Money Talk with Carl Stuart
Saturday 4pm-5pm

7/21/2008

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

Global equity markets got off to a disappointing start in 2014. Here are selected return numbers. 

 

                                                                                                         (As of 1/31/14)*

Dow Jones Industrials                                                            -5.30%

S&P 500 Index                                                            -3.60%

NASDAQ Composite                                                            -1.70%

Dow Jones World Index (ex. U.S.)                             -4.30%

 

                                                                                                (As of 1/31/14)*

Russell 2000                                                               -2.77%

Russell Value Index                                                     -3.55%

Russell Growth Index                                                 -2.85%

 

Major Bond Indexes                                               (As of 1/31/14)*

U. S. Treasury – Intermediate                                                +2.69%

                        Barclays Cap. Aggregate Bond Composite Index       +1.48%

 

Mutual Funds                                                       (As of 1/31/14)*

Lipper Large-Cap Growth Index                                -2.36%

Lipper Large-Cap Value Index                                    -3.65%

Lipper Small-Cap Growth Index                                -2.05%

 

                    

                 (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.

 

FINANCIAL AND INVESTMENT PLANNING

 

As you can see on the previous page the Dow Industrial dropped 5.3% in January. The decline was the average’s worst percentage loss since May 2012 and the biggest point decline since February 2009.

Source:  The Wall Street Journal

The so called emerging markets were hit harder. Declines in the Turkish lira and South African rand caused central banks in those countries to raise interest rates. On the last day of January the Hungarian forint sank to a two year low against the euro.

Source:  The Wall Street Journal  

Perhaps this is a good time to take that trip you always wanted to Turkey, South Africa and Hungary.

I have heard and read about the January indicator for years. The Dow Industrials performance in January has matched the outcome of the full year direction in 87 of 116 years, or 75% of the time. This excludes 1914, the year Claire graduated from high school, due to a number of component changes then. However, in years when January was a down month, the Dow continued lower in the remaining months of the year for only 48% of the time.

Source: The Wall Street Journal 

Also the year has gotten off to a volatile start. Through February 7th the Dow Jones Industrial Average has swung up or down at least 100 points during the day on 25 out of 26 trading days.

Source:  The Wall Street Journal

And if you want to feel a bit better, according to Sam Stovall, chief equity strategist at S&P Capital IQ, the S&P 500 since 1945 has risen 56% of the time following down January’s.

What does all of this mean to investors? Absolutely nothing. I think the information is interesting but useless in portfolio strategy.

As I wrote in last years’ letters, bonds had a rough time as stocks rose. In January the yield on the US Treasury 10 year note declined to 2.67% from 3% at the end of 2013. Again as you can see on the first page, the Barclays Capital Aggregate Index has a positive return of 1.48%.

What does this mean to investors? Absolutely something. While there is no guarantee bond prices will rise when stock prices fall, last month’s performance shows the benefit of owning non correlated assets.

Commodities were slightly positive for the month.

 

                                                                     2014 YTD%

 

DJ UBS Commodity Index

+1.29%

Reuters-Jeffries CRB Index

   +1.12%

Source:  The Wall Street Journal

Gold responded to emerging market turmoil by rising 3.18%. Crude oil was down 0.94% and natural gas sky rocketed, up 16.86%. This may have been weather related.

Source:  The Wall Street Journal

Here is my current thinking. One month is not a long term trend. Investors enjoyed excellent gains in 2013, and some may be motivated to take profits. According to Barron’s magazine as of January 31st, we have had over 580 trading days without a 10% decline in the S&P 500. While this has been very pleasant, it is not the historical norm. I would not be surprised to see at least one decline of this magnitude in 2014. I am not going to call a stock market decline a correction. While this term is widely used, it never feels very correct to me while it is happening.

Warm regards,

 

Carl W. Stuart

Financial Advisor

 

 

  • 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. 

  • 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.  There is an inverse relationship between interest rate movements and bond prices.  Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise.
  • The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected. 
Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing in emerging markets can be riskier than investing in well-established foreign markets.

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