Westcore Fixed Income & Bond Market Interview

Dear Mr. Market:

th-3We certainly spend a lot of time writing to you about the stock market and all the twists and turns it brings investors. Today, we have the pleasure of mixing things up a bit as we dive into something far larger and more intricate than the stock market; we’re going to talk about the bond market!

On a recent trip out to Denver, CO My Portfolio Guide had the opportunity to meet with Troy Johnson, CFA and Director of Fixed Income Research at Denver Investments. We were able to ask him and his team several questions about the bond market and how they’re navigating it in these interesting times.

My Portfolio Guide: First and foremost, thank you very much for making yourself and your team available. As you know, we own positions in the Westcore Plus Bond Fund as well as the Westcore Municipal Opportunities Fund. We understand your team was awarded a Lipper Award. Without necessarily giving us a pitch on your firm, could you briefly expand on the recent accolades?

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Westcore: The Westcore Fixed Income funds won the Lipper Fund Award for best fixed income small fund group for the three-year period ending November 30, 2016, placing first out of 74 eligible fund families. The award was granted based on Lipper’s measurement of risk- adjusted returns across our multiple fixed income fund offerings. We believe that winning the award affirms the soundness of our approach across multiple strategies as well as the hard work and talent within our fixed income team.

My Portfolio Guide: Excellent, and congratulations on the awards and success. Related to this, could you share your opinion on what makes your firm or approach different than some of the larger bond shops?

Westcore: We utilize an investment approach that emphasizes income and security selection rather than a focus on trading. This generally results in a heavier weighting towards credit oriented issues that offer enhanced income. We recognize rigorous fundamental research is a necessary component of such an emphasis and differentiate ourselves within that process in the following manner: Continue reading

March Madness: Final Four Investing Bracket 2017

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Dear Mr. Market:

Is your bracket already busted? This year’s March Madness tournament opened up with very few upsets until this past weekend. Much like the stock market, we see a similar trend happening right now. What follows is how we see things panning out but first, here’s a little background on how one of the most famous sporting events in the United States correlates to the investing landscape.

Seven years ago we became the first Registered Investment Advisor to use the NCAA basketball tournament as a way to show our readers a forward-looking view on the stock market! We break down and assign each of the four “regions” with an asset class and then pick teams (companies) that we think have the best chance at doing well relative to others.

CLICK THE LINK TO VIEW OUR Final Four Investing Bracket Picks 2017

Large Cap

Last year started off much differently than 2017 and as we wrap up the first quarter …some trends are emerging while others continue. If you eyeball the overall theme of this years bracket it will become clear that we’re picking some stocks that should continue to do well under the Trump administration. Whether you love him or hate him, ever since Donald Trump assumed office, the stock market has risen. The proverbial “Trump bump” is real and while we personally believe he needs to stay away from Twitter, there is no question that the stock market and certain economic sectors are primed to perform. Continue reading

‘Twas the Day of the Election…Stock market rally or sell-off?

 

img_59101Dear Mr. Market:

It’s that time of year again….here comes the holidays. One of the most famous Christmas poems ever begins like this:

‘Twas the night before Christmas, when all thro’ the house

Not a creature was stirring, not even a mouse;

The stockings were hung by the chimney with care,

In hopes that St. Nicholas soon would be there;

What if we changed a few words to reflect what Mr. Market will be thinking about instead of sugarplums and Christmas stockings? What is he thinking on Election Day?

‘Twas the day of the Election, when all through the nation

Every citizen was encouraged to get to a voting station;

Constant stories of Wikileaks and groping

Had every American and the stock market moping;

The media was franticly filling their time with endless chatter

All in hopes that our eyeballs would think a new President would matter;

Whether you’re liberal or conservative we all want a sound future for our girls and boys

As it relates to the stock market it simply prays for an end to this noise;

So goodnight to all and may you wake tomorrow

Knowing full well that some will be joyful and others in total sorrow.

We’ve obviously abbreviated our stock market poem to center on the real question so many investors have: Will this election result drive the markets higher or lower? Continue reading

Cheers to a stock that beats the market and its peers!

Dear Mr. Market:

We find ourselves back in earnings season, which always brings several surprises with well-known stocks…both positive and negative. Analysts and the media will tempt investors to chase returns as quarterly earnings are dissected and trading ‘advice’ is thrown around like a hot dog vendor working the crowd at a baseball game.

Our world is currently swimming in uncertainty which pushes investors to hunt for stability and returns that will enable them to reach their financial goals. Imagine if there was a stock that has posted impressive returns in both up and down markets and all the while you most likely have been supporting it yourself without even realizing it!

Constellation Brands (NYSE: STZ) is an international beverage producer and marketer with operations in the U.S., Canada, Mexico, Australia, New Zealand and Italy. They own iconic brands like: Robert Mondavi, Svedka Vodka, Ballast Point, Corona and Modelo to name just a few. In total they currently have over 100 brands in their portfolio with sales in 100 countries, 40 facilities and approximately 9,000 employees. In 2015 Constellation was one of the top performing stocks in the S&P 500 Consumer Staples Index. Continue reading

Who does Mr. Market vote for…Donald Trump or Hillary Clinton?

Dear Mr. Market:

160323171742-hillary-clinton-donald-trump-investors-780x439How dare we put you on the spot like this?!? What an awful question! How will you (the stock market) react if Trump wins or if Hillary wins? By the way…as an aside….a great client of ours recently asked why everyone refers to Trump by his last name and Hillary by her first name. Why is that?

Depending on which side you’re on, this question may initially seem like simple semantics but it’s not. Are you “presidential” if you roll with a campaign based on your first name? Do you “feel the Bern” or did you “Trust in Ted”? Whether you’re a proponent of Hillary for President or Hillary for prison…it’s still Hillary. Where are we at America?

At My Portfolio Guide, the one thing we typically don’t shy away from is having a clear opinion. There are some great firms out there that simply can’t give you one! You’ll hear what you want to hear. They fear losing your “vote” or ruffling feathers. Yes…we understand that balance too, but as much as our job is about deciphering news versus noise…it does become important to take a stance. Continue reading

Q1 is in the books – how does the rest of 2016 look?

Dear Mr. Market:

2016 #3The first quarter is in the rear view mirror and what a wild ride it was! The stock market started the year with the worst first 10 days in history and we finally experienced a ‘textbook correction’ of over 10%. Perhaps the most shocking part is when it was all said and done, Mr. Market rallied in March to finish out Q1 just above break-even. Volatility like this is typically played out over a 12-month or longer cycle, not in one quarter.

The question that investors are currently asking is … how does the rest of 2016 play out? Turn on your television or open any printed material and you will quickly be overwhelmed with the various talking points. Just look at a few of the headlines that have popped up last week:

  • Housing starts declined -8.8% in March.
  • Auto sales fell at a -14.6% annual rate in Q1.
  • Business investments in equipment fell -8% the first three months of this year.
  • Large declines in military spending by the government in Q1 will add 0.1% percentage points to the real GDP.
  • Industrial production dropped -0.6% in March coming in below consensus of 0.1%.
  • Production of high-tech equipment increased +0.5% in March, up +2.1% versus a year ago.

These are real economic data points that have driven financial headlines over the last few weeks. In our opinion here’s what they mean (or don’t) and how we think the rest of 2016 will play out in plain English: Continue reading

What stock market volatility?!?

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Dear Mr. Market:

How crazy has this market been? As always the stock market has been very volatile, right?

Not even close…. The stock market is essentially in a coma right now and you need to ignore whatever news source or preconceived notions that tell you otherwise. The irony is that some of the “smart money” could not have got the volatility prediction more wrong.

In January of this year Scott Wren, senior global equity strategist at the Wells Fargo Investment Institute, predicted dramatic swings in many areas of the market. He summarized this sentiment by saying, “I don’t see this volatility going away anytime soon.” We’re not out to point fingers but it’s blanket statements and unaccountable predictions like this that paralyze people or simply clutter their investment strategies and overall mindsets.

We’re actually in an extremely low level of volatility. It’s been eight weeks since we’ve seen a move of at least 1% or more in the S&P 500 and that hasn’t happened in 21 years! We also just wrapped up the first half of 2015 and there wasn’t a gain or loss of 2% which marks the first time that has happened since 2005. (Click here to see 2015 volatility relative to recent years)

As the stock market inches higher it all comes without a healthy and much needed correction. As of this writing we haven’t had a correction (-10%) for 1,359 days! You can look to our previous articles on how often corrections and pullbacks should be occurring to put this flat environment into perspective.

As an investor you actually should be doing what we would call a “volatility rain dance”. Bring it on! You want volatility. If your long-term belief is that the economy will improve and inflation seems to remain very much in check, you want a pullback in the market in order to put some money to work. Cash sitting in a bank earning “zero point zilch” needs to work harder and smarter but without a material pullback in the market it makes it somewhat uninviting to deploy cash.

Low volatility doesn’t necessarily equate to the “quiet before the storm”…although it’s certainly easy to think that way. The market is not a weather system but rather it needs a catalyst to move strongly up or down. Unless we slip into a recession you can expect the stock market to meander along for a while. If we do indeed continue to trade in a range bound fashion don’t feel the urge to make changes just for the sake of it. Lastly, turn off your television because every sensational interview with an analyst needs to grab eyeballs and predicting low volatility doesn’t fall into that category…