The Super Rich Stress Test Their Financial Plans-and So Should You!

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The Super Rich (those with a net worth of $500 million or more) who have family offices typically engage a sizable lineup of professional advisors to help them create and implement financial plans. To help ensure those plans are both state-of-the-art as well as in line with their needs and wants, many of them regularly “stress test” these plans.

 

Here’s why you should join them in that effort—even if you’re not nearly as wealthy.

Asking “What if?”

Stress testing financial plans can be a very smart way to help make certain that the plan will deliver as promised. The fact is, financial plans that might look great on paper all too often prove to be much less impactful once they are implemented. It is not uncommon for there to be unintended consequences that can even derail one’s agenda.

 

At heart, stress testing is when you ask, “What if …?” about a variety of areas of a financial plan you have or are considering. When it comes to estate planning, for instance, a wealthy individual might ask questions like:

 

·         What will actually happen to my assets when I pass on?

·         How will my family be affected, precisely?

·         Who will be tracking the hard assets such as artwork and jewelry to make sure they go to the designated heirs—as opposed to vanishing?

·         Who is going to make sure my estate plan is being executed as it’s supposed to be?

 

To be effective and informative, stress testing should be done in a systematic manner. While there are some variations, the basic process starts by determining your goals. Your goals, any problems to be addressed and opportunities to benefit should be the driving forces behind the financial and legal solutions you employ.

 

 

STRESS TESTING FOR EVERYONE

 

Once you clearly understand your goals, you can evaluate the specific existing or proposed financial services or products. There are numerous ways to dissect and critically assess financial services and products:

 

·         Work the assumptions. A plethora of assumptions underlie all services and products. In stress testing, these assumptions are modified to determine how the solutions will work when a given scenario changes.

·         Evaluate alignment with goals and objectives. A solution might prove to work extremely well, but still not achieve the desired results. It’s essential to help ensure that the services and products will accomplish your goals.

·         Calculate cost structure. The intent here is to identify the best and most cost-effective solution possible. When calculating cost structures, all the expenses should be specified—including long-term costs.

 

Based on the stress test’s evaluation of the existing or proposed solutions, you might consider alternative products or services. It can be very useful to do side-by-side comparisons between the solutions being considered or currently used and such alternatives, asking questions like:

 

·         How do the assumptions compare?

·         How do the alternatives rate when it comes to potentially achieving my goals?

·         Which solutions are more cost-effective?

 

The end result of the process: recommendations. Based on those recommendations, there are five courses of action to consider taking:

 

  1. Stay the course. If the stress testing found the solutions being used or proposed to be on target and of high quality, the recommended action is to stay the course.

 

  1. Choose different solutions. If the stress testing finds what may be described as a system failure—the financial products being used are not going to achieve the desired results and might even blow up, for instance—the right move is to take a different course of action.

 

  1. Choose a different professional. If the solutions are appropriate but the professionals involved are really not up to the task of implementing them (or they charge too much money), it will usually make sense to switch to more capable and/or cost-effective experts.

 

  1. Modify the approach with the original professional. If the solutions can be made more powerful with only slight modifications, the best route is often to stick with the original professionals and have them make the minor changes needed.

 

  1. Continue stress testing. There are occasions when the individual or family chooses a professional to conduct a stress test and that professional is not up to the task. This comes out often clearly in the process or results of the stress testing. The only viable course of action is to select a different professional to conduct the stress testing.

 

Although stress tests are commonly used among the Super Rich, they should be a part of most people’s due diligence process when vetting financial plans, financial products and financial services. Frequently, stress tests uncover flaws in financial plans as well as better ways to achieve desired outcomes. For those reasons, stress tests will likely benefit a great number of people—especially business owners and their families, who generally have so much of their future financial security riding on one asset: their business.

 

Certainly there is a cost to stress testing estate, asset protection and income tax plans. That cost will depend greatly on the complexity of the testing involved and your situation. However, a stress test fee can be a whole lot cheaper than the costs—financially but also emotionally and psychologically—of a plan or solution that is fundamentally flawed or in conflict with your goals.

 

ACKNOWLEDGMENT: This article was published by the BSW Inner Circle, a global financial concierge group working with affluent individuals and families and is distributed with its permission. Copyright 2018 by AES Nation, LLC.

 

 

If this message was sent in error, please notify the sender, delete it, and do not use any part of this message. Email contents are not to be construed as investment, tax, accounting or legal advice. Views expressed in this message are of the sender, expect where stated otherwise. Past Performance is not indicative of future returns. ALL INVESTMENTS INVOLVE THE RISK OF LOSS. Accounts managed by A.G. Campbell Advisory, LLC may involve above-average portfolio turnover, which may reduce an investor’s after-tax returns. The contents of this message are not to be construed as an offer, or solicitation of an offer, to purchase securities. Such an offer may only be made by means of delivery of appropriate offering documents, which must be carefully reviewed by a prospective investor before making an investment decision. Performance numbers have not necessarily been independently reviewed or audited and we make no representation as to its accuracy. The information and statistics in this report have been obtained from sources we believe to be reliable but are not guaranteed by us to be accurate or complete. A.G. Campbell Advisory, LLC, its principals, directors, research analysts and other employees may hold or take significant positions in the securities mentioned. Any reference to contracts are subject to written confirmation. Do not send any personal information through email. All emails are subject to review by A.G. Campbell Advisory, LLC.

February 2019 Report

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Sudden Wealth
What Should You Do If You Strike It Rich?

 

If a few million dollars—or more—fell into your lap tomorrow, what would you do?

 

Sudden wealth isn’t a common or reliable way to get rich, but it can and does happen. Some big drivers of sudden wealth include:

 

·         Receiving a substantial inheritance

·         Getting a major settlement in a divorce or a lawsuit

·         Receiving a big payout because of stock options or the sale of your company

·         Winning the lottery

 

But while sudden wealth may sound like a dream come true, it’s often accompanied by serious challenges resulting from the “sudden” aspect of that money. With sudden wealth, everything about being rich—the good and the bad—happens all at once. In contrast, most people who build wealth slowly are able to address issues and concerns incrementally over time.

 

The result: Sudden wealth can be an emotionally charged and overwhelming experience. Sometimes there are emotional challenges because of the source of the money—a relative who died, for example. Feelings of panic or guilt can go hand in hand with the feelings of excitement. All those swirling emotions can cause recipients of sudden wealth to make bad—sometimes exceptionally bad—decisions about the money and about their lives.

 

Here’s a look at how you—or someone you care about, such as your children—can prepare to deal with sudden wealth effectively to realize amazing opportunities while avoiding the many pitfalls of “striking it rich.”

 

Relationship challenges of sudden wealth

 

To be sure, getting rich quickly can solve many financial problems. At the same time, getting rich quickly can create big problems in your relationships with other people—including the people in your life you care about most.

 

Some examples: Family and friends may knock on your door looking for funds from someone they now see as a financial “white knight.” A sibling might be looking for an investor in her new business, or a distant relative might ask for help paying medical bills. A friend might hit you up for a loan.

 

Your marriage can be impacted, too. Shared decisions about how to spend, save and invest the new wealth can create friction. Before you got rich, your money was used largely to pay the bills. Now, with a lot more money, the myriad possibilities can create a wedge between spouses.

 

Sudden wealth can also impact new relationships. Are new friends—and, especially, new potential romantic partners—interested in you, or your money?

 

 

FOUR WAYS SUDDEN WEALTH CAN BE RUINED

 

People who experience sudden wealth can also fall into several traps that can quickly erode or eliminate those assets. These wealth destroyers can impact anyone, of course, but we see them hit the suddenly wealthy especially often.

 

  1. Giving away too much money. If you give too much of your wealth away, you can end up in your own precarious financial position faster than you might imagine. Even loaning money can prove problematic and occasionally disastrous.

 

  1. Extravagant spending. There is nothing wrong with treating yourself well and enjoying a good life. But if the money needs to last a long time, excessive spending can jeopardize your financial future. The key is to identify the necessities, the “nice to haves” and the “not that importants” and balance them.

 

  1. Poor investing and planning. If you receive a windfall, there may be a lot of professionals seeking to help you manage your money and address your planning needs. There is a high probability that many of these professionals are going to be “Pretenders” who aim to do a good job but are simply not talented enough to help you.

 

  1. Lawsuits. Your sudden wealth can make you a target for unscrupulous litigants. One way to address this possibility is by safeguarding your assets. By working with a wealth manager who is well-versed in asset protection planning, you can potentially insulate yourself from prospective deceitful and ruthless litigants—legally.

Take responsibility

 

If you or a loved one is fortunate enough to become suddenly wealthy, here’s a process we recommend that can help you or the other person get prepared and set up for success.

 

  • Assess your situation. You need a solid understanding of how much money there really is, and what you need and want to do with it. Often that requires slowing down and working through some of the emotions that accompany sudden wealth in order to think rationally about the windfall and its impact. A wish list, a balance sheet and a cash flow statement can all play a part in evaluating where you are and what you are considering.

 

  • Rely on consummate professionals. You want to work with true experts—recognized authorities who understand the difficulties you face due to becoming suddenly wealthy, and who are able to help you chart a financial course that matches your needs and wants. Consummate professionals can also act as a sounding board when it comes to most aspects of dealing with your newfound wealth. Their extensive experience, expertise and ability to see your situation rationally rather than emotionally can be useful in helping you think through different matters and plans.  

 

  • Make reasoned decisions. To make a windfall work best for you, you need to make intelligent and informed decisions, such as avoiding impulse buying and suffering buyer’s regret. Moreover, it is crucial to always recognize that you are in charge and to take responsibility.

 

 

 

ACKNOWLEDGMENT: This article was published by the VFO Inner Circle, a global financial concierge group working with affluent individuals and families and is distributed with its permission. Copyright 2019 by AES Nation, LLC.

 

 

 

If this message was sent in error, please notify the sender, delete it, and do not use any part of this message. Email contents are not to be construed as investment, tax, accounting or legal advice. Views expressed in this message are of the sender, expect where stated otherwise. Past Performance is not indicative of future returns. ALL INVESTMENTS INVOLVE THE RISK OF LOSS. Accounts managed by A.G. Campbell Advisory, LLC may involve above-average portfolio turnover, which may reduce an investor’s after-tax returns. The contents of this message are not to be construed as an offer, or solicitation of an offer, to purchase securities. Such an offer may only be made by means of delivery of appropriate offering documents, which must be carefully reviewed by a prospective investor before making an investment decision. Performance numbers have not necessarily been independently reviewed or audited and we make no representation as to its accuracy. The information and statistics in this report have been obtained from sources we believe to be reliable but are not guaranteed by us to be accurate or complete. A.G. Campbell Advisory, LLC, its principals, directors, research analysts and other employees may hold or take significant positions in the securities mentioned. Any reference to contracts are subject to written confirmation. Do not send any personal information through email. All emails are subject to review by A.G. Campbell Advisory, LLC.

Year-End 2018 Commentary

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Happy New Year: 2019!!! What to do?

 

·         Do anything other than sit there and listen to the national pundits tell you about the volatility in the market and how bad everything is. Don’t get caught up in the constant news cycle, as they tend to be short-term oriented, and sensationalize to enhance their ratings.

·         Remember the importance of history. History teaches us that trying to time markets is a loser’s game. No one, not even the huge institutions, do this well. The only way to make money in the market is a longer term, value oriented, buy and hold approach. As Warren Buffet says, “he tunes out the noise.”

·         Ask yourself, what is real?

·         Low unemployment

·         Slow growth economy

·         Corporate tax benefits

·         National wages are up

·         Low to no inflation

·         Cheaper Gas & Oil Prices

These are not the components of a recession that the stock market has already put into its’ lower prices and volatility.

·         What are the real negatives?

The real or perceived negatives are as follows:

·         A possible trade war with China

·         A Fed who blindly raises interest rates to drive us into recession

·         A Global Slowdown

·         Political gridlock and nothing getting done.

·         More domestic and global debt.

Of all of the above possible negatives, most of them are not nearly as likely or as ominous as some would like you to believe. And quite frankly, these risks are always inherent in the equity markets.

We believe that the Fed will only do what is necessary to keep our economy from overheating. There probably is no great time for them to be “unwinding” their balance sheet, but it will have to happen over time. Everyone is so set on their raising interest rates twice more in 2019. I am not convinced. Why? To slow down what? Either way, it neither makes nor breaks us.

Global slowing is a natural part of the business cycle, but business by no means has grinded to a halt, and I think everyone from the ECB to the Fed is conscious of the danger of stopping forward movement on the back of a slow recovery. Additionally, the Fed is aware of the higher carrying costs that will result by continuing to raise interest rates. They know that this makes it harder for us to pay our debt service, and they benefit from our survival, not our demise.

 A trade war is bad for everyone. The United States and China are so inextricably intermeshed that the leader would not let this happen. Furthermore, China’s economy is terrible, and a trade war would be a dagger in the heart of their trying to recover. Trade wars never offer the protectionist benefits that feel patriotic and get politicians elected.

Finally, the stock market generally loves political gridlock. The cynical thinking has always been that if the politicians cannot get anything done, they can’t screw anything up! The market loves predictability and hates uncertainty. This entire writing is a long way of saying that, “this too shall pass. “

With warm regards for a prosperous 2019.

Alexander (Zandy) Campbell

Third Quarter 2018 Commentary

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Staying the Course and Enjoying the Ride

The third quarter proved to be good for most U.S. equities, and investors welcomed a more gentle summer. Gradually increasing U.S. interest rates are tightening financial conditions around the world. The Fed has indicated that they will be raising rates for the foreseeable future, and this will lend itself to a stronger U.S. dollar. All this having been said, we believe that the markets will push through decent returns in equities through the remainder of 2018.

We believe as we move into the fourth quarter of this year, it is okay to take some capital gains. Politics will be changing our footing with the midterm elections, and we always have the risks of the emerging markets or another country’s currency ills resounding through our markets. This is all to simply say that it is getting later in the game, and we expect volatility and probability of market corrections to increase.

The underpinnings of U.S. growth are still strong with the tax cuts and low unemployment, and we still prefer the U.S. to other markets. Now is a good time to check our portfolio resilience and be comfortable with our weightings in regard to risk tolerances. Finally, we think year end should provide a good atmosphere for retailers and the holidays, and we see a reasonable fourth quarter ahead. This is a good time to stick to our investment plan, take some gains, and stay in short maturities in our fixed income.

Happy Fall,

Zandy

Second Quarter 2018 Commentary

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Trump Bump Down to a Nudge?

The first half of 2018 has been anything but boring, although the markets have yielded the investor very little. Literally, with all the wild moves of several hundred points in a day, the first half has returned just 2.65% for the S&P 500, while the Dow Jones Industrial Average was down 0.73%.

The big winners of the first two quarters would be oil stocks, with technology a possible second, again due to the F.A.N.G. stocks (Facebook, Apple, Netflix, and Google). By comparison, the small and mid-cap stocks have enjoyed a much more positive move for the same time period. The reason for this divergence is that the tax cuts have proven more helpful to the little guy, and most of these companies are not exposed to trade worries. Conversely, the big losers were the industrials and the banks.

The reasoning is simple, the industrials have exposure to China and oversees currency risk, as well as trade war risk. The financials in general came down in the first half of the year due to a flattening yield curve. The thinking is that if the spread decreases between the banks’ borrowing rate and the consumer loan rate, the banks will be hurt by the flattening yield curve. Finally, the yield curve flattening is one step away from it actually inverting. An inverted yield curve has often been the signal of a shortly ensuing recession.

Having hopefully dispensed with all the bad news, here is the good news: first, unemployment is approximately 3.8% which is a historic low. Interest rates have not skyrocketed, and our Fed has taken measures to insure against this occurrence by raising short term rates. Companies are reporting excellent year over year operating results, and the economy is chugging along. The consumer has been doing their part, and we perceive ourselves to be more secure today from domestic terror related events.

With all of this being said, the second half of the year seems to be setting up in a similar fashion to the first half. Some catalysts for future volatility might be the mid-term elections in November, with the appointment of a Trump appointed Supreme Court justice hanging in the balance. Additionally, some of the bad actors, such as China, Russia, and North Korea still present unknowns in relation to NATO and trade talks.

We find ourselves asking, “what to do now?” For the most part, we believe very little. If you are happy with your allocation to stocks and cash, stay put. If you have more cash to put to work, we suggest averaging into the markets at this point. In other words, now is a time to be very slow to act. If we get a decent pullback in the Fall, we might take a look at some of our quality favorites. Otherwise, our suggestion is to stay invested and try to turn off CNBC as much as possible.

Once we get the sand out of our shoes in September, we will begin to see the formation of a more engaged investment landscape.

A.G. Campbell Advisory, LLC

1st Quarter 2018 Commentary

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Rollercoaster Rides Are Scary BUT They Do Stop

I have met so many people in the financial industry, outside of the industry, investors, and money managers, and they all say the same thing: “this market is exhausting.” If we look at 2017 as one of the least volatile years on record, 2018 has begun as its’ bitter cousin. 2016-2017 will be seen as the Trump party, and now we must come back to earth and deal with reality. Our forecast is for muted returns this year verses last year and headwind risks are likely trade wars and higher interest rates. Eventually, the market will digest these items.

The 1st quarter volatility of 2018 came with a vengeance. The January to February selloff took most major averages down in the double digit range. At the peak, the drop was over 10%. Most of what we all are experiencing has little to nothing to do with the true value of the companies in the market. The stock market is reacting to the highly unpredictable style of the president. During this quarter, the market has all but ignored the strong earnings growth momentum, tax cuts and repatriation. These bullish facts will become more apparent during the first quarter earnings report season. We still think it make sense to overweight financials and selective technology. In general, we think market fundamentals are strong and on pace. At this point, we favor value companies over growth, and would also use this year to take some gains.

In the first quarter, the Dow was down 2.5% which ended to its’ nine-quarter gain streak. The S&P 500 was down 1.2% which also broke its’ rally record. In divergence, the NASDAQ was up 2.3% and the Russell was down 0.4%. Overall, the New Year came in with the winds of worry. We believe that some of this volatility will settle down as the geopolitical risks abate. While it continues, we suggest that our investors adopt the same attitude as Warren Buffet. Mr. Buffet believes that most of the political and other noise that we hear that stirs up market volatility needs to be tuned out. He thinks that market volatility causes more people to unintentionally harm themselves than anything else. We tend to agree.

Warmest Regards,

Zandy Campbell

Fourth Quarter 2017 Commentary & 2018 Outlook

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2017 Performance and 2018 Outlook:

2017

·         The Trump Bump accounted for a 6.5 trillion dollar increase in the U.S. economy, low interest rates, and more jobs created by any President in recent memory.

·         The S&P 500 closed up the year over 21% in positive returns and the only asset class to be negative was commodities.

·         The Tax Deal was completed in late 2017 and will take effect in 2018 and should be a net positive for the markets. Everything from lower corporate taxes to a one time low tax on repatriation of large corporate profits held overseas could add quite a kick to our New Year.

·         Foreign stocks and emerging markets were a good place to be in 2017

·         Geopolitical tensions began to ease at year end with increasing domestic political tension.

2018

·         Increased volatility due to extended bull market. Speculators will aggressively trade the dollar, bitcoin, and the VIX index itself. Everyone will be looking to call an end to this long bull market.

·         For reference purposes, the longest bull market in history was from 1990 to 2000 and extend over 113 months. Today, this bull market is standing at 105 months.

·         We advise 15-20% cash taken from high flyers and equity profits. In the equity space, we generally feel that clients should ride out their holdings. Options, short term bonds, and cash can be used to minimize volatility; therefore, the theme is to stay “long” quality equity and not panic, no matter what the volatility.

·         The biggest risk we have faced over the past 30 years is time spent “out “of the market and an inability to return to it.

·         Our outlook is for 2018 to be a year of higher volatility, an increase in domestic political fighting with the upcoming midterm elections, and a general increase in corporate profits. Stocks are still going to be “the place to be,” provided that investors can handle the natural corrections. We also favor international investments in that there are still values to be enjoyed in those markets. Finally, we are net bearish on bonds of all types. We would prefer tax free to taxable in general and would stay away from any type of junk. Short term municipals would be our alternative to treasuries or cash.

·         For those interested in which companies will benefit the most from the tax deal, we would suggest the industrials, consumer staples and telecom. These companies were taxed at generally the highest rates.  Most of the benefit has already been derived by the Energy and Technology sectors, but the actual implementation will still be felt in their balance sheets. Finally, consumers and small business will be net winners.

·         In summary, this is a year when knowing your risk tolerance and asset allocation will be as important as any.

Happy New Year!!!!

Third Quarter 2017 Opinion/Commentary

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3rd Quarter 2017 Market Commentary

The third quarter enjoyed another wonderful performance by the market. The S&P 500 and the Dow Jones were both up over 4%, and the trailing 12 months of both of these indices are up over 18%. Our take on all this joy related to the “Trump Bump” is that there has been supporting data to create a great market. There has been low inflation, low interest rates, better corporate earnings on balance, and the promise of lower taxes and a better health care system. Admittedly, these are unfulfilled promises, but it paints a picture of a business friendly environment.

Whether you are a Donald Trump fan or not, there has been $5 Trillion of new wealth created since his election in our stock market. Part of this euphoria is based on legislative change in terms of corporate tax rates and not gridlock. We will see.  We feel the market headwinds picking up possibly in the 4th quarter and choppier in 2018. Why? The market has been positive for 7 back to back quarters. That is almost unparalleled. Additionally, the Fed has signaled that they are tightening again in December and probably 2-4 times next year. They are also reducing their balance sheet. While all of this economic unwinding is occurring and rates move slightly higher, we see this action as a negative for stocks. At the very least, there will most likely be more uncertainty. Finally, the American market has priced in the tax cuts, and it is not a done deal yet. We believe that there will be cuts, but when and how much are the variables that concern a market potentially dominated by more short-termism. The good news is that for the 3rd quarter, market volatility is at an all-time low, and things appear a little quieter on the foreign affairs front.

What are our recommendations? Take some profits, and eliminate that long term capital loss that just never quite seemed to revive itself. We feel that a 15-17% cash position in case we get that 5-10% correction is warranted now. As importantly, keep your bond portfolios short to intermediate, and make sure you own your share of financials and technology. These two areas stand to benefit the most in our markets under these financial circumstances. Finally, if you really don’t have any money overseas, now is a good time to position oneself there. They are still behind the moves in our markets but are beginning to show real performance. Emerging markets outperformed our indices by several percentage points, and Brazil was the strongest index market. Part of Brazil’s performance was mainly due to reform progress.

At this point, stay long stocks, raise some cash via harvesting some rewards, and don’t be undone by future volatility. It is expected and our opportunity.

Warmest Regards,

Zandy Campbell

Second Quarter 2017 Commentary

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2nd Quarter 2017 Investment Commentary

The United States economy looks better than it has in a long time. The U.S. GDP was somewhat slow in the first quarter at 1.2%. We think the second quarter growth might be closer to 2.5%. Generally speaking, unemployment has dropped to its lowest levels in 17 years, but we are not naïve to the fact that there are many who are still under-employed. Additionally, there are those people who simply are not qualified or trained for today’s labor force. Stocks have hit their highs this year and have outperformed bonds for six years in a row. The first half of the year was dominated by lower price/earnings multiples and increased market volatility.

The political songs of excitement of the first quarter have all but faded to the monotony of Washington’s log jam that is endless and uninspiring. Can the Republicans get “repeal and replace” done? Few think so. Can the Republicans get anything they promised done? We’ll see. The main streets of America need some healthcare, tax, and regulation relief and so do our companies. For the best possible outcome, there will have to be true bipartisanship; therefore, count on something in between.

Finally, on a positive note, the corporate earnings train of the 2nd quarter looks promising. The forecasts or consensus is for year over year earnings to rise at the 8% level for the second quarter and 11% for the year. Wages remain sluggish which is very likely due to the current business environment which is still over regulated. Europe and other countries have far more favorable valuations than the U.S. at this time and global trade could drive this leadership even more.

A.G. Campbell Advisory, LLC believes that the Fed will continue to raise rates one more time this year and with President Trump’s new Fed appointee, Randal Quarles, the Fed will focus on dissecting Dodd-Frank. All of this bodes well for financials and industrials. It is our opinion that growth will moderate over the next 6-12 months but will continue due to positive corporate earnings. This tends to be exactly the type of environment where stock pickers often fair better than passive investors. We will see what fate holds for us.

Wishing you an enjoyable summer,

A.G. Campbell Advisory, LLC

First Quarter 2017 Commentary

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1st Quarter Commentary 2017:   Back To The Future

Hold on sports fans, it ain’t over ‘til the fat lady sings. Feeling like 1985? Kind of Reaganesque? Whoa Bessie, as Jim Cramer loves to say, “Now we are over the tips of our skis.” Here’s what we know: we elected a President who is definitely business friendly and wants very badly to take 100% of the credit for reigniting the American economy. Since his victory in early November of 2016, the increase in the S&P 500 has been nearly 10%! Please understand, this move in the market is based completely on what may come. We all enjoyed this drunkenness through February of 2017 and then we began treading water. The first obvious cold water on our party was the unsuccessful healthcare bill that was never to be. That loss put a question in the mind of Mr. Market as to whether Trump’s other agenda items would be any more successful than his first legislative attempt. Consequently, March of 2017 traded in a fairly tight range and most broad equity indices ended relatively flat on the month, but up between 4-6 percent on the year.

The 1980’s were characterized by Reagan in two specific areas: military strength and the courage of his convictions, and tax reform with the Tax Reform Act of 1986. Without some corporate tax relief and a semblance of a new healthcare program, the markets could definitely lose confidence in “The Donald.” Currently, without some very positive earnings, most stocks are poised to move sideways and to be very susceptible to political bombshells. So, what does one do? Is the Fed going to increase rates again any time soon? Is North Korea going to be properly held in check by China? What could any and or all of these items do to our market, and what is the proper strategy?

Simply put, check your cash for upcoming needs and make sure it’s in the money market. Other than that, we advise staying long the market just as we did through the 80’s which included 10/19/87 because there isn’t a better game in town. Also, have enough cash to take advantage of a 1987 or a 2008 type of scenario. Look at the returns on monies invested very shortly after those periods. Finally, turn off CNBC and get ready to enjoy a beautiful spring.

Warmest Regards,

A.G. Campbell Advisory, LLC