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J. Michael Martin
FAI Investment Outlook 4Q 2015

First Nine Months of 2015:    China & Fed Worries Weighed on Stocks. 

The slow-growth economic outlook and gentle fluctuation of stock prices during the first half (when stocks earned 3%, including dividends) was overwhelmed in the third quarter by increased worries about China’s drag on global business. The S&P 500 stock index plunged 10.7% in the last week of August alone!

The Bond Conversation
The Bond Conversation

Interest rates rise, bond prices fall. Rates go up, prices go down. A short conversation between father and son about bonds and how they work.

J. Michael Martin
Our Portfolio Response to China's Devaluation

Last Wednesday, the People’s Bank of China (PBOC) announced a 1.9% devaluation of its currency, the largest in its history! The Dow Jones Industrial Average quickly plunged to a new low for 2015, down about 1.5% in just a couple hours! The dollar price of the 10 yr. U.S. Treasury bond rose +1.2% on the news, and European stocks closed down -2.7% on the day (London closes at 11:00 AM New York time).

J. Michael Martin
FAI Investment Outlook 3Q 2015

Before the markets  opened on Monday, June 29th, the S&P 500 was sporting a ho–hum YTD total return (e.g. price change plus dividends) of 3.1%. But the last two trading days of 2Q were bogged down with worries about unmanageable debts in Greece and Puerto Rico; falling prices smacked the total return for stocks in the first six months of the year down to just 1.2%!

J. Michael Martin
FAI Investment Outlook 2Q 2015

Start to finish, U.S. stocks went nowhere in this year’s opening three months; but prices were as fidgety as an eight year old who just wolfed down two ice cream cones…

J. Michael Martin
The Blue Sheets - Meeting The Challenge: Finding safe returns in a slow-growth, low interest-rate world

Broadly speaking, both stocks and bonds are quite expensive by most historical metrics: they are valued at the high end of the range that they enjoyed when expectations for economic growth were twice our current reality.

J. Michael Martin
FAI Investment Outlook 1Q 2015

Investment disciplines have a lot in common with weather forecasting. Both are a mixture of art and science. Both try to anticipate future developments completely beyond their control. And professionals in both fields are closely observed by millions of people who make plans based on their prognostications.

Blue Sheets: Strategy for Choppy Markets
The Blue Sheets: Strategy for Choppy Markets

Throughout 2013, a surge of demand for U.S. stocks swept the S&P 500 Index to a 32% total return! In that same 12 months, though, the earnings of those 500 companies only grew by about 5%. Hmmm.

J. Michael Martin
The Power of Portfolio Diversification

While understanding the past is crucial, investing is always about the future… the near future and the far future; our personal future and the future of the world we live in. When we make investment decisions, of course we cannot know how things are going to unfold... so we make assumptions, usually based on a notion that the future world will more or less resemble the one we have known. And it will …except when it won’t!

J. Michael Martin
Plotting A Course

FAI Wealth Management (formerly Financial Advantage Inc.), a Columbia, Md.-based firm that manages $330 million for approximately 220 families, shortened the duration of its bond portfolio at the beginning of both 2012 and 2013. “That’s the best defense against rising interest rates,” says J. Michael Martin, the firm’s chairman and chief investment officer.

“Our expectation, and that’s a lot different than knowledge, is that we have seen the low point in bond rates and it’s going to be a long, erratic uphill climb,” he says. Namely, he sees a continuing struggle between monetary policy and real-world supply and demand for capital.

To read the complete Financial Advisor Magazine article, please click here.