Monthly Archives: August 2013

Where to find a top advisor?!

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Top advisor - magnifying glassSo…if you’re looking for the best financial advisor there is do you simply run a quick search on Google? Would it look something like ” best financial advisor in Denver” or “best financial advisor in Orange County”?  Would you rely on a list that ranks the best financial advisors?

In nearly every aspect of our lives we rank products or services and take pride if we are associated with or use that brand.  How often have you heard that a product has a “Gold Star Rating” or is recommended by ‘Consumer Reports’?  It should be no surprise that the same applies when it comes to the Financial Services industry.  Investors want to work with the best and often rely on rankings issued by various publications and websites for this information.

The key difference is that there are many more variables that need to be taken into consideration when looking at the financial industry and ranking firms or individuals.  In this article we will take a look at a list that is published annually and is highly respected – ‘Barron’s Top 1,000 Advisors List’.  Through our discussion it will become clear why ranking financial professionals is not as easy as ranking cars or laundry detergent and the results need to be looked at closely. Continue reading →

This Recession has a Split Personality

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US-economic-collapse-vs-Recovery-1-300x300Dear Mr. Market:

It’s been well documented that you have a pretty volatile personality. There are days when you tempt us with optimistic stories and the potential to make tons of money in a roaring market. Suddenly, you turn on us and show investors your angry and pessimistic side with sharp drops in the stock market and ultimately their account balances.  It’s almost as though you have a split personality and we actually think that the same case can be made about our economy; the United States basically has a “split economy”.

We apparently have officially climbed out of a recession but if you ask most people on Main Street if that’s the case you’ll likely find that’s not their view. Even big businesses are still hoarding cash in what feels like nobody trusts tomorrow or what is around the corner.

Is this recession really over?

The word recession itself conjures up negative emotions and is the topic of many heavy conversations. This past recession was impactful enough to have even earned itself its very own name. It’s been called the “Great Recession” and some have even called it the Lesser Depression, the Long Recession, or the “global recession of 2009”. While so fresh on our minds, let’s first ask ourselves why that is and also assess where we are now relative to it.  Secondly, let’s ask when the next recession is coming? Continue reading →

Emerging Markets: Much more than a Contrarian Investment

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Unknown-17Dear Mr. Market:

It wasn’t all that long ago when most investors would build a portfolio out with the majority of it allocated in domestic stocks. This “home bias” seems odd though since if you’re truly an investor that is using your eyes to gauge opportunity, you would buy international stocks. U.S. stocks currently represent less than 49% of the world market. As a consumer of products and services just look around and think about all of your favorites. (car, electronics, appliances, toys, furniture, clothing, etc.) Where in the world are they made? We’ve all been educated on the merits of investing overseas by now…right? Not necessarily! The average American investor still has about 90% of their holdings devoted to U.S. companies.

How about we peel the onion one more layer? Of the relatively small percentage of investors that typically hold International stocks even less is allocated towards Emerging Markets. Most people perceive international stocks to carry more risk than domestic stocks (currency risk, political/regulatory risk, transaction risk, and increased volatility). All of this would theoretically be amplified when dealing with even smaller countries in lesser developed regions. Ironically enough, risk is actually lowered when adding international exposure.

Studies show that adding about 25% of your equity exposure towards International actually delivers a higher portfolio return with lower risk (standard deviation) than just holding U.S. stocks alone. Investing in International or Emerging Market stocks has higher stand-alone risk but adding it to a well-built portfolio enhances your diversification and potentially lowers your overall risk. Taking diversification one final step further can be done with “Frontier Markets” which are even smaller, have greater political and economic instability and higher risk-reward ratios. You’ll find that frontier markets have much more volatility than developed or emerging markets but also tend to have better long-term returns.

Adding International ExposureEmerging Markets are getting hammered this year and if there is one guarantee Continue reading →

8 Summer Reminders for your Investments

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images-12Dear Mr. Market:

Through the end of last week the S&P 500 had posted a return that was up just over 19% for the year!  We’ve seen investors pull money out of fixed income investments at a record pace as they are chasing the impressive returns that the equities markets have posted.  If you’ve been in the market you’ve certainly enjoyed some positive returns, but the question now is where do we go from here?  Below we’ve taken a few moments to put together some talking points that every investor should consider with their own portfolio.  As we are over half way through 2013 we find this a perfect time to revisit some reminders that we’ve touched on throughout this record-breaking year: Continue reading →