June’s Overactive Emotions

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Before I move along to observations of current events, I’d like to make an announcement about a current development here in the office. My longtime colleague and friend, Ken Moyer, has joined our team as a full partner. Ken and I have worked together for over a decade and I have come to respect him as an advisor and trust him without hesitation. I am a big believer in synergy among advisors, and I couldn’t be happier to have Ken on board.

A few of you already know Ken. Over time you will all get to know him as we fully integrate our businesses. As we move into the future, Shelby and Linda will always be here to help with your administrative issues; and Ken and I will be here to help with investment and planning matters. Ken is a Certified Financial Planner Practitioner and I know his financial planning experience will be just one of the great advantages to having him on our team.

Finally, you will see these Worth Considering issues go from being written as “I” to “we.” Ken has also been writing a similar letter to his clients and we will now be working together to send one letter to our combined group.

Welcome aboard, Ken!

And on the topic of news around the office……..our own Linda Nunez is about to become Linda Lampman! Linda met and fell in love with a nice young member of our operations staff a year ago. I hope she doesn’t mind that I am sharing this news with you all, but I thought it was well worth noting. Matt is a very lucky guy.

Congratulations Linda!


June’s Overactive Emotions

So what’s going on in the investment world these days? Not much. In our last issue we discussed the June pullback in almost all asset classes and how we thought it would be temporary. After that decline, the S&P 500 Index has moved back up but bonds have not been recovering along with stocks.

Remember that bond prices move inversely with interest rates. Since interest rates are close to zero there is very little room for bonds to appreciate in price from here. The Fed is eventually going to remove its QE programs and these will most likely push rates higher since their actions over the past few years have held rates artificially low.

However, we don’t think rates will spike upward. If you look at the following chart of the 10 year US Treasury bond, you’ll notice that even though there are 2 well-defined long-term trends, there are also lengthy periods where bond prices have moved opposite the trend. We expect this to continue and we wouldn’t be surprised to see periodic counter-trends in the future.


If we are at the beginning of a long-term reversal in the interest rate trend (interest rates start going up) then we need to understand that this will be a new investment environment and one that few investors have experience with. Rates have been dropping for 30 years and we may have to unlearn some things. The transition will probably be volatile and affect the overall investment landscape. It will be more important than ever to maintain a disciplined investment approach during these volatile periods.

European Potential

After mostly avoiding it for the past few years, we are starting to consider Europe as a place to weight a little more in our asset allocations. The Europeans were slower in their response to the financial crisis but the actions they have taken in recent years are showing some results.

As companies here in the US have reported their quarterly earnings in recent weeks there has been a quiet, but clear trend. They have commented on how their European operations have begun to add to their earnings rather than detract and they are now seeing Europe as one of their pleasant surprises.

It is far too soon to say that Europe is firmly on a growth track but it’s hard to not take notice of the better than expected economic data that has come from the region in recent months. The majority of Europe is still troubled but that doesn’t mean it’s beyond repair. These are typically the times when good values can be found. A lot of headwinds are unique to Europe for various reasons but if the region can manage to put in a bottom economically, it will go a long way toward boosting the earnings power of most companies around the world- not just in Europe.

Mid Earnings Season Report

The US earnings season so far has been decent and although the recovery is not proceeding as quickly as in the past, we are still seeing respectable growth and many people are getting back to work. I have talked many times about the Plow Horse economy. We don’t think economic growth is going to skyrocket but we do think it will slowly grow over time. Recent economic data confirms what corporate earnings are saying, which is that the Plow Horse might be picking up his pace a bit, but he’s not morphing into a Race Horse any time soon.


  • As I promised in the first issue of Worth Considering, I won’t clog your Inbox with unnecessary communications. This summer hasn’t brought many things worthy of your attention. Businesses continue to show modestly growing revenue and profitability. The real estate markets – both commercial and residential – continue their recovery, and job growth is still slow. The Plow Horse lives on.
  • Government bonds still present more risk than reward in a broad sense. Corporate and municipal bonds are less exposed to these risks, but caution is still advised.
  • Europe might soon switch to a source of positive headlines instead of constant dread in the coming quarters. It is too soon to get overly excited, but we just might have seen the worst of things across the Pond. We don’t suggest anyone bet heavily on a European turnaround but 2014 might turn out to be a time when Europe becomes a leader instead of a laggard in terms of growth.
  • I hope you share my excitement about these developments here at the office. Ken is sure to make a meaningful contribution to our team, and Linda is going to be a giddy bride, I’m sure!

Jeff Winn, Financial Advisor – Central Florida Area

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