With the election of Donald Trump and with a Republican controlled Congress, American taxpayers can look forward to reduced income taxes, perhaps as early as next year. For most folks, your tax planning strategy should be income deferral, […]
For investors, perhaps the tepid reaction of equity markets to the election of Donald Trump was of equal or greater surprise than the upset election itself. I had to talk just one client off an emotional ledge late election night, and as of today, his impulse to “Sell everything” (from which he backed away) […]
I have been an ardent believer in the opportunity unleashed by American ingenuity and risk taking in the oil patch. Hydraulic fracturing has brought forth a wealth of clean burning natural gas, reducing the need for coal in electricity production. HOWEVER, this process has the potential to cause environmental damage. Those who reject […]
Attention dog and cat owners: Petco is having a 30% off sale! If you happen to be in need of dog or cat food, or perhaps a new toy for your favorite pet friend, this might be a good time to consider checking out the Petco website. But before you do……
What does this notice have […]
This was one of the best quarters and is one of the best half-years for our Balanced-Value style of investing that I can recall in our 13+ year history. Most client accounts will see a half year cash flow adjusted increase in the range of 7% to 10%, topping the performance broad stock and bond indices. Our superior performance was driven by a relatively heavy weighting to the energy industry which had been under market suspicion until things began to unravel in Iraq in June. An ocean of new oil is being produced in North America with more to come, and as with natural gas, there is worry that oil prices may become depressed for a time by surplus.
This was one of the best quarters and is one of he best half-years for our Balanced-Value style of investing that I can recall in our 13+ year history. Most client accounts will see a half year cash flow adjusted increase in the range of 7% to 10%, topping the performance of broad stock and bond indices. Our superior performance was driven by a relatively heavy weighting to the energy industry which had been under market suspicion until things began to unravel in Iraq in June. An ocean of new oil is being produced in North America with more to come, and as with natural gas, there is worry that oil prices may become depressed for a time by surplus. However, the unexpected sweep by extremist Muslims into Northern Iraq seems to have driven investors to buy energy companies, despite little movement in the benchmark Brent Crude price. Since our approach to energy is dominated by ownership of pipelines, and because these stocks are in high demand for their dividends, our clients enjoyed a double barreled lift to their portfolios as both energy and utilities were among the strongest performing sectors in the past quarter.
The quarter’s performance was aided by new price highs for a number of our holdings.
The Fixed Income Story
Meanwhile, surprising the consensus, including me, was the strong showing of bonds as interest rates stubbornly refuse to rise, even after five years of economic recovery. I reduced bond holdings a year or so ago in the face of the first significant correction in bond prices in five years. At the time it appeared the long predicted turn for interest rates was upon us. Not so. Rates have backed off...
It was about five years ago that the current equities bull market began, although you would have had to search far and wide to find any investor, professional or retail, who properly called that bottom at that time. At Trusted Financial, suspecting we were in a bottoming pattern, we were continuing our program of selective buying of stocks and bonds at what were bargain prices. Please take a few minutes to read the words I wrote for our Trusted Advisor Client Newsletter - April, 2009.
For Quarter ending March 31 2014, client accounts saw a modest gain of 2% to 3%. This topped most domestic stock indices. New price highs were experienced in cyclical holdings and in non-cyclicals such as Utilities. In other words, it was a pretty satisfying quarter.
Fixed Income Strategy
I share a widely held belief that we are in the trough of interest rates and that the next move will be higher. However, this change appears likely to manifest itself only gradually. I’m not one who believes that the massive money creation by monetary authorities across the planet will lead to runaway inflation or to interest rates rocketing upward to contain it. That was the scenario between 1972 and 1981, but that was forty years ago and something has changed: productivity. We are still in the early-to-mid innings of an electronic (i.e. silicon based) productivity revolution. Fewer employees can accomplish more tasks at lower costs than at any time in the past fifty years and this trend continues apace. Labor costs, on a unit of production basis are falling. Further, the North American energy bonanza will, for decades, dampen the cost of energy, a key input to inflation.
It was five years ago that the current equities bull market began, although you’d have had to search far and wide to find any investor, professional or layman, who properly called that bottom at that time. At Trusted Financial, we strongly suspected we were in a bottoming pattern and were continuing our program of selective […]
Recently, a good friend expounded upon the supposed dangers of water pollution from hydraulic fracturing of oil and gas wells. As an investment advisor who considers himself an environmentalist, albeit a practical environmentalist, I decided to seek out a credible study on the topic.
The Groundwater Protection Council, a non-profit organization with members consisting of state and […]
As we approach the half-way point for the current quarter (was New Year’s Day that long ago?), I wanted to briefly summarize financial market news and our response thereto. Hope was surging along with the market as the books were closed on 2013. As indicated at our client Holiday Luncheon in December and in private conversations with some clients, value investors such as ourselves have been uncomfortable with the dramatic lift off in share prices that manifested itself so widely during the last three months of 2013....
