Carl Stuart is an Independent Registered Investment Advisor. He manages approximately $340 million, primarily on a fee basis, and has been in the business for 32 years.
Carl has been married to his wife, Claire, for 41 years and has three children, ages 37, 34, and 31.
In 2002, he was honored by Registered Representative, a national magazine, as one of the top 10 advisors in the United States.
For the last five years, Carl was honored by Registered Representative magazine as one of the top100 independent advisors in the country.
In 2008, Carl was listed in Fortune Magazine as one of the top 50 independent advisors in America.
In 2009, 2010, and 2011, Carl was listed in Barron’s magazine as one of the top 1,000 advisers in the nation.
Carl is Chairman of the Board of the Texas Presbyterian Foundation in Dallas, Board Member and Chair of People’s Community Clinic, former Trustee and Chairman of the Investment and Finance Committee of Pine Manor College in Boston, Massachusetts, past Chair of the YMCA of Austin, past President of Big Brothers/Big Sisters of Austin and past President of Westwood Country Club.
(As of 03/31/13)*
Dow Jones Industrials + 11.30%
S&P 500 Index + 10.00%
NASDAQ Composite + 8.20%
Dow Jones World Index (ex. U.S.) + 3.10%
(As of 03/31/13)*
Russell 2000 + 12.39%
Russell Value Index + 12.31%
Russell Growth Index + 9.54%
Major Bond Indexes (As of 03/31/13)*
U. S. Treasury – Intermediate - 0.12%
Barclays Cap. Aggregate Bond Composite Index + 0.22%
Mutual Funds (As of 03/31/13)*
Lipper Large-Cap Growth Index + 8.11%
Lipper Large-Cap Value Index + 11.24%
Lipper Small-Cap Growth Index + 11.75%
(Source: The Wall Street Journal, Russell Investments & Barclays websites)
*Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot
invest directly in any index, and index performance does not include transaction costs or other fees,
which will affect actual investment performance. Individual investor’s results will vary. Past
performance does not guarantee future results.
SECURITIES OFFERED THROUGH
RAYMOND JAMES FINANCIAL SERVICES, INC.
FINANCIAL AND INVESTMENT PLANNING
As you can see from the data on the first page, U.S. stocks posted very attractive first quarter returns. However, that was not the case for foreign stocks and U.S. investment grade bonds.
Commodities also had a rocky ride during the quarter. Perhaps commodities experienced some of the weakest performance. The Dow Jones UBS Commodity Index fell 1.1% in the first quarter. The index fell 1.1% in 2012 after declining 13% in 2011. Natural gas was the bright spot. It rose 20% in the quarter. Copper fell 6.8% and gold was down 4.8% at $1,594.80/ounce. (Source: Wall Street Journal)
You may be scratching your head about the outperformance of U.S. stocks during the period. As you would expect, I do a lot of reading and attending conference calls. It seems to me there are three common reasons most often cited as possible causes for this phenomenon.
The first is valuation: It is argued that the prices of U.S. common stocks are not expensive. Based upon historical price earnings ratios, the S&P 500 is in fair value territory. The second commonly suggested reason is economic: while the U.S. economy is growing slowly and unemployment and underemployment remain stubbornly high, the trend is in the right direction. Commentators seem to be especially optimistic about the new home construction industry.
The third frequent explanation is global bank policy: in this hypothesis strategists suggest investors are being forced into equities because central banks are publicly committed to maintaining rock bottom interest rates on deposits. As the thinking goes, the Federal Reserve and other central banks want investors to move out of cash and into equities and real estate. This is the so called global liquidity argument.
As far as the U.S. equity market outperformance is concerned, some seers feel we are benefitting from being the best house in a bad neighborhood. In other words, capital has to go somewhere and the U.S. looks better than many alternative locations.
As we enter the second quarter it is probably useful to have realistic expectations. If we have three more quarters like the first one, we would have an almost 40% annual return for U.S. stocks in 2013. While we can hope for this, call me a party pooper, but I am skeptical this will happen. In each of the last three years the U.S. economy’s rate of growth
has slowed in the second quarter, and the equity market has declined. Additionally there is a widely recognized calendar based phenomenon that asserts the May-November period is weaker. I mention these items to only suggest that equity markets do not only move in one direction – up or down. What would I do if I were a U.S. stock investor? Absolutely nothing. There is no guarantee we will experience the same pattern four years in a row.
And if a person sold equities when would she/he know the proper time to jump back into the pool?
A couple of months ago I shared with you some interesting data I had come across describing our economy. Recently I read some fascinating statistics about U.S. stock market patterns. Oh all right. Maybe you won’t find these numbers so fascinating but I do.
A look back at market history shows that the U.S. stock market, represented here by Standard & Poor’s 500
Composite Index, demonstrated strength after big declines. Even after three steep drops, the S&P 500
still provided an average 10-year annualized return of nearly 11% as of December 31, 2012. However, it’s
important to note that past results aren’t predictive of the future.
8/31/29-8/31/39 = -5.03% 9/30/64-9/30/74 = 0.49% Ensuing 10-year returns Ensuing 10-year returns
Ended 8/31 ended 9/30
39-49 9.18% 74-84 15.63%
40-50 12.10 75-85 13.48
41-51 15.09 76-86 13.59
42-52 17.87 77-87 18.25
43-53 13.43 78-88 15.38
44-54 15.32 79-89 17.32
45-55 17.37 80-90 13.98
46-56 17.67 81-91 17.42
47-57 17.91 82-92 17.54
48-58 17.89 83-93 14.69
Source: Thomson InvestmentView. Years shown are the end dates of the preceding 10-year period.
Results are calculated on a monthly basis. The index is unmanaged and, therefore has no expenses.
So you and I would expect longer term investors would recognize these facts and adopt a strategy to benefit from them. That may not be what has happened.
A study by a company named Dalbar looked at stock fund returns and investors behavior from 1993 to 2012. Here is what they discovered.
Average Stock Fund Return vs. Average Stock Fund Investor Return
Fund Return 8.6%
Investor Return 4.3%
Source: Quantitative Analysis of Investor Behavior by Dalbar, Inc. (March 2013) and Lipper.
Dalbar computed the “average stock fund investor return” by using industry cash flow reports
from the Investment Company Institute. The “average stock fund return” figures represent the average return for all funds listed in Lipper’s U.S. Diversified Equity fund classification model. Dalbar also measured the behavior of an “asset allocation” investor. The annualized return for this investor type was 2.3% over the time frame measured. All Dalbar returns were computed using the S&P 500® Index. Returns assume reinvestment of dividends and capital gain distributions. The fact that buy and hold has been a successful strategy in the past does not guarantee that it will continue to be successful in the future. Past performance is not a guarantee of future results.
My conclusion from these data are pretty straight forward. Everything, including stocks go through cycles. I am sure my parents were relieved when I finished my adolescent cycle.
When it comes to stocks it appears that after long periods of poor performance there has been a pattern of subsequent good performance.
The other conclusion is, as investors, we have to overcome our emotions. Because we tend to sell when prices are low and buy when prices are elevated, we do not reap the benefits that average stock funds might return.
Since we live in such uncertain times, I hope these statistics are helpful to you in gaining and maintaining a healthy perspective.
Past performance is not indicative of future results.The information contained in this report does not purport to be a complete description of the securities, markets, or development referred to in this material. Any opinions are those of Carl W. Stuart and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject
to change without notice.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.Any information is not a complete summary of all available data necessary for making an investment decision and does not constitute a recommendation. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision.