"It is not by muscle,
speed or physical dexterity that great things are achieved
but by reflection,
force of character
and judgment"

- Marcus Tullius Cicero

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CapTrust Advisors

News Brief

Scot Bruin

"What Goes Up?"

Commentary by Scott Bruin, Executive Managing Partner

Good Day All! On a Tuesday Morning several weeks ago, I woke up with a song in my head. We’ve all done this haven’t we? I couldn’t place it but soon came to realize that it was a tune (ancient by today’s standards) recorded way back in 1969 by a rock and roll band that called themselves Blood, Sweat and Tears. The tune—Spinning Wheel—has a first line of the lyric that goes: “What goes up, must come down”. Maybe, just maybe, I was getting a financial markets related reminder through this song?

The markets are making new highs and higher prices seem possible. But, what does go up, should ultimately have a fall or precipitous pullback if history holds. Shouldn’t it?

At CapTrust, some of us were around to see the Dow Jones Industrial Index go through 1500. We know that being invested appropriately over the long term has worked out with the Dow now seeing levels over 17,000. We are not timers, short term prognosticators or program traders. We are long term investors.

At the same time we do know that it makes very good sense to run a “checklist” against our clients investment policy statements and anticipated needs while we are operating in clear and comfortable conditions. Each of our clients’” IPSs” are fully tailored to the individual organization or individuals needs and so need to methodically reviewed, one by one.

CapTrust Consultants will be “challenging the checklist” with each of our clients in the coming days. We look forward to working closely with you on this. It is the right thing to do while “the seat belt sign is off and it is safe to move around the cabin”!!

Thanks for the opportunity to continue to serve your requirements. It is truly our very good fortune.

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Market News

Second Quarter 2014 Commentary

The Great(er) Moderation –
Déjà vu All Over Again

Barely five years after the worst economic decline since the Great Depression, the US and fellow advanced nations are showing a stability in growth and macroeconomic output last witnessed in the two decades prior to the crisis. Volatility in growth among the main industrial nations is the lowest since 2007 and half that of the 20 years starting in 1987, according to Bloomberg analysis based upon data provided by the International Monetary Fund (IMF). This period of tranquility has supported risk assets and given companies and consumers the green light to spend more freely and ramp up risk-taking. A strategist at JPMorgan has dubbed today’s market as the Great Moderation 2.0. The degree of today’s moderation may trump any point during the previous era, however, as investors plunge deeper into risk assets in an effort to realize returns that were once common in less risky assets in the past.

As background, the Great Moderation is the name given to the period of decreased macroeconomic volatility experienced in the US from the mid-1980s until the Great Recession. The phrase was first coined in a research paper in 2002 by two Ivy League economics professors and was brought to the attention of a wider public audience by former Federal Reserve Chairman Ben Bernanke during a speech in 2004. This period of time refers to a reduction in the volatility of the business cycle, as exemplified by the standard deviation of quarterly real GDP (declined by half over this period) and the standard deviation of inflation (declined by two-thirds), according to figures reported by Bernanke. Many other major economic variables such as industrial production and measures of employment declined in volatility, as well. The expectation for greater predictability in...


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