Quarterly Commentary Q4 2020

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4th Quarterly Review 2020

What’s Good is Bad, and What’s Up is Down

A friend of mine used this expression in a conversation with me yesterday, and I realized it captured a lot about 2020. It not only correctly characterizes the sentiments behind the locomotion of 2020’s stock market volatility, but also it identifies the country’s political climate of this past year. Nothing really makes sense. We found ourselves in a pandemic of deadly proportions that shut down major parts of our economy, and yet, at year end, the S&P 500 index returned 18-19%. This is head scratching to say the least. In order to get a better perspective, we have to ask ourselves why and what to do? Do we simply ignore some of the lofty valuations and just throw the baby with the bath water into stocks? Alternatively, do we run for cover in money markets, gold, digital currency and treasuries? Obviously, the answer is neither and probably something in between. As we look back at 2020 one last time, we notice that, on average, our balanced accounts exceeded the balanced index (12-13%) returns by 2-4% approximately. We certainly participated in the technology run-up and were mindful to be prudent on the back of 2019’s good market. After all, one can only eat so much cake and ice cream. A.G. Campbell’s clientele are generally long-term investors; however, the commitment to “long-term” does not mean that we should be careless about timing. I’m reminded of an anecdotal quote by Warren Buffet, “the stock market is designed to transfer money from the active to the patient.” This is an investment philosophy that I not only learned from him, but also gleaned from my father’s investment ethos. A.G. Campbell and its followers have been rewarded by sticking to this strategy.

What do we do now? To answer that question, we need to understand 2020. Last year’s market was propped up by the Federal Reserve’s commitment to a dovish stance. Interest rates were kept at an extremely low level, and stocks were still the best place to be. We see this continuing with little change until the accommodative Fed changes its tune. In a highly unusual period such as this time, we believe this is a great time to reassess risk tolerances. For example, how would you feel, even if it were only temporary, if the market was to reduce 10-15% of your overall account value? Most people have a problem with this scenario, but it’s just part of being a true investor; however, if you can solidify your ability to sleep soundly by taking some gains and having some cash, there is no reason not to consider this action. We would be more than happy to have our Certified Financial Planner™ and partner, Betsy Brennen, CFP®, AIF®, run several models for you to stress test your portfolio. This is one way we make certain that you have the money you want for your future when you want it. 2021 will most likely be a year of change in our tax structure, government’s economic intervention, and focus. We expect a shift from the wild investor enthusiasm for IPO’s and high growth stocks, to value stocks and probable corrections. We saw some of the value shift in the financial sector towards the end of last year and believe this will continue. International investments look positive for 2021, especially in areas that were ravaged by Covid-19. Finally, something as simple as diversification of one’s investment assets is likely more relevant now than it has been in the past. Our bias is still in the equity camp, but we are cautious about slipping into a state of intoxication over never ending up markets. Be well and be smart. Happy 2021!

Quarterly Commentary Q3 2020 & Outlook

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2nd Quarterly Review 2020

My mother used to say, “if you don’t have anything nice to say, don’t say anything at all.” Alternatively, we do think we have nice things to report about our management in the 3rd quarter of 2020 and what we think are positive times ahead. The S&P 500 Index was up approximately 8.47% for the quarter on a price return basis, and we were up on average 9.25%, net of fees, in accounts invested 100% in equities.

Most of our investors have balanced portfolios with a combination of stocks, bonds, and cash; therefore, the average balanced accounts were up approximately 6.5-7.5%, net of fees. On a risk adjusted basis, we view this as very positive performance relative to the risk/return of the major averages. Remember that 5 stocks out of the S&P 500 equal more than the market weighting of the other 495. Those 5 are Facebook, Amazon, Apple, Netflix, and Google. Therefore, the S&P 500, which used to be a broad index, is more of a technology index today.

Addressing client worries today has mainly centered around the impact of the Coronavirus pandemic and the upcoming U.S. election on portfolio performance. On this front, I have 2 pieces of positive news: the U.S. Centers for Disease Control and Prevention (CDC) knows more about the virus than it did 7 months ago and the mortality rates are on the decline. Second, there have been very contentious elections in the past, and we have survived and prospered. For example, remember Bush v. Gore in 2000 and the new buzzword was “hanging chads?” Florida was the ultimate seat of judgement for the winner: George W. Bush; however, the election results of 2000 were delayed by approximately 34 days. The S&P 500 was down approximately 10% during that time. This reminds us that markets do not respond well to the uncertainty of knowing who will be the future leader of the United States. Conversely, our clients’ portfolios recovered well in a reasonable period of time, and given the tumult, the period of volatility that clients experienced was relatively short. This example confirms our commitment to the U.S. equity markets. Because we believe in owning stocks as long-term investments, we don’t trade events like delayed election results. The worst investing outcomes that we’ve seen are from the investors who jumped out of the markets in 2008 and never returned. On average, AGCA client portfolios are up from those times by 200 to 300%, net of fees. Permanent damage comes from trying to trade the market.

Our investment philosophy has always been to embrace absolute growth companies and value-oriented equities, or companies that tend to trade at a lower price relative to their earnings and other fundamentals. We would prefer to own both so that we always have an equity engine working hard in our portfolios. Our current performance has demonstrated that this type of hybrid investment strategy has been rewarding, and this makes us much more comfortable during periods of volatility.

In summary, this is a time to turn off your televisions and computers as much as possible and appreciate the fact that you own solid companies in appropriately allocated portfolios. We pledge to continue to work diligently on your behalf each and every day. We are all looking forward to 2021. Here’s to our future.

Quarterly Commentary Q2 2020 & 3rd Quarter Outlook

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2nd Quarterly Review 2020

Before we delve into the 2nd Quarter review, we are pleased to announce that we have recently expanded our practice to include Betsy Brennen, CFP®. Betsy is a former colleague from Alex. Brown & Sons, and she has been a good friend to A.G. Campbell Advisory for many years. She brings experience in working with individuals and families with financial planning needs, including insurance and long-term care planning. COVID-19 has had a devastating impact on Seniors living in retirement and assisted living communities, and their families. It has highlighted the importance of having an option in place to support long term care needs at home versus institutional care, as one ages. Our plan is to introduce this new concept and Betsy via tele – or videoconference between now and the end of the year.

The 1st Quarter, marked by the proliferation of the global COVID-19 pandemic, was one of the most unusual and volatile in capital markets history. During the period of February 19 to March 23, the market fell 34%, and this foreshadowed much weaker economic news to come. The weakness was confirmed by historically high unemployment of 14.7%, and over 25 million jobs were lost. The economic freeze was underway. Housing began to lock down with declines in new home starts and permits were non-existent. Commercial banks and mortgage companies began tightening standards and a potential 40% to 50% decline in GDP was being forecast for the second quarter. All of these variables, combined with the impact of daily COVID – 19 contagion and lockdowns, set us up for a major fall in consumer confidence.

The 2nd Quarter, however, showed signs of strong recovery across U.S. and Global equity and fixed income markets. Ironically, despite all the frightening news into the second quarter, the U.S. equity market had its best quarter since 1987. Big technology and the NASDAQ led the way with gains in excess of 30%. The Dow and S&P 500 posted gains just shy of 20%. International and emerging markets participated in the rebound with positive mid-teens performance as well. In terms of fixed income, most of this world was pretty quiet; however, credit spreads got tighter as investment grade corporate debt and high yield prices moved higher. The world was looking for cover and who could blame them?

Recent market performance aside, volatility continues to be the hallmark of the stock market this year. The trade war with China and continued U.S. hot spots of COVID-19, along with nervous anticipation of U.S. election results have illuminated the fact that we are not out of the darkness yet.

As for the second half of 2020, it is our perspective that volatility will still be with us. But, just because the market is more erratic at this time, it doesn’t mean that we don’t plan to profit by it. We believe that there will likely be a performance ‘leadership change’ from big technology stocks to those with more long-term value orientation. Therefore, we believe this is the time to use some of the market anxiety to buy more of our favorite blue-chip companies that pay great dividends at lower prices. In particular, we still like the ‘Home Depots’, banks, and certain other finance companies. We expect that they will profit from 2 things: first, DIY (do it yourself) trends that have emerged during our COVID lockdowns. Second, we believe that as the economy recovers, well-capitalized financial sector companies with attractive valuations will outperform. Thus, we like these areas. In fixed income, we are interested in taking some gains in late July and August and positioning some of these assets in 3-7-year tax free alternatives. Taxes will be going up ultimately, no matter who is elected in November.

Finally, as always, we are grateful for your business and continued loyalty.

Quarterly Commentary Q1 2020 & 2nd Quarter Outlook: “The New Normal”

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  • World economies already in slow growth mode and now many of them are pushed into a recession.

  • Stock valuations started the year at unprecedented levels and had further to fall when COVID-19 took over.

  • Bond yields were low at the beginning of the year but recessionary fears have driven yields down further.

  • The Coronavirus and the oil war between Saudi Arabia and Russia allowed for the largest drop in oil prices in history. At current oil price levels, many mid-level shale producers in Texas and other smaller oil companies will be driven out of the business. Suspicions are high that collaboration between Russia and Saudi Arabia are strategic to hurt America at a very vulnerable time. They very much dislike our oil independence.

  • Major business interruption and lifestyle changes occurred almost overnight due to the world pandemic.


  • At the end of Q1 2020, the Dow was down approximately 23%. It had fallen further and has experienced some rallies to the upside, but we believe this market will be susceptible to more volatility.

  • Not to belabor the bad, but the following represent the full quarter end returns

DJIA            Nasdaq     S&P 500     Russell 2000     Global Dow     Fed Funds    10-year Treasury

-23.20%     -14.18%    -20.00%     -30.88%             -24.04%            -1.50%          -1.22%

  • The market downturn was the 2nd most precipitous in Wall Street’s entire history. Literally, most fund managers said that they felt like it fell of a cliff. The only faster market decline was 1931.

  • The average recession is approximately 11 months. The 2008 recession was 18 months.

  • 5 things to invest in when a recession hits: core sector stocks with reliable dividends, real estate, precious metals, and yourself.


  • DON’T PANIC- It won’t change anything, and recessions are a necessary part of the cycle. Stocks were too high at the end of the year to find any desirable value.

  • Equity markets are already pricing in a recession; therefore, any good news about the slow down of COVID-19 or an end to the oil war will be a catalyst for equities. We already know that China, Russia, and Saudi Arabia cannot afford these oil prices.

  • GDP will undoubtedly pull back hard in the 2nd quarter. Estimates range from negative 17-35%. Additionally, unemployment will be a double-digit number, but exactly what it will be is harder to gage.

  • There will be an obvious dearth of demand and supply chain disruptions due to the pandemic in the second and most likely the 3rd quarter of 2020.


Turn off the television. Check in less often. We are minding the store, and no one has ever made any money by taking drastic action in these crises. Most of our clients have 3 to 5 years before they need every penny of savings. The financial markets should be well on the way to recovery by this time. After 2008, most of our investors recouped the previous 2007 and another 40% return five years later. Letting time take time is the key here.

Time is needed for Global Demand to return. Asia accounts for 10% of S&P500 companies’ revenues and China accounts for about 4% of overall revenues. Therefore, 2020 is going to be the year that we reposition by selling our laggards and buying great dividend generating companies that can be acquired at incredible values. We need the time to see Q1 earnings projections and future pro formas so that we can accurately access what is an opportunity and what is not.

Diversify- Maybe all of this volatility has taken you mentally and emotionally to a new place in your investment mindset. For example, maybe you have been positioned in 100% equities with your investments as far back as you can remember, and today’s environment combined with your current age has given you a new risk palate. Now is the time to speak with us and let’s get corrected risk and asset allocation targets for you. This is an active measure right now in which you can participate to take some control back. We welcome your calls at any time, and make no mistake, we are here to serve you. Stay calm and this too will pass.

Warm regards and please be well,

Zandy Campbell

A.G. Campbell Advisory, LLC is Fully Operational

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Zandy and I wanted to take a moment to re-assure our clients that we remain fully functional and operational during this unique time for our world. Our company has had contingency plans in place for many years, and we are fully prepared to operate from our home offices for as long as is necessary. While our office complex does remain open, we believe prudence dictates that we distance ourselves from the facility as much as possible for the foreseeable future. We will continue to receive U.S. Mail and other physical deliveries at our offices, but we will visit outside of normal business times during off-peak hours, so as to limit any possible exposure risk. We also believe it prudent to not have in-person or face-to-face meetings, and will instead restrict our activity to phone, email and other electronic means. PLEASE DO NOT HESITATE TO CONTACT US WITH ANY CONCERNS, WE REMAIN AVAILABLE FOR OUR CLIENTS EACH AND EVERY DAY.

Warm Regards

Mark Scott

Investment Commentary/Update: The Corona Virus – What to do?

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We’ve comprised a suggested list of “Dos & Don’ts” that you might find helpful during times when equity markets are temporarily out of favor with investors.


Do review your holdings and make sure you have sufficient near-term liquidity, perhaps 180 days. This way you are not forced to liquidate great companies at falling prices.

Do feel comfortable that your AGCA Team is constantly monitoring our clients’ portfolios, and is proactively taking steps to protect gains and provide liquidity, not only for current needs, but future opportunities as well.

Do know that these types of situations can generally impact investors for a period of 6 months or so. Also, be aware that the Department of Health & Human Services and the CDC have taken extraordinary safety measures to assure the safety of the American Public.

Do be aware that the stock market was trading at what may have been unrealistic multiples before the virus. The indices were prognosticating double digit growth next year. This is not realistic in a period when global growth is slowing. Therefore, the Coronavirus, among other factors, could be just the right catalyst that drives the equity markets to pullback 10-15%. Ultimately, there really is no way to get around this function of free markets.

Do stay informed, but no need to watch 365, 24/7 news. Remember, they have an ulterior motive to sensationalize for ratings.


Don’t panic. Nothing will change for the better if this is our demeanor. Now is the time when we help you make level headed, premeditated, and conscious decisions. Don’t join the indiscriminate selling, protect liquidity and profits if need be, but rest assured that there will be opportunities to invest any excess cash. If history after SARS, the Swine Flu, and other similar viruses have taught us anything, it’s that buy-and-hold does eventually persevere.

Don’t listen to people who say, “it’s different this time.” I have never seen that to be the case. Don’t imagine that this is definitely going to make us all die, impact all earnings, and wipe out GDP. It won’t. Remember, the CDC and the United States have restrictions in place to protect us.

Don’t allow yourself to be consumed by the never-ending news cycle. Stay informed, take appropriate precautions, and go about your normal routine. The market will sort itself out in time.

Don’t be fooled. While the market’s recent volatility is disconcerting to say the least, we’ve learned from past experiences that investors who remain disciplined have enjoyed very healthy growth after these types of “corrections.”

Don’t believe that there is nothing that can be done to help. Federal Agencies remain poised to act should it become necessary, and let’s not forget good old-fashioned ingenuity. Many people around the world are working very hard to combat the virus, and have made unprecedented progress.

Be wise, be calm, and call us with any concerns or questions.

Thank you,

Zandy Campbell

Q4 2019 Market Commentary

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Q4 2019 Market Review & Commentary

Happy New Year!!!

With 2019 closing with an S&P 500 index up 28.88%, the holidays were healthy and happy for many. The 2018 S&P 500 performance (down 6.24%) was no match for this past year. What changed? 2019 was punctuated by very favorable and low interest rates. On the whole, earnings have been good, and Phase I of the U.S./China Trade Deal seems to be in place. There were some bumps along the way in 2019, but the market demonstrated amazing resilience. Technology and Finance led the way throughout the year, more specifically, Semiconductors, Credit Services, Aerospace/Defense, Electronic Equipment, and Diversified Machinery, as well as a strong U.S. Consumer.

As we come barreling into 2020, earnings are the first and most meaningful measures of the health of the market. As companies begin to report their earnings with the banks in the fore, much of the focus on trade optimism in 2019 will likely be short lived. Our growth has slowed overall as evidenced by the Institute for Supply Management Manufacturing Index missing consensus estimates. There are contrary indicators to this number and the consumer is still very strong. Therefore, we believe that if you couple slower overall improving growth with this being an election year, a high single digit return for the market seems reasonable. Therefore, if you are allocated in U.S. stocks and companies with good long-term prospects and reputations, stay with them. It might also make sense to use this year as a chance to diversify a little and take some of the volatility out of your portfolio. We would not be overly aggressive buyers of the American markets at this time. Finally, keep some money dry for a rainy day, and be happy and feel joy that 2019’s supposed recession did not materialize!

As always, if there are any changes in your personal financial situation, please keep us apprised. We will be meeting with many people as the new year begins. Be well and God speed the plough.


Zandy Campbell

Q3 2019 Market Commentary

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3rd Quarter 2019 Commentary

 ·         The US-China trade dispute has dominated the headlines and volatility for this quarter. The Federal Reserve’s stance on interest rates gets a distant second. The gist of the ambiguity for stocks is slower global growth and tariff wars. Brexit is also very much in the background.

 ·         The Federal Reserve cut rates twice, and the ECB announced new strategies to stimulate the economy. US stocks achieved fairly small gains and pressures were felt in the commodity and financial sectors.

 ·         The Trump impeachment doesn’t help the macro view of the solidarity of the United States. In particular, China seems to want to see if “waiting Trump out” is a possibility, although talks are resuming.

 ·         Bond yields have declined precipitously over the quarter due to heightened global risk aversion.

 Our message is that we will conservatively take gains going into the fourth quarter and be satisfied with holding moderate amounts of cash. While there is this sense that so many things are awry, the truth is more to the contrary. The US has low unemployment, and growth is still placing GDP near 2%. The world is saying that we are going to have a recession in 2020. As you know, we don’t make those types of prognostications and believe a broken clock is right twice a day. That having been said, yes, things are in a slower growth mode than in the past few years. We believe that after 10 years of a bull market, we are bound to have some pullbacks. No market in our lifetime has ever been monodirectional, but we wouldn’t want our clients wasting their time trying to guess the top. Instead, we will pave the year end path with some realized gains and cash so that we live to fight another day.


Zandy Campbell

Q2 2019 Market Commentary

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2019 Half-Time: Climbing the Wall of Worry

 The first half of 2019 is complete, and the S&P 500 was up 17.35% for the period. This performance is the best first half since 1997. The PE multiple of the S&P is near 20 with Price to Sales Ratio at a little over 2X. Generally speaking, the fuel for the market this year has primarily been due to central bank policy. While we are extremely happy with this low interest rate environment, we believe that stocks will ultimately need to return to an environment where earnings are the drivers of upward movement.

The negatives for future GDP growth and earnings are of course the tariffs. Ultimately, higher tariffs do impact the United States in terms of earnings nearly as much as the Chinese. President Trump and President Xi have been “talking” about a trade deal for some time, and we believe that something possibly luke warm will be achieved. Let’s face it: the Chinese have enjoyed this huge trade imbalance for 30 years. The benefits of that trade tilt are not lost on President Xi, and I am fairly confident that he is not anywhere near really considering evening up that advantage. It is likely that Europe’s slow-down will continue to bleed on the United States which will result in slower growth and low interest rates. Therefore, it’s our opinion that the second half of the year will be fairly bumpy and very open to the vicissitudes of trade talk and rumors. Nevertheless, we believe that the U.S. equity markets continue to be the best alternative for our clients, and Federal Reserve Chairman Powell proves to be a “market-friendly” government official, which bodes well for the longer-term.

We believe that a year-end target of 3050 is very probable for the S&P 500 Index. This is simply to suggest a period of digestion and sideways movement in the second half. It wouldn’t surprise us if we have as much as a 10% pullback in this upcoming half, but we would use that as a buying opportunity. The central bank and geopolitical concerns will most likely dominate the rest of the year, but we encourage investors to stay long and even use market sell offs to add into favored equities.

Warm Regards,

Zandy Campbell

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Q1 2019 Market Commentary

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Christmas Eve 2018 was the deepest and darkest place that the market has been in quite some time. Officially, December 2018 was the worst December since 1931. The good news is that the market shook off all this gloom and doom prompted by an ambitious Federal Reserve. It’s a point of debate, but we think the Fed overdid the raising of interest rates in 2018. To be fair, Chairman Powell had a lot of ground to overcome in a short period. He was in a tough situation and still is.


January 2019 began with a roaring stock market recovery. The market was way oversold and came roaring back. The catalyst was that the Fed turned very dovish, and the China trade situation was showing signs of an agreement. Thus, the first quarter of 2019 was up 13.07% based on the S&P 500 index and recorded one of the best first quarters ever. We are all very lucky because first quarter earnings showed signs of falling off early in 2019. Subsequent to this bad data, the treasury yield curve inverted. When this phenomena occurs, it supposedly often heralds a recession within the next 12-18 months. We’ll see. Earnings for Q2 don’t look any better, but the U.S. / China optimism seems stronger than ever. Europe and Brexit are still in a state of chaos and in many ways make us feel pretty lucky. Politically, the hunt to still take down Trump continues, and yet, we are still slowly moving ahead.


Most of our accounts have between 13 and 20% cash, and we are happy about that fact. We have our eyes on several of our favorite investments and companies and will pounce on them when stock prices head lower. Currently, we are as invested as we want to be, and we are mainly helping clients with their tax work. With interest rates being so low, we still see the only overall place to be for the longer term is the stock market, and we are invested accordingly. For us to get a lot more bullish, the weakness in the global economy would have to recede. The ECB has held steady and promised not to raise rates until next year. Therefore, we are advocates of a more balanced portfolio buoyed by some short term bonds and cash. It’s always best to be cautious when markets have risen quickly and optimism seems the luxury of over-enthusiastic investors. Valuations are quite high and the market is facing some declining fundamentals.