Wednesday, April 29, 2015

Being smart with. $$ -- Beware claims of profitable trading trends

"YOU CAN BE A DAY TRADER," shout commercials on CNBC. They implore you to use trading platforms that take advantage of historical trends. But Harvey Campbell, finance professor at Duke, (in Kiplingers March 2015) says if you look hard enough for patterns you'll find them. But he said it's like saying stocks that start with "H" did best last year so buy "H" stocks. When you test for enough factors, by chance there has to be some that appear to matter, even if they don't.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Friday, April 3, 2015

Being smart with $$ - Hedge funds better for the manager than the investor

Hedge funds. Only the rich are lucky enough to buy them, right? And the hedge-fund managers get paid very well for offering such great returns. The managers usually get a 2% management fee which by itself is quite a bit. But they also get 20% of the returns they provide. Wow. That's a nice payday when hedge funds returned only 3% in 2014 compared to over 11% for stocks (says CNBC). In 2013 stocks did 26% vs. 9% for hedge funds! Sounds like the hedge fund managers have a much better deal than the investors.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Wednesday, April 1, 2015

Q1 2015 Quarter End Letter

Dear Clients and Friends:

The first quarter of 2015 has come to a close and as always there is plenty to worry about in the financial markets. Political instability around the world and economic concerns both here at home and overseas make investing a difficult endeavor. However, as you go back in time, it is hard to find a period when there have not been concerns in the markets. And when there are few concerns, the markets are typically at very high levels which should worry those who realize that the next hiccup can lead to a big drop. I remind you, as always, that investing should be pursued as a long-term proposition and short-term concerns should not dictate your portfolio. The majority of professional investors can not time the market or beat the market averages and therefore we should be careful not to believe that we can do so either. Long-term investment returns should get us to our long-term goals and that will be our reward.

The Dow Jones Industrial Average of large stocks closed the first quarter almost exactly where it started. A 0% return is not what we hope for. However, if you maintained a simple diversified portfolio of large and small U.S. stocks, international stocks, bonds and REITs, you would have realized a return for the last three months of approximately 2.5% (appropriate portfolio allocations and specific results would differ for each investor). We can never predict in advance which sector of the markets will be the outperformer but if we maintain a proper diversified portfolio then we can benefit by the sectors that will do the best. And diversified portfolios reduce your volatility and risk along the way.

It is worthwhile to review your portfolio semi-annually or at least annually to discuss changes in your life that may require modifications to your investment mix or to otherwise rebalance back to your target allocations.


Thank you for reading my posts.

- Larry Pike, CFA, Client Priority Financial Advisors LLC
www.clientpriority.com


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