FAI's Year End Review & Investment Outlook
U.S. stock prices wandered indecisively between - 3% and +3% during the first half of 2015 making very little progress in either direction. The market turned drastically more negative in August (see the S&P 500 chart below) as currency & economic weakness in China weighed on stocks. An October rally boosted the index back to barely positive... then drifted to the remainder of the year to a -0.7% price return.
S&P 500 Calendar 2015 CNN Money
Barclay Hedge Fund Index +1.6% MSCI World Stock ex-USA: -5.6%
REIT Index +0.6% NYSE Composite... -6.4%
Commodity Trading Index -0.3% DJ Utility Average... -6.5%
30-yr U.S Treas. Tot. Ret. -2.7% Gold price -11.1%
Blmbg. Hi-Yld. Corp. Bd. Index -3.5% MSCI Emerging. Mkts. Index -15.9%
In this volatile environment, we believe it is essential to remain vigilant, diversified and opportunistic. The following are some of the ways we are maintaining a diversified risk-reduced posture in all four of our Portfolio Profiles.
- Equities. Our style is to always own high quality stocks in portfolios, but to scale back our equity exposure when stocks are expensive and increase when they are a bargain. Stock exposure is currently well below its upper limit in all of our Portfolio Profiles.
- Tactical Strategies. We own specialized mutual funds whose style is designed to be productive in weak markets because of their ability to go both long and short.
- Precious metals. Precious metals, which can attract frightened capital from around the world when the headlines feature terrorism, armed conflicts, currency wars or deflation.
- Bonds. Bonds are the classic defensive investment when stocks underperform. We currently emphasize short duration, high quality bonds.
- Emerging Markets. We emphasize high quality companies chosen by portfolio managers and analysts that live and work in the countries they are investing.
We appreciate your business and look forward to seeing you in 2016.
IMPORTANT DISCLOSURE INFORMATION
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 FAI 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 FAI 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. FAI 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 FAI Wealth Management's current written disclosure statement discussing our advisory services and fees is available for review upon request.