Thursday, November 17, 2016

Time, not timing, is what matters.

When it comes to investing in the market, we believe, it is not the market, but rather time in the market that truly matters. So many investors spend time trying to "guess" what the market is going to do. But any way you slice it, in our experience, timing the market just doesn't work.

Rather, it is our belief that investors who have stayed the course through the long haul - even through periods of declining stock prices - are in a much better place when all is said and done.

For some, this may be extremely difficult to do - especially during times when it appears that the market is in a state of decline. Nobody likes to sit and watch their money "disappear". So it can be tough to stay the course.

But even though selling when there is a sudden downward movement in the market may limit your short-term losses, you may also miss out on an upward swing in the market. According to Market Analysis, Research and Education (MARE) group, a unit of Fidelity Management & Research Co., the investors who sold and remained out of the market (S&P 500 Index) after it fell by 20 percent on October 19, 1987, would have missed out on the 15 percent climb over the following two days.

Likewise, an investor who sold after eight down days in the fall of 2008 would have missed out of the 6th largest one-day gain ever on October 11, when the S&P rose by 12 percent, also stated by MARE. This, too, highlights the importance of investing for the long-term, and not getting caught up in the "hype" of short-term market movements.

All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges or expenses. Past performance does not guarantee future results.The S&P 500 Index is a broad-based measurement of changes in the stock market conditions based on the average performance of 500 widely held common stocks.

Wednesday, November 16, 2016

There is Always Scary News

Every time I turn on the TV, it seems as though bad news is flooding the screen. Of course, this news has an effect on the stock market, keeping many investors away. While it may seem like times are tough right now, there has actually always been negativity out in the world, and in turn, reasons to keep your money close. But the truth is, if you stop investing during "bad" times, you will lose out on quality investment opportunities.

Here are just a few examples of what would have occurred in terms of dollar amounts and average total returns if you had invested $10,000 in the (            )  on these historic days:
  • Terrorists attacked the World Trade Center on September 11, 2001. Ten years later, you would have had $12,715 which is a 2.4% return. By the end of 2013, you would have had $21,168 - a 6.3% return. 
  • The Dow Jones Industrial Average dropped a record 22.6 percent in one day on October 18, 1987. Ten years later, you would have had $44,268 which is a 16.0% return. By the  end of 2013, you would have had $137,666 which is a 10.5% return.
  • President Kennedy was assassinated on November 22, 1963. Ten years later, you would have had $22,945 which is an 8.7% return. By the end of 2013, you would have had $2,171,751 which is an 11.3% return.
  • Pearl Harbor was bombed on December 7, 1941. Ten years later, you would have had $34,710 which is a 13.3% return. By the end of 2013, you would have had $37,870,576 which is a 12.1% return.
      Spreading fear is profitable for the 24/7 news channels and is designed to keep you tuned in for more information. Their ongoing, fear-based programming is harmful to you and your investing program. 

[     *Results are calculated by (            )

Thursday, September 29, 2016

Reflection Reveals Economic Truth

Our nation’s dialogue is drumming red, white, and blue as we continue to draw closer to November 8th. Our upcoming election has prompted plenty of debate across several avenues, including how the outcome might affect our investments. It seems that even during family dinner, it is hard to break away from the clatter of opinions. So, how are we supposed to find solace in the middle of a heated presidential campaign?

Answer: Pause and consider . . . because your investment return is not determined by whether we have a Democrat or Republican in the White House. Sure, this is easier said than done! While there is cJanita thisonstant rhetoric around elections, it is important to ask yourself two things:

  • Do you remember the past elections affecting the performance of your investments over the long run?
  • Does your experience reflect an investment return that was different whether a Democratic or Republican president was in office? 
This is not the first time our economy has adjusted to a new president and it certainly won't be the last. We encourage you to please let your goals determine your actions, not the current president's political affiliation. However, if you are struggling to make sense of this in regards to your investments, please know that we are here for you. Just reach out to our trained specialists at

In times like these, it helps to recall there have always been times like these.”
- Paul Harvey 

Six truths that won't be affected by the election's outcome.

It is a common perception that the stock market will fare better when a Republican is in the White House because the Grand Old Party tends to be pro-business. A related perception is that Democrats hinder economic and market growth with higher taxes and increased regulation. The historical evidence just doesn't support either notion.

In truth, investors who stay the course are likely to fare much better than those who invest only when one of the two major political parties controls the White House. In fact, if you look at the returns of the Dow Jones Industrial Average since its invention in 1897, it's clear the stock market does not favor either party.
Everything Investors Need to Know—and Should IgnoreAbout the Upcoming Election
  • Gridlock doesn’t mean nothing gets done.
  • Changes in Washington don’t typically come all at once but in increments.
  • Campaign rhetoric doesn’t always influence what happens during a president’s tenure.
  • Consumers and businesses have a far greater impact on the economy than the government.
  • The state of the economy influences who is president, not vice versa.
  • The stock market doesn’t care if the public is happy with who is president. 
The U.S. election will, as always, give us sufficient reasons for both optimism and despair but as an investor, your long-term goals, plan and behavior should shape your investment decisions, not your reaction to who wins the presidential election. However, if you have needs or concerns that you would like to discuss with us in person, please give us a call at 281.990.7100 or email!

"Well-positioned, well-led companies will create investment value regardless of who sits in the White House."

Jerry Webman, Ph.D., CFA Chief Economist for OppenheimerFunds

Bad news always gets more attention

It's easy to focus on the doom and gloom reported in our 24/7 news world. Simply put, bad news always gets more attention!

The focus on bad news seems even worse in an election year when candidates can't stop speaking about the country's problems. Of course this is followed closely by all the reasons the candidate is the man/woman for the job!

According to Warren Buffett in his annual shareholder letter released this spring, it is because of this constant negative drumbeat that many Americans now believe their children will not live as well as they themselves do.

"That view is dead wrong: The babies being born in America today are the luckiest crop in history," said Buffett.

He goes on to claim that the American GDP (Gross Domestic Product) per capita is a staggering six times the amount it was in 1930.Moreover, Buffett doesn't believe that Americans are smarter or work harder now than they did then. They just work more efficiently, allowing for more production. 

"This all-powerful trend is certain to continue: America's economic magic remains alive and well. For 240 years, it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs. America’s social security promises will be honored and perhaps made more generous. And, yes, America’s kids will live far better than their parents did," said Buffett. 

"Every pessimist who ever lived has been buried in an unmarked grave. Tomorrow has always been better than today, and it always will be."
- Paul Harvey

Will driverless cars be common by 2035?

Remember as a kid watching old Sci-fi movies where there were cars that drove themselves and drivers could coast with auto-pilot? It all seemed far off, as if pertaining to a futuristic society. Well, some of those "futuristic" ideas may actually be on the verge of becoming a reality - and they might be doing so a lot sooner than you think!

Today, automakers around the globe are currently working on various different technologies that not only include cars without drivers, but they're taking it one step further by putting these vehicles on the road.
For example, Audi recently obtained a permit from the state of California to test drive vehicles on public streets. Other auto makers aren't far behind as Volvo and Mercedes Benz are in the process of testing out different vehicles.

You may be surprised to learn that some non-auto manufacturers are also racking up miles with driverless cars as well. Google, for instance, currently has about 700,000 test miles on its own version of cars without drivers. IBM, Intel, and Cisco Systems are also in the game. With so many driverless explorations happening, it seems as though the future is now.

So what are the implications of all this? In terms of investment, it could be substantial. According to Morgan Stanley, the benefit of autonomous cars alone for the United States economy could be somewhere in the range of between $700 billion to $2.2 trillion per year. In any case, driverless vehicles are certain to transform the auto industry - and our lives - in many ways, likely by the end of this decade.

Source: Chris Bryant and Andy Charman, “Race Is on to Build World’s First Driverless Car,” October 13, 2014.

"Some Google employees have their self driving vehicles take them to work. These cars are a bunch of sensors, wires, and software. This technology 'works'." - Tyler Cowen

Energy Independence: The Dream is Becoming a Reality.

Energy Independence: The Dream is Becoming a Reality.

For many years, the argument has raged on regarding how the United States should go about obtaining and paying for its oil reserves. This debate has been the subject of many heated discussions - and it may be for many years to come. However, the concept of U.S. energy independence is becoming a reality much sooner than many people realize, halting the argument in its tracks.

Back in early 2007, many Americans believed that the future of the United States energy industry appeared to be bleak. Since then, however, a major transformation has taken place - primarily in the country's three largest oil fields - in terms of key oil production figures.

The Bakken, the Eagle Ford, and the Permian Basin, have all increased their oil production from 1 million barrels per day to an estimated 4.6 million barrels per day (as of year-end 2014). In fact, the oil production in Texas alone was more than 3.1 million barrels per day, the most in more than 33 years, according to the Energy Information Administration.

Given this steep increase in U.S. oil production of late, a longer-term trend towards energy independence could actually become a reality, lessening our future dependency on foreign oil producers.

There are still some questions with regard to long-term sustainability of U.S. oil production going into the future. However, it could be a positive opportunity and dream come true not just for U. S. oil producers, but also for consumers and investors alike.

Source: U.S. Energy Information Administration. Data represent thousands of barrels per day (bpd) for the month of July 2014.

"As long as the United States - and the world - gets its oil from the Middle East, we will be drawn into the endless crises that seem endemic to the region. American energy independence would not only liberate us, it would also drive down the worldwide price of oil." - Kathleen Trola McFarland

Income is growing faster than any time in history.

In many parts of the world today, money is continuing to set new speed records. No, these records can’t be measured in miles per hour, but rather in terms of Gross Domestic Product (GDP) in various areas of the globe. And, as time marches forward, the speed with which money is moving continues to increase.

As an example, in the past, it took approximately 150 years from the beginning of Britain's industrial revolution for Gross Domestic Product per person (measured as purchasing power) to double. Roughly 120 years later, in America, this was accomplished in roughly one-third the time. But even more recently, though, in China, it has doubled in only 12 years and with 100 times fewer people.

In addition to the rise in GDP, the average incomes in developing countries are also growing faster than they ever have in the past. While China and Asia are responsible for a great deal of this new wealth, South Korea, Mexico, and Nigeria are also following suit.

Around the world, there are millions of people who are moving quickly into the "middle class." This means more discretionary income is available and ready to be spent on goods and services. This speedy transition has, in turn, provided a golden opportunity for businesses - and investors - as consumers continue to spend.

"By increasing productivity and becoming more competitive, we will be able to offer better opportunities and improve the standard of living for all Mexicans." - Enrique Pena Nieto

Source: Urban World:Cities and the Rise of the Consuming Class, June 2012, McKinsey Global Institute