Category Archives: Investment

Market Timing? Time to sell?

“Far more money has been lost by investors trying to anticipate corrections, than has been lost in corrections themselves.” — Peter Lynch

Trump Elected 45th President… Now what?

What’s happening and what will happen with the markets in the wake of Donald Trump’s victory as the 45th President of the United States?

While the result was indeed a surprise to most, there is no panic necessary. We are a country governed by laws passed by two houses of Congress as well as the President. While some may agree or disagree with a particular brand of politics, nothing in the way of policy decisions is going to happen immediately.

In fact, while the initial market reaction to the news was significantly negative (overnight futures were down ~ 5% at one point), the open this morning has recovered as significantly (up a bit as of this writing).

What we will see over the next few weeks/months is continued volatility (which is normal) which will provide good entry points for those holding cash. In the short-term, the volatility, while unsettling, may actually give our fund managers opportunities to deploy cash and take advantage of dislocations to further enhance portfolio returns.

As usual, we have been closely following the economic environment.  The facts are that corporate balance sheets are in very good shape and corporate earnings are rising.   Consumer finances show that household debt service ratios are at historic lows and household net worth at historic highs.  As a result, consumer sentiment has been and should continue to increase and bolster the already positive consumer consumption rate (nearly 69% of our economy).

We encourage you not to make any knee-jerk reactions based on the outcome of this election.  Our investment strategy has always been one driven by asset allocation with a view to the long-term.  As we have seen in the past, the shocks to our systems typically create temporary dislocations in the market  (BREXIT, the Taper-tantrum, LTCM meltdown, etc.)  Cooler minds will prevail which is why we firmly believe in our asset allocation approach.  That is not to say we will not act to fine-tune our strategy over the next few weeks as we assess the changes in government policies and initiatives resulting from the election.

To summarize, what we do now is stay the course.

Please feel free to reach out to any of us on your wealth management team if you have any questions or concerns, but know that we are diligently watching/reviewing the situation.

BREXIT! Now What?

We have spent much time this past few weeks digesting what a BREXIT would do to the US Economy, the World Economy and also what type of shock it would cause to the markets.

In our opinion, the United Kingdom’s exit from European Union will have, and has had, a shock affect on the markets.  It will take some time for the emotional mist to clear and give way to logical financial facts that can be used to divine the health of the international economies and related stock markets.  Stock markets are made up of companies and no company will sit idle while the world shifts around them, they will plan and act accordingly.  So, while there will be and has been an immediate shock to the markets around the world (especially since most felt that REMAIN would get the winning votes), calmer heads will prevail in the coming weeks as the UK’s plans with the EU are solidified.  Our sense is that this will effect the UK and Europe to some extent and may even cause some slowdowns or a small short-term contraction in economic growth, but the actual impact on the US economy will be muted.

There is much going on behind the scenes and the rhetoric to make this schism as constructive as possible to allow for a continued strong relationship between the UK and EU.  As the political environment in the UK starts to gel, expect the UK to petition for release under Article 50 of the Lisbon treaty. After that, the exit negotiations will begin followed by, or in tandem with, laying the groundwork for trade agreements and relations with between the EU and the UK.

This is going to be a long process and there is no current crisis.  The companies in the European stock exchanges are not worth 10% less simply due to the vote.  The Euro-zone markets and FTSE will become oversold and then will recover.  Any surprise shock to the system will cause a market reaction.  The US was not immune to this emotional reaction; however, with only a bit more than 4% of US trade going to the UK, the impact on the US economy should be small.  There is no US recession in sight, so our markets should quickly recover.

The bottom line is that you can use this as a buying in opportunity if you like, but at the very least you should stand your ground in your well diversified portfolios.  Enjoy the summer as the fear dissipates and gives way to the reality of corporate earnings, job growth and general slow economic growth in the US and around the world.

Below is a summary of BrExit from our friends at LSA Porfolio Analytics

“The People Have Voted and the U.K. Is Out”

On Thursday, Britain voted to leave the European Union. While this decision is most important for Britain itself, it will also have significant implications for the future of the European Union, exchange rates and global financial markets.

What is ‘Brexit’

Brexit is an abbreviation of “British exit”, which refers to the June 23, 2016 referendum by British voters to exit the European Union. The referendum roiled global markets, including currencies, causing the British pound to fall to its lowest level in decades. Prime Minister David Cameron, who supported the UK remaining in the EU announced he would step down in October.

Market turmoil could create opportunity

This time the opinion polls got it right. The “Remain” and “Leave” camps were running neck-and-neck coming into yesterday’s U.K. referendum on membership of the European Union and in the event some 52% of U.K. voters opted to reject the status quo and pull out.

Markets have responded dramatically. U.K. equity index futures have slumped and the pound sterling has tumbled to 1980s levels. Safe havens such as gold, German Bunds and U.S. Treasuries are seeing substantial investor demand. The euro has also come under pressure.

Fears of ‘Lehman Moment’ Overblown

No doubt this will be the first of many volatile trading sessions, and the major central banks may intervene if necessary. But we caution against reacting as though this were a second “Lehman moment,” as some commentators have suggested.

The likelihood of at least medium-term damage to the U.K. economy from a “Leave” vote, as well as pronounced market volatility on the back of political uncertainty for the U.K. and the EU as a whole, might lead our investors to overreact.  Still, the U.K. has chosen the rockier of two paths. It piles up the political distractions that have dogged the administration of U.K. Prime Minister David Cameron and his chancellor, George Osborne. The “Brexit” camp is clearly in the ascendant but the vote revealed a lack of national consensus. And even consensus would not wish away the complexity of this exit, a “monumental,” multi-year task in the words of one legal expert.

Economic Damage Likely to Be Contained

That complexity is likely to prolong the period of low corporate investment we have seen leading up to the vote, both within the U.K. and in the form of foreign direct investment. This, together with the higher costs of trading, is what led mainstream economists to forecast a 3-7 percentage point negative long-term impact on U.K. GDP.

The pain may not be felt evenly. Many of the large companies in the FTSE 100 Index are global rather than U.K. businesses—80% of the index’s revenues come from overseas. This should help insulate them from any domestic downturn and potentially deliver a windfall from the weakened pound. Smaller, more domestically-focused companies are more vulnerable to a fall in consumer demand and higher import costs. That could be a source of opportunity during a sell-off in U.K. assets, particularly if the U.K. makes its new status work over the longer term.

Elsewhere, the economic impact is likely to be felt most keenly in Europe and, in the words of one Federal Reserve Bank president, to have only “moderate direct effects on the U.S. economy in the near term.” Again, we expect an excessive market reaction to be a potential source of opportunity.

Another Blow for Globalization?

A more pessimistic reading of the vote would see it as one more crack in the edifice of international political and economic co-operation built over the past 70 years. Anti-EU parties in countries like France, Germany and Italy may take heart from the result and attempt to further exploit the euro-skepticism increasingly evident in opinion polls across the Continent.  But to us this merely confirms that globalization is under siege, a trend already well-advanced and understood by financial markets.

 Look Through the Noise to Fundamentals

Most importantly, this vote will probably exert only a marginal effect on global economic fundamentals, which remain stable but weak. We still live in a slow-growth, low-inflation, low-interest rate environment, characterized by sluggish productivity and investment. “Brexit” has been a tail risk stalking markets in the same way that the oil price, the strong dollar and concerns about China created volatility back in January and February, but we think its implications are overstated. For that reason, we again stress the importance of looking through the noise to focus on fundamentals and watching for opportunities to address risk in portfolios. The market reaction may provide opportunities to add to some positions once the worst of the initial volatility has passed.

Looking further out, in a lot of places in the world we still need structural reform and a more appropriate fiscal response to the current malaise if we are going to allow our economies to grow on a proper footing, and our companies to generate sustainable earnings growth. Part of that progress will involve addressing the legitimate concerns of those who have failed to benefit from globalization, but populism and political division is not the way to do it. In that respect, today’s result is hardly good news. But we believe its effect will be marginal and the market’s initial response is likely to create opportunity for patient investors with cool heads.

The impact of traders over the next couple of market sessions will continue to test the soundness of a portfolio’s resilience to withstand volatility.  We continue to monitor the markets and underlying model positions and although our exposures to currency sensitive and European focused positions are light we stand ready to make changes to address downside and risk to portfolios.


This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Information is obtained from sources deemed reliable, but there is no representation or warranty as to its accuracy, completeness or reliability. All information is current as of the date of this material and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.


This material may include estimates, outlooks, projections and other “forward-looking statements.” Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed. Investing entails risks, including possible loss of principal. Investments in hedge funds and private equity are speculative and involve a higher degree of risk than more traditional investments. Investments in hedge funds and private equity are intended for sophisticated investors only. Indexes are unmanaged and are not available for direct investment. Past performance is no guarantee of future results.


This material may include estimates, outlooks, projections and other “forward-looking statements.” Due to a variety of factors, actual events or market behavior may differ significantly from any views expressed.

What the heck is going on!?!

 As the markets continue their flight south for the winter there seems to be a growing disconnect between the U. S. economy and the stock market.  If you look at the markets’ performance since the beginning of the year, you’d think we were falling into a substantial recession, with rising unemployment, and rampant inflation.  None of which is the case!

 In reality, the economy is doing pretty well with GDP growing at over two percent and continuing job gains that have put us nearer full employment as the unemployment rate drops.  There’s scant evidence of any inflation, despite the fact that the Fed decided to raise short-term interest rates at its December meeting.

 If you’re looking for more concrete evidence of how the economy is doing, you can focus on the auto industry as your example.  Car sales in the U. S. hit an all-time high at nearly 18 million last year .  Auto sales have usually been a good predictor of how well the overall economy is doing, since the industry has so many “spin-off” jobs in parts, sales, etc.

 Also, there’s good evidence that auto sales will continue to remain strong as the average age of cars in the U. S. is about eleven years so replacement of aging vehicles will continue for years to come, with an added spark from the lower fuel prices brought by lower cost oil.

 Could things be better? Of course!  It would be nice to see GDP growth closer to three percent and if unemployment dipped even more, many part-time and underemployed people could find good, full-time jobs.  It would even be helpful if inflation picked up a bit, giving consumers more of an incentive to shop.

 Finally, every four years as we engage in the presidential election process the general media coverage tends to emphasize the negatives and minimize the positives rather than presenting a more balanced and realistic view of the nation’s economic circumstances. 

 With all that, it gives me pause to look at the falling numbers in the market, but since the economic numbers seem to be in place, I’ll stand with Warren Buffett and hang in there with my well diversified portfolio, doing some rebalancing and putting some money to work at these lower prices.

Boston CPA & Wealth Advisor Puts the Market swings in Context

It seems you can’t get away from the “fear trade” during these last few weeks. It is all over the news, in your email inbox, on social media, etc… it is hard to tune it all out.

Remember, we have been here before when panic drove the markets, and some investment managers are falling in again, trimming back their equity exposures in a time where the economic fundamentals do not support such a move. Currently, there are many causes to this recent pullback, not the least of which is time (we were due for a correction in the market). But, as you listen to the pundits and talking heads, they only seem to be focused on what will get them ratings, and that is usually fear.

We are continually looking at the economy (domestic and international) and the prospects for the markets overall, over time. Based upon that analysis, this last pull back was an opportunity, just as the last one was. We are still not that far from the all-time highs achieved by the markets a short time ago and the intraday movements may exceed them today! This tumult will pass and our economy will continue forward, but the volatility in the equity markets will be here until several fears settle down. Currently the fear factor seems to be the most prevalent issue moving the market, Ebola, ISIS, Ukraine are all adding to fear. The rise in value of the US dollar is helping the Fed back off on their tightening plans, and corporate earnings are starting to come in (positively). And we are in October, which has historically been a tough “transitional” month for the markets.

On the other hand, we have extraordinary drop in the cost of doing business in the US. Oil is down significantly and will be a boost to international consumer spending. Natural gas is still plentiful (and local) providing us with lower manufacturing costs and bringing jobs back to the US. The US dollar is strengthening giving us the ability import more goods at lower costs which should help drive US consumption. The employment picture keeps getting better.

Our sense is that you are seeing a lot of profit taking on the fear. This great article recently ran on CNN Money:
“Is it time to exit stocks?” by Heather Long

That sums up our thoughts quite well.

We have a very diversified long-term investment approach with an asset allocation that is designed to provide you with a reasonable return that will meet your needs. These down trends and adjustments happen. They will always happen. But you have plenty of time to wait a pullback out and watch the markets continue forward.

Don’t get caught up in the hype or lose track of the facts!


Our friend, John Tener, shared the following facts with us for us to share with you:

1. The U.S. now had had 63 straight months of economic expansion, including 54 straight months of private sector job growth (the best recovery in almost any measurable way since FDR).

2. The 54 straight months of private sector job creation is the longest period of job creation since the Labor Dept. began keeping statistics.

3. Unemployment had dropped from 10.1% in October, 2009 to 5.9%, and is projected to reach 5.4% by the summer of 2015.

4. The stock market has seen steady growth since early 2009, with the Dow Jones average reaching a record 17,098 this past August, 2014. 401k retirement plans, mostly affecting middle-class Americans have directly benefitted.

5. The Federal deficit continues to shrink, and has been reduced by two-thirds since 2009. In 2009, just after President Obama was sworn in, the deficit was $1.4 trillion. the 2014 deficit is projected to be around $500 billion, the smallest since 2007.

6. Federal spending since the beginning of 2009 has increased only 1.4% annually, the lowest rate since Eisenhower. (Under Reagan it was 8.7%; under G.W. Bush it as 8.1%.)

7. For 95% of American taxpayers, income taxes are now lower than just about anytime in the past 50 years. (The only people whose income taxes have gone up are those making $400,000 per year or more–less than 2% of the population).

8. Our dependence on foreign oil has shrunk since 2009 due to record domestic oil production and vastly improved fuel efficiency standards for cars and trucks.

9. Since 2010, at least 7 to 10 million more Americans now have real, effective, affordable health insurance, which will inevitably lead to better health, more work productivity, less time loss, and longer lives.

10. Health care reforms (under the ACA) have added years to the life of Medicare, which was on course to exhaust its funds by 2018. It is now fully solvent to a projected 2030.

11. Health care reforms (under the ACA) have lead to the slowest rate of increase in health care costs since 1960.

12. There are now fewer soldiers, sailors and airmen in war zones than at any time in the last 10 years.

13. There have been zero successful attacks by al Qaeda on U.S. soil in the last six years.

CPA Wealth Advisors Ahead of the Curve on PIMCO

Bill Gross’ departure from PIMCO has lead many advisors to indicate that they have been “blindsided” by the news and the reshuffling of the investment industry. Only now after the departure of both the heir apparent, Mohamed El-Erian, and now the bond king himself are some advisors reacting.

Over a year ago the Investment Committee at Wealth Management Advisors, LLC of Tewksbury, MA (WMA) found chinks in the armor of the long stable PIMCO Total Return Bond Fund. The departure of Mohamed A. El-Erian was only another outward sign that all was not well in the fund organization. “We diversified the fixed income portfolio away from PIMCO to a great degree as we evaluated the funds performance, holdings and the other industry offerings,” said Stephen Ahern, President of WMA. “Our investment team has been watching the interest rate environment as well as the specifics of our holdings and working with clients to reduce the risk in their fixed income portfolios.”

Many advisors still make extensive use of PIMCO funds and it will be a continuing run for the exits as we have seen over the last year. WMA has been monitoring the PIMCO situation, returns and activities of the fund as well as the Gross led communications. This led them to the conclusion that there are better intermediate bond fund managers that stick to a more reasonable investment strategy in their space and that has worked out quite well for their clients.

Tewksbury CPA & CFP Discusses the Forgotten New Year’s Resolution

By now, many have given up on their New Year’s Resolutions to eat healthier, go to the gym or remove vulgarity from their speech, but there is another resolution not to give up on so quickly – to begin (or restart) saving toward your goals. The United States Personal Savings Rate has recovered from historic lows prior to the last recession, but is still short of the long term average. Whether it is for a dream vacation, a child’s wedding, or simply for a “rainy-day,” savings is essential to the financial health of all, young and old. In an era of credit card dependency, the only way to greater financial freedom is to deliberately plan for and save for the future.

Savings is both short term and long term in nature. Earmark which accounts are short term savings accounts (the savings you have setup to cover checking account overdrafts and dining out money) and which accounts are long term savings accounts (dream vacation fund or retirement savings). Many people do not have the discipline to save as those in previous generations did, but there are numerous strategies to ensure you meet your goal(s) including the following:

  1. Clearly establish your savings goal(s). What are you saving for? When will you know you have met your goal? Why is it important for you to save for this goal? Not all goals have a clear dollar amount, but make it clear up front, as it will provide you additional motivation to stay the course.
  2. Set aside a predetermined amount to be transferred into a “special account” every time you are paid. Your bank can most likely set this up to occur automatically, or better yet, set it up with your employer using direct deposit. Alternatively, you may consider setting up regular investments into a mutual fund for longer term savings goals. The underlying point is as long as the money is not in your checking account, you are less likely to spend it on superfluous items. Begin saving an amount you know you can manage, and then gradually increase it. Many experts recommend you save at least 5% of your after-tax income.
  3. Your “special account” can be your workplace §401(k)/§403(b), your IRA, a brokerage account, your Christmas/Vacation Club account or your “general savings account.” Depending on your situation, you may be saving in several of these accounts at once in various amounts.
  4. Setup ground rules for when the funds can be withdrawn from the account. If you are directing your savings to a retirement account or club account, the withdrawal penalties will most likely discourage you from prematurely dipping into the funds, but since you have increased access to your “general savings account” it is essential you set withdrawal parameters so you do not fail. Consider deactivating the ability to take ATM withdrawals from your savings account or deactivate the ability to move money online. By forcing yourself to go to a bank branch to make a withdrawal, you will resist the impulse withdrawal to purchase the latest technology gadget.
  5. Review your own progress towards your savings goal(s) periodically. For some this may be as little as annually, but for most it should be monthly.

The American Institute of Certified Public Accountants (AICPA) has launched the “Feed the Pig” initiative to improve help people increase their savings. It is filled with interactive tools and resources to motivate you to make a savings commitment. Please visit There is also a site geared exclusively towards “tweens” (and their parents/teachers) who need to learn healthy financial habits before they are bombarded with credit card offers on their 18th birthdays. Please click here to visit FEED THE PIG

By sitting down and revisiting how you are intentionally spending the money you work hard for and establishing a savings strategy, you will not only keep a New Year’s Resolution, you will increase the level of control you have over your finances and will feel significantly more empowered and gratified when you can comfortably pay for your dream vacation, or your child’s wedding, or the latest life-changing technology gadget…with CASH!

Please contact us to learn how a regular savings plan is only a part of our Chronos Wealth System.

Signs of a housing recovery?

According to a well-known gauge of the U.S. housing market, home prices have been on an upswing. The latest S&P/Case-Shiller 20-City Composite Home Price Index, which was released in May, posted its biggest gain in seven years. This improvement has spurred renewed optimism about housing’s role in the country’s economic recovery.

What does the latest S&P/Case-Shiller home price index reveal about home prices?
The 20-city index–one of several S&P/Case-Shiller housing indices–showed a 10.9% gain between March 2012 and March 2013, the highest increase since 2006. In addition, all 20 cities tracked by the index had gains for three straight months.While the numbers certainly give homeowners and real estate investors cause to be optimistic, it’s important to note that not all cities saw the same price increases. Both San Francisco and Phoenix saw large price jumps of more than 20%. However, New York and Boston had smaller gains of 2.6% and 6.7%, respectively. What factors are driving the recovery, and what do rising home prices mean for the economy as a whole?A variety of factors are driving home prices up, such as low housing inventory, low mortgage rates, and a decline in foreclosures/short sales.As for the economy as a whole, rising home prices often serve as an indicator that the economy is performing better since it generally demonstrates increased consumer confidence. And while this latest report is good news for homeowners looking to sell, it also provides welcome news to underwater homeowners who may now see an increase in their home equity.

It is important to note, however, that other economic data–such as the large number of institutional investors buying properties to rent–suggests that there is still a ways to go in terms of a full-fledged housing recovery.

Could this all lead to another housing bubble?Today’s economic environment is different than the one that led to the housing bubble burst in 2006. Those differences include a tighter mortgage lending environment and houses that are still undervalued at prices that are significantly lower than they were at their 2006 peak.

IMPORTANT DISCLOSURES Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Market Nosebleed? Time to re-balance?

With the Markets daily hitting new highs with little pullback, it may make you remember the “go-go” late 90’s. Then the “new paradigm” of stock valuations justified the high prices despite zero or negative earnings. The market went so high most of us ended up with ”nosebleeds”. This time is very different.

Most substantial bull markets are accompanied by new theories trying to explain the market and why traditional valuations using P/E multiples no longer seem to be valid valuation metrics. In the current rally, P/E multiples on stocks remain in-line with historic average levels. The market is hitting new highs, but valuation multiples are not! Thus, we believe the fear of nosebleeds at this market level might be a bit premature. We would expect P/E’s to rise dramatically if we were going to see a significant drop, but currently stocks seem to be fairly priced.

If the muddle-through economy continues, stocks should continue up on a reasonably trajectory. We still have some worries about the weakening effect that the sequestration and cutbacks in government spending will have on our nascent recovery, but this is precisely why we re-balance portfolios and stay invested in our asset allocation to reduce overall portfolio risk.

We have received several inquiries from clients about re-balancing their portfolio now that the market is reaching new highs. Rest assured that as part of our normal process, we review each portfolio at specific intervals and recommend re-balancing when the portfolios are out of alignment with each client’s long-term goals. Even when markets are volatile, we keep an eye on the allocation drift and, as we monitor it, we may make a recommendation to re-balance the portfolio more than our customary semi-annual re-balance.

It is important to note that a proper re-balance strategy is done at set intervals and must balance the need to keep things in alignment with the need to keep transaction costs low. The near-impossibility of perfectly timing a market bottom or top is why we stick to our knitting and follow the plan. Remember, you must have a long term perspective to be in the market. A reasonable approach to asset allocation and re-balancing will do well for the vast majority of investors and help avoid the fears of nosebleeds and market crashes.

If you are having a market “nosebleed”, give us a call at 877-448-3400 and we can help you with the proper cure!