgent housing market.
  • Tectonic shifts in energy, global trade, frontier markets and technology are catalysts for growth in 2013.
December 2012
  • Though equity markets have been calm, the real economy tells a different story.
  • If our leaders in Washington aren’t able to arrive at a compromise, January 1 will mark the beginning of the country’s first “scheduled recession”, though third quarter corporate earnings suggest a global slowdown is evident.
  • Don’t be surprised to see a Christmas rally should Congress kick the fiscal can down the road and the Fed extend Operation Twist.
November 2012
  • Third quarter earnings growth for S&P 500 companies is at risk of being negative for the first time in three years.
  • Though some risk assets softened in October, all are solidly positive year to date.
  • Monetary stimulus has stabilized markets, aided housing and the consumer, but alone it is inadequate; pro-growth taxation, spending and regulatory policy is necessary.
  • While the presidential election is important, Congress will ultimately control spending and tax legislation.
October 2012

Tectonic shifts in energy — led by new technologies to tap into natural gas stores deep under the surface of the earth — are expected to lead the United States to energy independence by 2020. Many investors have failed to recognize fully the profound impact the energy revolution — along with other tectonic shifts — is having on market fundamentals and asset prices. This report focuses on the impact energy has had on the private economy this year and our expectations for its long-term influence.


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