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April 2015 Market Commentary

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Spring has sprung! Our clients’ portfolios were up 2.14% in aggregate for the month of April, with the S&P being up 0.96%. Obviously, this is after a painful 6-9 months of oil prices going from $101-$48/bbl. When commodity prices fall that far and that fast, the best thing you can do is absolutely nothing. The CBOE Volatility index, the market’s fear–gauge, climbed 7.9%, and decliners outpaced advancing stocks by a 2:1 margin. Therefore, we are kicking “tail” and taking names! So, why doesn’t it feel like it? The answer is we are “regaining” some of last year’s gains which evaporated after the second half, commensurate with the fall of oil prices and natural gas. Technically, this year, we are ahead of the market by approximately 1%.

The reason that none of this information should matter is that we don’t invest our money, your money, or anyone else’s money for 1 month, 3 months, 6 months or even a year. We invest in equities for no less than a minimum of 10 years. Imagine if you had invested in the S&P 500 beginning in 2000 and wanted to take your money to retire in 2010. Chances are you experienced almost ZERO growth. The key for most of us is equaling the money we spend over the long haul. There is not a single client for whom we are not accomplishing that task. We may have back to back quarters or even down years, but we truly achieve our fiduciary responsibility by helping our clients not outlive their money. Our target for most clients living on their portfolios is a distribution rate of 4% per annum. Even with a 50/50 stock to bond allocation, one could expect to easily pay that percentage rate for 35-50 years.

The Federal Open Market Committee’s two day policy meeting seemed to conclude with a question mark about the momentum of economic growth. The reason that this is important is that if they felt conviction about the economy, we would all know that the “raising” of interest rates would be sooner than later. My bet is that the Fed waits until September to raise rates and hopes that the summer holds more gains in household incomes and consumer sentiment. Higher rates are a necessity for many reasons economically, and politically. 

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. 

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!