By Kevin Welu, Managing Partner at TrueNorth Wealth Management July 5th, 2016
I set the general topic of this newsletter many weeks ago. With so much negative press and sentiment lately, I wanted to step in and provide a bit of positive insight and outlook, as there is plenty of reason for positivity! As easy as this topic sounded just a few short weeks ago, the world has changed…. literally overnight. I can’t even recall if the discussion of a Brexit was seriously considered as a viable option as we began 2016.
“Brexit is Freedom.” This is the title of an article written by Brian Wesbury, an economist considered to be relatively optimistic. He wrote this on June 6th; way before the actual vote on the 24th. “The bottom line is that investors should ignore scare stories about what would happen if Brexit wins. No way will they (the European Union) allow one of their biggest export markets to become more distant. In addition, and this is actually great econcomic news, it would free the US and UK to sign a free trade deal that the EU is now holding up. Any market volatility would be short-lived and any swing to the downside would be a buying opportunity. Brexit is not a reason to sell. In fact, freedom is a good thing.”
In news much closer to home, the Iowa economy is showing very positive signs, even considering the slowdown in agriculture. The state is growing and our unemployment rate is one of the lowest in the country at just 3.9%. Tax receipts so far this year are up, even despite a decline in agricultural related business.
The Chicago Cubs have the best record in baseball! I digress.
Every bear market has been followed by a bull market! It’s true.
From January 2, 1996 through December 2015, if you stayed invested in the S&P 500, your return would have been 8.38%. If you missed the best 100 days, your return would be a -9.66%. In March 2014, Vanguard published what I find to be a very valuable study. The topic was “Putting a Value on Your Value: Quantifying Vanguard Advisors’ Alpha”. From the results of the study, we can see and quantify several important factors outside of the “normal” considerations such as buy/sell timing, asset allocation, etc. The factors looked at in the study can contribute to positive, value-added returns for investors. According to this study, the one attribute which exceeds all others is behavioral coaching. Of course there are other important elements which financial advisors can bring to an investment experience, but this one very much resonates today, when we are bombarded with negativity and pessimism. Advising clients through turbulent times and “coaching” them to stay the course has always been an important part of my job; one that the industry can sometimes overlook.
Abandoning long-term investment strategies, letting emotions drive your decisions, and over-reacting to negative news headlines are the types of activities that can lead to negative investment experiences. Staying positive is not easy during difficult times. You may recall in my last newsletter that the best advice I could give investors was discipline. Since then, I have asked several people if they would add anything to this. One of the best responses I received was humility. How true!
The markets have a way of humbling all of us. If you think you can out-guess the markets, good luck to you! If we stay focused on the long run, not allow emotions to affect our decision-making, and be sure we invest appropriately to fit our clients’ risk tolerance and objectives, we believe we can have a positive investment experience. We have been through turbulent markets before. And it can certainly be challenging! It is important to stay the course through discipline and with humility.
In August, I will begin my 30th year in the investment business. If the next 30 are like the past 30, I am ready to go!! Thank you for your continued trust in allowing us to help with your investments and financial lives.
 “Brexit Is Freedom”, First Trust Monday Morning Outlook. June 6, 2016. Brian Westbury, Robert Stein, Strider Elass.
 “Iowa Economic Trends”. Iowa Gross Domestic Product- Nominal Basis. June 14, 2016. https://www.legis.iowa.gov/publications/fiscal/economicTrends.
 “Learning From the Lessons of Time: The Issues That Worry Investors Today Aren’t New”. Legg Mason Global Asset Management. February 2016.
 “Putting a Value on Your Value: Quantifying Vanguard Advisors’ Alpha”. Vanguard Research. March 2014. Francis M Kinniry Jr., Colleen M. Jaconetti, Michael A. DiJoseph, Yan Zilbering.
The material in this publication is based on data sources we consider to be reliable, but it is not guaranteed as to accuracy and does not purport to be complete. The interpretation and organization of these ideas are the views of Kevin Welu and do not represent the opinions of TrueNorth Wealth Management. This information is not intended to be used as the primary basis of investment decisions nor because of particular individual client requirements, should it be construed as advice designed to meet the investment needs of one investor.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and TrueNorth Wealth Management are separate entities from LPL Financial.
The economic forecasts set forth in the presentation may not develop as predicted. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. No strategy assures success or protects against loss.
International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.