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March 2015 Market Commentary

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The major equity indices were negative for the month of March, and so far in 2015, volatility is the name of the game. The equity markets experienced negative returns in January, only to see some positive returns in February, and then negative again in March. For the quarter, this resulted in the major indices being up less than 1%.

While it’s important to understand what’s happening in the financial markets and the major stock and bond indices, the actual performance of these benchmarks is pretty unimportant for most people. We chuckle that so many people and institutions are wed to this archaic form of measure. Simply put, the indices mean little because our clients are not the indices. To be an index would mean never having any cash on hand, zero. Furthermore, these benchmarks are often heavily over weighted by one particular industry due to its’ popularity; for example, the S&P 500 performs in line with technology due to the market capitalization of Apple. Again, this is ridiculous; however, if nothing else, Wall Street will always be buoyed by the spirit of competition. Competition requires scoring, and scoring requires a benchmarking system by which to judge. All of that said, not one bit of that system makes you a better investor.

For the past 9 months, our investments in natural resources have been a short term anchor to performance. This temporary shortfall doesn’t affect our thinking about this vital industry in the least. There are four important points about this investment: first, the industry is by far one of the best values in an overly high market today. Second, we don’t buy any company without at least a 3 to 5 year time frame. History has taught us that to do otherwise causes investors to lose money. Third, many of these oil and natural gas companies are selling at a fraction of their cash values which means the market is giving them an enterprise value of zero. This is silly because Putin wants to play war games, and the United States and Saudi Arabia know that low natural resource prices keep him in line. Thus, A.G. Campbell Advisory has used this as an opportunity to own these companies at a fraction of their true worth. Finally, we believe that an oil price of $65-$70/bbl could move these equities quite significantly; whereas, with an abysmal GDP in the United States, other companies are going to find it more difficult to report remarkable revenue increases and move the needle. 

February 2015 Market Commentary

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We are living in very volatile times, and this writing will illuminate why we possess such resolute conviction in how we are managing assets. History plays a major role in our decision making. We are far less worried about the 24 hour News Alert Emergency of the moment. To illustrate our thinking, we are borrowing a selected piece from The Copper Handbook by Horace Stevens in the early twentieth century:  

“There will be seasons when demand will follow so closely upon the heels of supply that prices will go skyward, and the fool will say in his heart that the market must forever advance. There will also be periods when the supply will far exceed demand, and the faint of heart will say that production is overdone, and never more can be profitable, but in the aggregate the great law of averages, immutable as the law of gravitation, will give to the world everything for its imperative requirements, at prices not prohibitory to the consumer, yet sufficiently high to provide for the well-managed companies’ profits beyond the dreams of avarice.”

… Horace Stevens, “Copper Handbook” 1903

Of course his book talked specifically about copper, but we believe this to be true of many other markets as well.

Fast forward to our current day, and think about the oil and natural gas markets. Saudi Prince Alwaleed bin Talal told USA Today on January 11, 2015 that oil will not see $100 per barrel again! While according to OPEC’s Secretary-General, Abdulla al-Badri, oil prices could surpass $200 per barrel without sufficient industry investment. Oil prices have run from over $100/bbl. down to as low as slightly less than $50 per barrel within 5 months.  Natural gas prices have moved as sharply in a lower direction over the same time frame. This type of radical movement in a commodity price “has” an effect; however, we believe it is “only” an effect not a long term trend. This same erratic move has happened over the years in technology prices, real estate, and nearly every asset class that one can imagine. We think that the recent volatility in energy prices is overdone. You cannot dismiss the need for oil in a world of 7 billion people who need these resources. There is not enough alternative energy infrastructure ready to handle the world’s demand. For those who argue that GDP around the world is dropping, I would only modestly agree. It may be dropping from an imbalance in global trade in terms of manufacturing that may be evolving with America as the winner via Natural Gas and Oil.

A.G. Campbell Advisory’s investment philosophy is now and ever shall be a strategy of staying the course and buying the dips. Our clients have been rewarded by sticking to this discipline. Our advice to our clients is “turn off CNBC, stay on plan, and add money when you feel the most fear.” Above all, let benchmarks be other people’s gage. We will have seasons of greatness and prosperity which may or may not be in tune with the market. Like our friend, Horace Stevens, we feel that these Wall Street imposed standards are part of “the fool’s game.”

-Alexander (Zandy) G. Campbell, III

Welcome to A.G. Campbell Advisory LLC!

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A.G. Campbell Advisory, LLC was founded by Alexander “Zandy” Campbell and Mark Scott to be a trusted financial fiduciary for its clients. As a Registered Investment Advisory (RIA), A.G. Campbell Advisory believes in giving our clients the most prudent advice based on each individual’s unique situation. A.G. Campbell Advisory was created to be a truly independent firm that puts the interests of our clients before our own. Our firm’s philosophy is, “investment management like it’s our own money.” A.G. Campbell will never recommend a client to invest his or her money in a fund or investment in which we would not invest our own capital.

A.G. Campbell Advisory was formed on the principles of the firm’s namesake, Zandy’s father, Alex G. Campbell, Jr. Mr. Campbell has acted as a fiduciary for much of his life, and the company has incorporated his values and beliefs into our investment philosophy. Our firm has also adopted the historic Campbell family badge as the firm’s logo. Its inscription reads, Ne Obliviscaris, which means “Lest we forget.” This motto mandates that we never forget that our clients are the sole focus of every decision made. These values that we practice can be traced back to roots in Strone, Southend, and Argyll Scotland nearly 200 years ago. A.G. Campbell Advisory is often chosen over other RIA firms because of its absolute transparency and high ethical standards. This ethos is evident in every aspect of our firm. We find satisfaction in helping our clients lead happy and secure lives.

A.G. Campbell Advisory, LLC works with a select number of families and institutions across the United States. The firm is compensated through fees charged as a percentage of assets under management. This form of compensation makes absolutely certain that our firm’s interests are always aligned with the interests our clients. If the boutique advisory services of A.G. Campbell Advisory sound right for you, please give us a call; we look forward to earning your trust!