Posted on Friday, January 18th, 2008 in
Commentary
Over the past twenty-five years we have experienced more positive time periods than negative periods. As advisors and investors, just like our clients we do not enjoy the downturns, although we know that stock market corrections are an inevitable part of investing. They are also the last thing that most investors want to experience. At Legacy Financial Advisors we want to help guide you through not only the good times but help you prepare...
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Posted on Monday, December 31st, 2007 in
Commentary It’s confirmed: the stock market has become more volatile. The S&P recorded 6 months of negative returns and 6 months of positive returns to end the year up 5.5%. The year end return figures hardly tell the story of the roller coaster like swings, but they do emphasize a critical lesson for investors - getting caught up in day to day moves can make one nauseated.
After a cycle that served investors well since 2003, headwinds in the financial sector...
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Posted on Sunday, September 30th, 2007 in
Commentary
As we write this, the markets are charging out of the gates with expectations that the worst has passed and any hidden credit issues have been uncovered. For most of the third quarter, the focus has been on the unknown impact of loose credit and how widespread the problem is. We’ve seen the collapse of several major Wall Street hedge funds as well as main street real estate values. The question is whether this problem is contained or will it...
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Posted on Friday, August 17th, 2007 in
Commentary
As a result of the recent market volatility, we thought you might like our insight on the sub-prime lending debacle. Any time the market has a downside correction it gives us reason to pause and carefully evaluate the cause-effect as it pertains to your portfolios. Should we join the crowd? We don’t believe so.
We don’t think there is cause for you to panic based on the current events. As investors, you understand the nature of our markets during times like...
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Posted on Saturday, June 30th, 2007 in
Commentary
The second quarter stock market returns were the strongest they’ve been in the last four years. This quarter’s results rebounded from the first quarter when global stock markets experienced a sell off and a record high level of investors held ‘short’ or negative equity positions. The increase in volatility that came at each hint of market affecting news ultimately weighed in favor of the bulls ….and the market continued to surge forward.
The broad domestic markets, as measured by the S&P...
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Posted on Saturday, March 31st, 2007 in
Commentary
The momentum from fourth quarter 2006 continued into January with strong returns for the month. As mentioned in our January letter, after four consecutive years of solid returns the markets are more susceptible to a pullback. The decline on February 27th, which was based on speculation that began in China, moved around the globe, sending US stock markets down more than 3% for the day. Instead of a sharp rebound, the days after the drop showed increased volatility - something...
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Posted on Tuesday, March 6th, 2007 in
Commentary
Nothing actually happened to trigger last week’s market declines. No sudden change in economic forecasts. No critically bad economic or corporate news. No government decrees. However, rumors circulated in Shanghai and Beijing that a government squeeze on credit and stock speculation was imminent. Rumor, but nonetheless an 8.8% sell-off in Asian markets, which spilled over to the U.S. markets with a 4.4% drop in the Dow.
FACT
As mentioned in our December 2006 Market Commentary, overall markets have been positive over...
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Posted on Sunday, December 31st, 2006 in
Commentary
The rise of investor activists and corporate governance took effect in 2006. The real impact is yet to be seen, but 2006 could be considered the year of the CEO-ouster. The year also saw large hedge funds go out of business and private equity funds taking over big business. The balance of political power shifted after 12 years and the job of our nation’s economist was turned over after more than 18 years. It also marked the loss of the...
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Posted on Tuesday, September 26th, 2006 in
Commentary
The markets experienced something of a “stealth” rally in the third quarter. After taking a step back in the second quarter, there was steady progress forward to bring the broad indices close to their record highs by the end of September. The S&P 500 returned a healthy 5.7% with the large value component contributing 6.2%. The outsize performance of large cap stocks allowed them to catch up with the small company stocks for the year. Real estate investment trusts outpaced...
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Posted on Friday, June 30th, 2006 in
Commentary
The 2006 Morningstar conference should have carried the theme “Waiting on the Fed.” Keynote speaker Paul McCulley, PIMCO’s chief economist, stopped in the middle of his presentation to dial up the Federal Reserve’s interest rate announcement. To make the announcement more dramatic, he read the statement issued by the Federal Reserve to the 1,500 financial professionals in the audience. Why? He wanted an emotional reaction from the attendees.
Michael J. Mauboussin, chief investment strategist for Legg Mason Capital Management, presentation was...
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Posted on Friday, March 31st, 2006 in
Commentary
This quarter’s market performance posted solid gains, picking up where it left off in late 2005. The S&P 500 and the Dow Jones Industrial Average each returned roughly 4 percent and the tech-heavy Nasdaq Composite returned about 6 percent for the quarter.
Many companies continued to post strong corporate earnings growth, which is the primary driver of stock prices. In addition, companies made significant strides in improving their balance sheets, which seems to have reinvigorated investors’ interest in propelling the markets...
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Posted on Saturday, December 31st, 2005 in
Commentary
The broad domestic markets represented by the S & P 500 ended with modest gains of 4.9% for the year. Specific sectors such as energy and utilities surged ahead 31.4% and 16.8% respectively. Sector leadership changed in October with a hurricane induced spike in the materials area and especially strong showing in financials.
Outside of energy, the foreign equity markets posted solid gains. China and the emerging markets continued to be the strong, but the biggest turnaround story was Japan. The...
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Posted on Friday, September 30th, 2005 in
Commentary
The wrath of hurricanes Katrina and Rita devastated families and touched all of us across the country. It shows the incredible generosity of Americans as we are opening our homes and checkbooks to help those in need. There is much continued work to be done to rebuild cities and lives. We keep these people in our thoughts.
This third quarter’s markets proved resilient in the face of these natural disasters. The monetary toll from the storms is estimated to be more...
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Posted on Thursday, June 30th, 2005 in
Commentary
The recent 17
th annual Morningstar conference in Chicago brought together some of the best money managers and investment minds in the business. We heard some differing thoughts as to the direction of interest rates, which sectors are poised to rebound and which could cool down in the future. The managers were optimistic about the markets and the economy as it continues to get healthier. Although the overall markets were flat to negative during the first half of...
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Posted on Thursday, March 31st, 2005 in
Commentary
The broad markets were given a dose of reality this quarter as negative returns followed the strong surge that ended 2004. The energy sector was the bright spot for investors as energy related companies topped the performance list. At the same time, other parts of the market were being constrained by the high costs of energy. The fragile investor psychology that warmly greeted a conclusion to election campaigning felt threatened by higher energy prices, interest rates and slowing growth.
Depending on...
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Posted on Friday, December 31st, 2004 in
Commentary
This is the time of year we hear and read Wall Street’s predictions. Forecasts fell significantly short of the gains in the major indices for the year. The focus in 2004 was on rising interest rates, energy prices and the election uncertainties. Through the end of the third quarter, the lackluster markets were greeted with an upsurge after the elections as Wall Street welcomed a decision. The build-up of positive economic news became visible to investors in the fourth quarter,...
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Posted on Thursday, September 30th, 2004 in
Commentary
The third quarter gave market pundits lots to talk about, but left many investors about where they started at the beginning of the quarter. Large company stocks outperformed smaller, more aggressive companies and long bonds were a surprisingly strong performer. Even as Alan Greenspan raised target rates on short term federal funds, long term rates started falling from a high of 4.78% on the ten year treasury to a low under 4%. 2004 has performed to the expectations that many...
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Posted on Wednesday, June 30th, 2004 in
Commentary
The second quarter showed no signs of direction as the markets tried to assess the combined effects of tensions in Iraq, higher oil prices, rising interest rates, the earnings outlook and investor sentiment. Even with all the second quarter noise the markets rebounded to record small gains in most sectors. When we talked with various managers at the recent Morningstar conference there was some dispute whether the markets have become overvalued. Generally, focusing on the composition of the major indices...
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Posted on Wednesday, March 31st, 2004 in
Commentary
The first quarter ended with positive numbers across the broad markets. After the tremendous upward bounce in 2003 the markets were poised for a pause in March. Interestingly, the previously flat to negative bond market prospered in the last month of the quarter due to uncertainty brought on by the terrorist acts in Spain, continued unrest in Iraq and anticipation of lower than expected earnings news to be released during the upcoming second quarter.
Market leadership seems to be changing. As...
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Posted on Wednesday, December 31st, 2003 in
Commentary
Looking back on 2003, almost all the indices delivered outstanding returns. The market experienced several stages during the year - from the first quarter’s significant declines due to anticipation of war to the momentum turn around during the second and third quarters. The fourth quarter began to show signs of returning fundamentals to our markets.
But even with 2003’s improved performance in our portfolios we are not yet back to a normal investment environment. Looking back, the S&P 500 stood at...
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Posted on Wednesday, November 12th, 2003 in
Commentary
A number of mutual fund companies have recently been spotlighted regarding questionable trading practices. At this time only a handful are being scrutinized, but we take this investigation very seriously. Although this is extremely disturbing to us as your advisory firm, we are confident that the majority of the mutual fund industry is upright, honest and conscientious. We do not believe these are widespread practices throughout the industry.
To date two chief financial officers who headed Strong & Putnam Fund Companies...
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Posted on Tuesday, September 30th, 2003 in
Commentary
As we enter the last quarter of 2003, we are encouraged by two consecutive quarters of positive returns for the equity markets. As a leading indicator of the economic state, the stock market has painted a much-improved picture of what is to become. Many pundits say that market valuations have become expensive by historical standards, but the major indices are still far below what they were two years ago.
As we indicated in our 6-30-03 commentary, the market increased too fast...
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Posted on Monday, June 30th, 2003 in
Commentary
We recently attended the Morningstar Investment Conference in Chicago and had the opportunity to talk with many of the managers we use in our investment strategies. Our agenda was simple: ask many questions, listen and take notes to help confirm or formulate new strategies in our investment portfolios. We discussed with the managers the current market rally, their thoughts on the economy, their investment philosophies, and where opportunities might lie ahead. The investment pros did not disappoint us with their...
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Posted on Monday, March 31st, 2003 in
Commentary
It’s been difficult for investors to focus on anything but the 24/7 news coverage of the war. The first quarter traded primarily on war news rather than economic data or company financials. Consequently, the renewed short-term volatility accompanied by wide swings in the indices is focused more on the markets’ psychology than on existing market fundamentals. The recent run up in the Dow Jones Industrial Average (March 11-21) is a good example of how quickly market uncertainty can shift. Investors...
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Posted on Tuesday, December 31st, 2002 in
Commentary
It has been a long time since we have been able to write this commentary where the overall market has been positive for 90 days. As you can see below in the chart the broad market rallied beginning on October 10
th after it had reached its most recent bottom with all the categories recording a positive return except for the Municipal bond sector. Interestingly, technology, the highest risk category, also was the best performer for the quarter. Although the month...
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