“Things work out
best for those who
make the best of
the way things
- John Wooden
The financial markets over the last 90 days since I wrote you have been acting like, well, financial markets!
Too simple—but so true.
Commentary by Scott Bruin, Executive Managing Partner
The financial markets over the last 90 days since I wrote you have been acting like, well, financial markets! Too simple—but so true.
Sometimes there are more buyers, sometimes there are more sellers. Analysts, journalists and barbers are opining on falling energy prices and corresponding demand, the Fed’s Bond Buying curtailment, the future of interest rates and the decision the Japanese made to reduce bonds and buy more equities in their pension funds. Layer in mid-term elections, ISIS and the realities and emotional fears surrounding the ebola virus and you have enough fodder and pundits chattering to keep even the least engaged folks “up nights”.
Doesn’t it remind you of the scene in the Jim Carey movie, Bruce Almighty, where actor Morgan Freeman (portraying God) has handed off his responsibilities to Carey’s character? Carey, who is playing a frustrated and cynical television news reporter, is immediately overwhelmed by “voices” talking to him in his mind and asking (god-him) for help, direction and reassurance. Everyone is talking emphatically, loud and all at once! The financial markets noise can be deafening just like that at times.
At CapTrust we recognize that every one of these events and factors are at least newsworthy and some may have a near term influence on the ebbs and flows in the capital markets. Every now and then an event is even more important strategically. In our shop, these are discussed and vetted. We do our best to deliver our very best direction—all the time—while separating “wheat from chatter”.
I’m reminded of a marketing piece from a respected and noted asset manager in our industry where they depict and overlay world events versus markets and fund performance going back to the 1930’s. The events include the Great Depression, World War II, the scare with the Soviet Launch of Sputnick in the 50’s, the Cuban Missile Crisis and social unrest in the 60’s, Mega Inflation in the 70’s, record setting market declines of the 80’s and so on. There are thousands of events that have had near term influences on the financial markets. Meanwhile the DJII rose from 100 to over 17,000. Sounds so simple, doesn’t it?
We all wish we (or our forefathers) had money invested in equities in the 1930’s and had never liquidated them. Perhaps some did! But, that static investment process is one that we rarely encounter. There are new infusions of capital, distribution requirements, out performance, under performance, capital projects, retirements, births, deaths and many other considerations in our individual consulting assignments. Those simple (sic) DJII returns came with a pile of uncertainty and gyration.
The markets are dynamic and so are the needs of our clients.
We have just witnessed a “short and shallow” equity market pull back that some suggested would be the next “Bubble/Bear” market. At this moment, the Dow Jones Industrial Average has just made a new intra-day all-time high. Reminds me of that 1950’s pop tune, “What A Difference A Day Makes”—you decide which performer, Martin, Bennett or Sinatra.
Now closing in on our 17th year, we are working very hard to continue to bring you meaningful insight through our independent thought processes always underscored by quality and integrity; DESPITE THE NOISE.
The next time I write to you it will be 2015! Let me be the first to convey that we are very thankful for the opportunity to work with you. We wish you a very happy holiday season and a fine 2015.
All the best—Scott Bruin
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We provide investor clients the tools to make good business decisions. The straight-forward logic of our excellent models and the helpful charts in our Market Monitor gives our clients easy command of current business circumstances.
Third Quarter 2014 Commentary
All Quiet on the Western Front
-Erich Maria Remarque
A narrow summary of the capital markets in the US might indicate that, once again, markets were positive and the overall economy continued to improve. One might even find this assessment sufficient considering that the major domestic equity market indices continued trending up. Specifically, the S&P 500, Dow Jones Industrial Average, NASDAQ Composite, and Wilshire 5000 all ended the third quarter positive. This was primarily due to large and mega cap stock gains offsetting smaller cap losses. The S&P 500 was positive for the seventh quarter in a row. Dating back to the end of the financial crisis in the second quarter of 2009, the index has now been up 17 of the past 22 quarters. Yet, under the surface, there has been weakness in the global economy over the past several months. While the S&P 500 returned a positive 1.1% for the quarter, the equal-weighted S&P 500 Index fell 0.7%. In general, the smaller a stock’s market cap, the greater the loss during the quarter, as exemplified by the Russell Midcap (-1.7%), Russell 2000 (-7.4%), and Russell Microcap (-8.2%) indices. Much of the pain was experienced in September as geopolitical concerns again took over headlines and global data showed a deceleration in growth.
In All Quiet on the Western Front, a fictional war novel set during World War I, the German army reports “Im Westen nichts neues” (“In the West, nothing new”, or more famously translated “All quiet on the Western front”) on the day that the story’s narrator finally dies in battle. Recent commentary on the current US capital markets would probably be similar: “All is quiet on the Western front”. Meanwhile, there are signs of deteriorations in the US economy and, more so, across the developed world. Further, through the eyes of biased market participants, much of the... commentary out of Wall Street during the recovery has embellished, perhaps even glorified, the markets role in the economy.