Our “Off The Wall” Blog
is now Monument #Unfiltered

Subscribe below to receive our unique, straight-forward, unfiltered wealth advice delivered straight to your inbox.

And In Other News…

Hilary Clinton

I stay away from politics in my blog unless it has something to do with the market… but I had to have some fun with this one.

The real not-so-new-news is that the first quarter of 2015 came to a close at the end of March and it was an interesting quarter.  Also, earnings season started.  Oh, and Monument Wealth Management was recognized as one of the Best Places to Work in Washington D.C. for the 3rd year in a row.

The First Quarter of 2015 and a Little Bit of “What’s Next”

For the first quarter of 2015, the S&P 500 was basically flat at +0.44%.  Small and Mid-cap stocks led the Large-cap stocks, especially the Growth stocks (vs. value stocks).  We saw Developed Countries, as measured by the iShares EFA ETF, up +5.47%.  Developing Countries, as measured by the Vanguard VWO ETF, was up +2.12%.  Leadership in the U.S. markets continued to be in the growth-orientated sectors, more specifically the Consumer Discretionary (CD) and Health Care (HC) sectors.  Notably, the Industrials and Tech sectors did not participate to the extent that CD and HC did, but I think the quarter was essentially a continuation of the overall longer trend of U.S. cyclical sectors leading the non-cyclical sectors of the market.   Since the market low of March 9, 2009, those sectors have performed as such (cumulative total return, which includes dividends, through March 31, 2015).  According to JP Morgan Asset Management research:

  • CD +423.4%, the #1 performing sector
  • HC, +275.4%, #5 performing sector
  • Industrials +315.3%, #3 performing sector
  • Tech +276.4%, #4 performing sector

Compare these against the S&P 500 return over the same period of +247%. The rest of the sectors, Energy, Consumer Staples, Telecom, Utilities and Materials, are all below the 247% of the S&P 500 over the same time.

As an aside, the only other sector that has outperformed the S&P 500 over the same period of time is the Financial sector at +330% (#2) but that sector is still -21% below the market peak of October, 2007 and the only sector remaining negative to that peak. 

Dividend stocks did not perform well overall given the pull back in Utilities and Energy sectors.  For those of you with dividend portfolio strategies, my opinion is that a good old fashioned dividend strategy is one of those things that always has to be “on retainer” in a long-term investment plan no matter how poorly they do over a quarter.

So how about going forward?

Here’s what we think is important to know as an investor (I don’t dispense trading, craps, black jack or roulette advice – It’s simply not a strength of mine):  The net impact of the rising U.S. Dollar, the decline in oil prices, and the low long-term interest rates will eventually shift demand away from businesses and towards households. This means the consumer will start creating more demand in the economy than businesses.  When that happens, we will see sales growth increase and that’s powerful because roughly 70% of the U.S. economy is driven by the consumer.

The most recent ISM for Manufacturing Report suggests that business spending has tapered off based on the increase in the U.S. Dollar and pullbacks in the Energy sector.  Additionally, as we wrote about here on March 31st, 2015 in the section titled “So What?!?!”, the U.S. household is saving money.

In fact, according to J. P. Morgan’s research department, the U.S. household savings rate is up a full 1% from the end of the fourth quarter of 2014.  It continues to look as though the energy savings bonanza has been saved and has not been spent.  That means that consumers are probably paying off debt, like credit cards, or they are replenishing savings accounts because they used the savings to pay off debt.  Either way, when the debt is paid down or the savings account is back up, we think that we will see the energy savings windfall start to be spent.

Add to that the labor income picture which has been recently improving (wages have started to increase a little), household net worth is increasing (markets are close to their highs), higher consumer confidence, better weather, and you have a pretty good outlook for the potential for increased consumer spending.

That’s not to say that the corporate sector has fallen to zero. Now that the weather has improved we should see construction increase, which has a very positive effect on the economy as well.

Bottom line: let TRADERS fret over whether or not now is the exact perfect time to position for growth.  They are all waiting for the confirming news and economic report to signal that growth is breaking out again.  To the extent that any INVESTOR has not positioned their portfolios for growth already, it’s my opinion that it should be done so now.

I’ll point you to our blog from last week for more thought on being in the pro-growth camp.  See the “So What Do We Think” section.  As for when it ACTUALLY starts, I’ll sign off with lines from Fat Sam in the first scene of the 1985 venerable and timeless comedic hit, Fletch:

FLETCH: “Like when?”

FAT SAM: “Like tonight.”

FLETCH: “For sure?”

FAT SAM: “No, not for sure. When it comes, it comes”

Fletch 4.13.15

Earnings

Readers must feel like it never ends.  Well it does, but it starts up quickly again.  If you followed earnings reports in 7th grade, your summer vacation would have come four times faster than it actually did.  That’s a little known fact but I read it on the internet.

The first quarter of 2015 reporting started last week when Alcoa announced on Wednesday.  It’s the traditional report that commences “earnings season”.  But it really does not get heavy until next week.

Unless you have boycotted reading my missives for the past few weeks, you know I’ve been saying (and basically repeating everything you can read and watch in the popular press) that everything from the dollar, weather and oil is being used as an excuse to lower expectations for earnings this quarter.  More on that here in the first paragraph (it’s kinda funny too – give it a read).  Everyone is pretty pessimistic.

When the bar is laying on the floor, it’s pretty easy to clear; so don’t be surprised if we see the market go up even with all the ‘bad news’ coming out of earnings calls.  Just a hunch…

Monument-Wealth-Management-Blog-Subscribe

Important Disclosure Information for “And In Other News…”

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Wealth Management), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument Wealth Management. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Monument Wealth Management is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of Monument Wealth Management’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

David B. photo

David B. Armstrong, CFA

President & Co-Founder

Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....

Learn more ...

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance is no guarantee of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.

A copy of Monument’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.monumentwealthmanagement.com/disclosures. Please Note: Monument does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Monument’s website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational/comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results.  It should not be assumed that your Monument account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Monument accounts; and, (3) a description of each comparative benchmark/index is available upon request.

Please Remember: If you are a Monument client, please contact Monument, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.

Get Monument #Unfiltered: Our Free Private Wealth Newsletter

Our no B.S. wealth advice delivered 2x per month, max. Tuned specifically for busy, high-net-worth business professionals and investors who want straightforward advice without the fluff.