Archive for category: Commentary

We are very excited to share with you that Shorepoint is approaching our Five Year Anniversary! Luis and I started working together in the aftermath of the greatest financial collapse since the Great Depression. During the last five years, we have tripled the number of clients we serve, while the amount of assets we manage has risen by more than five fold. Luis and I are very thankful – to you, our clients and colleagues, for the support from our families, and to our stellar team, rounded out by Brian, Pam and Ashley. We understand that this growth has been a collaborative achievement, and we are very grateful for the confidence and support we have received along the way. We will remain focused on continuing to deliver on our commitments in the years to come and we will always strive to serve our clients better.

The first quarter results broke from the steady and above average returns of 2013. As we expected, volatility increased significantly and we experienced a 6% correction in February followed by a move up to record high levels before a slight retreat at quarter-end. Volatility increased due to several concerns:

1. Emerging markets economic slowdown and currency weakness
2. The Federal Reserve/tapering
3. “Elevated” equity valuations
4. Mixed economic data
5. The upheaval in Ukraine, which led to a roller coaster ride in the equity markets

Despite continued uncertainty about the health of the global economy and the future of monetary policy, U.S. stocks reached all-time highs in the third quarter before pulling back slightly in September. The market’s focus was on the Federal Reserve (“Fed”) again this quarter with the expectation that the Fed would start reducing bond purchases after its September meeting. However, to the market’s surprise, the Fed decided to maintain the current buying program. The Fed cited mixed economic data and the uncertainty around the fiscal issues – government budget and debt ceiling deadline – as the primary reasons for not tapering. The market reaction was a spike in volatility for both stocks and bonds. The yield on the U.S. Treasury 10 year bond gyrated wildly during the quarter, starting at 2.5%, almost reaching 3%, and then finishing at 2.6%.

2013 started where last year left off with the Dow Jones Industrial average booking its best first quarter since 1998. As pundits worried about the impending disaster of going off the “fiscal cliff”, domestic equities raced ahead to produce double-digit returns in the quarter. Mid caps (S&P Mid Cap 400 Index +13.5%) and small caps (S&P Small Cap 600 Index +11.8%) led the way while large caps (the S&P 500 Index +10.6%) were close behind.

After experiencing a 10% correction in the second quarter, equity markets rebounded sharply and largely ignored a multitude of concerns such as the global economic slowdown, the European sovereign debt crisis and growing tension in the Middle East. The resilience in equity markets was evident as international stocks outpaced domestic stocks with developed markets +6.9% and emerging markets +7.7% – both up over 10% year-to-date…