During this holiday season, we want to take this opportunity to express our sincere appreciation to all of our clients and friends.  We cherish every relationship and are thinking of you with gratitude.  We wish you and your loved ones a very Merry Christmas and Happy Hanukkah!
 

  • With just two weeks left in the 2010s, here is how this decade stacks up over the last 100 years.  With a price change of about 180%, the S&P 500 has had an excellent ten-year run.  The 24% decline in the 2000s had two 50%+ bear markets which is why we have yet to see investor sentiment fully recover.  As we enter the 2020s, we would rate investor sentiment neutral at best.  Usually you see excessive bullishness after a run like this, but that has yet to materialize.  When it does, it may signal a top.

Source:  Bespoke Investment Group

  • The global economic slowdown may be coming to an end as more global indicators are showing signs of life.  But we expect only a modest recovery (not a V or U shape) because growth is being weighed down by aging demographic trends and too much debt.  The slower recovery is due to people having too much stuff.  Both young adults and seniors are becoming minimalists and are buying less.  So there is too much manufacturing capacity relative to the slowing demand.  We see this as the reason for the near-recession in manufacturing, not the trade wars.
     
  • Investors should be happy with the trade deal with China announced last Friday.  Critics were quick to slam the “phase one” pact, but it is basically a détente that eliminates the damage from pending U.S. tariffs and makes some progress on China’s intellectual property theft.  The major U.S. concession is canceling penalty tariffs while for China, the most significant concessions include its predatory trade practices and new protections again patent theft.  All of the agreements are merely promises for now and China routinely cheats, but now there is a dispute resolution process in place.  President Trump will stand back and test if China will honor these new commitments.  If successful, this agreement could lead to a quick “phase two” and be a big win for investors in 2020.  

 

Stocks Having Best Year Since 2013

 

The S&P 500 is having its best run in six years, but individual investors are fleeing stock funds at the fastest pace in decades.  Investors have pulled $135.5 billion from stock funds and ETFs so far this year, the biggest withdrawal on record (data goes back to 1992 – source:  Refinitiv Lipper).  Concerns center around the U.S.-China trade war and lingering recession worries.  The outflows are a sign that investors aren’t chasing this year’s strong performance, suggesting major indexes still have plenty of room to run.
 
The retail selling of stock funds shows that individual investors are less bullish.  The AAII sentiment survey shows that 36% of investors are bullish (8-week moving average) compared to 27% in July, but down from 50% in January 2018.
 
Where are the sales proceeds going?  Bonds and money market funds.  Individual investors have put roughly $277 billion into bond funds this year and another $482 billion into money market funds, an 11 year high.  These enormous sums represent future buying power of stocks at some point. 
 
So who is buying stocks and pushing prices sharply higher?  Corporations.  Companies themselves have been the biggest buyers of stock through share repurchases in recent years.  Net stock purchases (after compensation to employees) of U.S. stocks are expected to total $480 billion this year, according to Goldman Sachs.  Another $470 billion of purchases is expected next year, again according to Goldman.

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Knowledge – Results

Experts in Risk Management

Are you prepared for the next market correction or financial crisis?

Knowledge – Results

Experts in Risk Management

Are you prepared for the next market correction or financial crisis?

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Richard Furmanski

Richard Furmanski

CFA

has been a portfolio manager and analyst for over 35 years. He manages conservative, tax-efficient portfolios for both pre-retirees and retirees. His lower risk approach appeals to investors who want less volatility and competitive risk-adjusted returns.

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Mary Ellen Adam

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has been in office administration for over twenty years. Her experience includes customer service, firm operations, and office administration. She interacts with our clients on a day-to-day basis and handles any requests that may arise.

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Frequently Asked Questions

If you can't find the answer to your questions here, feel free to give us a call at 847-847-2505

Do you manage both stock and bond portfolios?

Yes. We build a portfolio of conservative, high-quality stocks and hold them for the long-term. The average holding period is 4 – 5 years. Our focus is on stocks that are suitable for retirement portfolios.

Our high-quality bond portfolios are designed to provide both income and stability of principal. Bonds provide the anchor for balanced accounts (those holding both stocks and bonds).

What is your investment philosophy?
We take great care in purchasing only high-quality stocks and bonds intent on a multi-year holding period. Portfolio turnover and taxable realized gains are modest in comparison to other active managers. We do not time the market but will become more defensive, in terms of stock holdings, when market conditions warrant.
Will the portfolio be managed in accordance with my financial goals?
Yes. Each of our clients has a custom-tailored portfolio. These custom portfolios are designed to meet specific client objectives with a thoughtful approach to specific constraints such as risk tolerance. And as each client’s situation changes, the portfolio does as well. There is no cookie cutter approach.
What kind of expertise do you have and how can that help me in difficult markets?
We have been working with high-net-worth clients like you since 1982. Over that time we have helped them to navigate several bear markets and financial crises (including the stock market crash of 1987). We hold the Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP) designations.
Are you sensitive to taxes when managing portfolios?
Yes. Our holding period for an individual stock averages 4 plus years which means our turnover is low and realized gains can be carefully managed. Further, where possible, we tax loss harvest small losses as a way of offsetting gains taken elsewhere in the portfolio.
How have you performed?
Results will differ by client and the level of customization but we have provided competitive investment returns for many years.
How do you charge for your services?
We charge a management or consultant fee based upon the size and level of customization of the account. As the account grows, we benefit together.

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