FORD WEALTH MANAGEMENT LLC Integrity•Independence•Insight
536 Pennsylvania Avenue Glen Ellyn, IL 60137 630.545.2800 www.fordwealthmanagement.com Erik G. Ford, CRPC®, AIF®, CFP® Principal Partner [email protected] Trent E. Warren, CRPC®, AIF® Partner [email protected]
July 2, 2015
Dear Fellow Investors:
“Nobody loves me but my mother, and she could be jivin’ too. Now you see why I act funny baby when you do the things you do.” - song lyrics by B. B. King
Dear Fellow Investors:
The first half of the year is behind us and for those of us who are only young in spirit, the time seems to pass faster and faster. The results of the first half are a good example of why we stay diversified and do not chase returns. Of traditional asset classes, the three highest returning for 2014 (REITS, Large Caps, Fixed Income) were notable disappointments in the first half with REITS falling to the bottom and Large Caps and Fixed Income finishing essentially flat. On the flip side, two notable disappointments for 2014 (Developed Markets and Emerging Markets) moved from near the bottom to the top. The indexes referenced above are as follows: REITs, NAREIT Equity Index; Large Caps, S&P 500; Fixed Income, Barclays Aggregate; Developed Markets, MSCI EAFE; Emerging Markets, MSCI EME. Returns and rankings are courtesy of JP Morgan Asset Management.
All this occurs in our very interesting and dynamic environment with a litany of ongoing political and economic tensions. As this is being written the Greeks have defaulted and are preparing for their referendum and we have our own versions of Greece to deal with (Puerto Rico or Illinois, take your pick). China is slowing down and OPEC is dead set on making up for price declines with volume. Here at home we celebrate another decrease in unemployment as reported hiring is up, but we also have the lowest labor force participation since 1977 and virtually no upward pressure on wages. And of course there is still the Fed. Now all of these factoids (and many others) can be viewed with an attitude of the glass half empty or the glass half full. As will be no surprise to regular readers, we are in the latter camp.
Page 2 Ford Wealth Management July 2, 2015 Securities offered through LPL Financial. Member FINRA/SIPC. Investment Advice offered through Ford Wealth Management LLC, a registered investment advisor and separate entity from LPL. Referencing the above lyric from the late B. B. King, there is very little love out there in the markets and a lot of searching for meaning and interpretation. There continues to be a great deal of caution and reluctance to believe what we may be seeing. This has led us through a long, but uninspiring, economic recovery with very little faith in what the future may hold. You can take just about every issue in the above paragraph (as well as others) and turn it positive or negative. Your view will likely depend on whether you take the long or short view. Problems that we face provide opportunities for solutions that lead to progress. That progress is what we take advantage of as investors.
We believe “construction season” may provide a fitting analogy. We may find the way to our desired destination unexpectedly blocked thus forcing us to take a detour via a longer or rougher path. The destination is the same and with a little patience and care, we arrive where we intended not the worse for wear. Our portfolios can be viewed similarly in that each component of a proper allocation will not always be a smooth ride. Some will take deviations down bumpy detours, but eventually we should find our way if we do not make ill-advised decisions to try shortcuts. Enjoy the summer.
Sincerely,
Erik G. Ford Trent E. Warren
The Standard and Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The FTSE NAREIT All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. Equity REITs. Constituents of the Index include all tax-qualified REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property.
The Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non- agency). Provided the necessary inclusion rules are met,
The MSCI in an unmanaged index created by Morgan Stanley Capital International that is designed to measure equity market performance in global emerging markets. The Emerging Markets Index (MSCI EM) is an unmanaged float-adjusted market capitalization index that consists of indices in 21 emerging economies: Brazil, Chile, Page 3 Ford Wealth Management July 2, 2015
Securities offered through LPL Financial. Member FINRA/SIPC. Investment Advice offered through Ford Wealth Management LLC, a registered investment advisor and separate entity from LPL. China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
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Securities offered through LPL Financial. Member FINRA/SIPC. Investment Advice offered through Ford Wealth Management LLC, a registered investment advisor and separate entity from LPL.