Market Update through 11/15/2013

as of November 15, 2013        
                      Total Return
Index
12 months
YTD
QTD
MTD
Stocks        
Russell 3000 37.60% 29.40% 6.68% 2.33%
S&P 500 35.78% 28.46% 7.23% 2.52%
DJ Industrial Average 30.53% 24.51% 5.85% 2.88%
Nasdaq Composite 42.68% 33.53% 5.88% 1.82%
Russell 2000 47.13% 32.89% 4.08% 1.53%
EAFE Index 31.13% 20.74% 3.37% -0.01%
         
Bonds        
Barclays US Aggregate -1.61% -1.47% n/a -0.38%
Barclays Intermediate US Gov/Credit -0.40% -0.37% n/a -0.14%
Barclays Municipal  -3.26% -2.48% n/a -0.39%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $93.84    $96.38
Natural Gas    $3.66    $3.58
Gold    $1,287.40    $1,323.70
Euro    $1.34    $1.35

Mark A. Lewis

Director of Operations

Market Update through 10/31/2013

as of October 31, 2013        
                     Total Return
Index 12 months YTD QTD Oct
Stocks        
Russell 3000 28.99% 26.45% 4.25% 4.25%
S&P 500 27.17% 25.30% 4.60% 4.60%
DJ Industrial Average 21.82% 21.02% 2.88% 2.88%
Nasdaq Composite 33.79% 31.15% 3.99% 3.99%
Russell 2000 36.31% 30.89% 2.51% 2.51%
EAFE Index 27.68% 20.73% 3.38% 3.38%
         
Bonds        
Barclays US Aggregate -1.08% -1.10% n/a 0.81%
Barclays Intermediate US Gov/Credit -0.03% -0.23% n/a 0.62%
Barclays Municipal  -1.72% -2.10% n/a 0.79%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $96.38    $101.21
Natural Gas    $3.58    $3.79
Gold    $1,323.70    $1,273.00
Euro    $1.35    $1.34

Mark A. Lewis

Director of Operations

Medicare Open Enrollment is Upon Us

Medicare Open Enrollment began October 15 and will run through December 7. For those of you on Medicare, this is your opportunity to compare your existing plan to other options and to make any changes you may want.

Just as we recommend that you perform an annual review of your homeowner’s and auto policies, it is important for you to take the time to review your Medicare policies as well because the plan that’s best for you this year might not be the best next year. In September, you should have received an “Annual Notice of Change” letter from your provider. You should read it carefully for details of how your plan will change next year.

The Medicare Plan finder is a great tool to help you compare costs and coverage of the many plans available. Pay close attention to the prescription drug section. This allows you to enter your prescription medications and compare the policies that will cover them. https://www.medicare.gov/find-a-plan/questions/home.aspx

If all of this becomes too confusing or time consuming, you may want to consult with a counselor at the NC SHIIP (Senior Health Insurance Information Program). This free service is designed to help you better understand your options and benefits. To find a SHIIP office near you go to: http://www.ncdoi.com/SHIIP/SHIIP_County_Sites.aspx

Market Update through 10/15/2013

as of October 15, 2013        
  Total Return
Index 12 months YTD QTD MTD
Stocks        
Russell 3000 22.79% 22.45% 0.95% 0.95%
S&P 500 20.53% 21.07% 1.07% 1.07%
DJ Industrial Average 15.98% 18.02% 0.33% 0.33%
Nasdaq Composite 25.83% 26.92% 0.63% 0.63%
Russell 2000 32.21% 28.41% 0.57% 0.57%
EAFE Index 25.32% 17.93% 1.00% 1.00%
         
Bonds        
Barclays US Aggregate -2.00% -2.05% n/a -0.16%
Barclays Intermediate US Gov/Credit -0.72% -0.90% n/a -0.06%
Barclays Municipal  -2.85% -3.30% n/a -0.44%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $101.21    $102.33
Natural Gas    $3.79    $3.56
Gold    $1,273.00    $1,326.50
Euro    $1.34    $1.35

Mark A. Lewis

Director of Operations

Politics and Your Portfolio

A bitterly divided Congress, a government shutdown, an impending debt ceiling debate – this must be a sign that our political landscape is as bad as it has ever been. But, from what I can tell Americans are instead coming together and becoming increasingly united…in their disgust with our government! The Onion, self-acclaimed as “America’s Finest News Source” (they are a satirical news outlet) had a spectacular headline recently titled “Psychiatrists Deeply Concerned for 5% of Americans Who Approve of Congress”.  At least there is still a laugh to be had out of all of the political dysfunction out there!

Regardless of your political opinion and all jokes aside there are implications of the political debates in regards to your investments. Looking back to August 2011 when Congress narrowly avoided defaulting on our debt we can see the results of the poor work efforts by our elected officials. A last minute debt ceiling increase was passed back then, but Standard & Poors still downgraded U.S. Treasury debt from their highest credit quality of AAA based on the political dysfunction. Markets were shaken with uncertainty, and this resulted in a quick decline in the stock market – but oddly enough a rush of investors bought Treasury bonds for their safety. See the irony there?

Several days ago we saw a strong rally when headlines crossed that there were talks that both sides may agree to potentially a six week increase in the debt ceiling. I take this as showing how low the market expectations are for political outcomes – a strong rally on talks of maybe meeting about a maybe making a decision…not now, but within 6 weeks.  Had you have tried to time the market reading the headlines earlier last week, you would have missed this incredible rally that seemingly came as a result of very little.

What we do know is that in the end, as messy as it may be, a solution will come, the government will reopen, and the debt ceiling will be increased. Though the near-term uncertainty can hurt markets, just look at the longer-term results from August 2011 when the S&P 500 traded below 1,200 compared to over 1,700 now. Over time a recovering economy and growing company profits drive the stock market. The politics is just an unfortunate and embarrassing side-show along the way.

Travis Boyer, CFA
Financial Advisor

Market Update through 9/30/2013

as of September 30, 2013        
                                       Total Return
Index 12 months YTD QTD Sept
Stocks        
Russell 3000 21.60% 21.30% 6.35% 3.72%
S&P 500 19.33% 19.79% 5.24% 3.14%
DJ Industrial Average 15.59% 17.63% 2.12% 2.27%
Nasdaq Composite 23.00% 26.12% 11.20% 5.14%
Russell 2000 30.07% 27.68% 10.21% 6.38%
EAFE Index 20.35% 13.36% 10.94% 7.12%
         
Bonds        
Barclays US Aggregate -1.68% -1.89% n/a 0.95%
Barclays Intermediate US Gov/Credit -0.50% -0.84% n/a 0.81%
Barclays Municipal  -2.21% -2.87% n/a 2.15%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $102.33    $108.21
Natural Gas    $3.56    $3.68
Gold    $1,326.50    $1,308.40
Euro    $1.35    $1.32

Mark A. Lewis

Director of Operations

Senior Moments

You’ve arrived somewhere only to realize you’ve forgotten what you went there to do. Or perhaps you forgot the punch line at the end of a joke. When I was a young new mother, I got in my car to go to work when I suddenly remembered the baby was in her car seat in the living room! These are a few situations many of us will find we know too well. Incidents such as these remind me of the famous line from Mark Twain: “Of all the things I’ve lost, I miss my mind the most.”

Memory lapses such as these are caused by a variety of factors – thankfully few of them serious. If you can relate to the first scenario, you have experienced what researchers have dubbed “the doorway effect.” A paper published by Gabriel Radvansky at the University of Notre Dame explains that our brains use a file system not too dissimilar from our computers. However, rather than file folders for documents, music, pictures, etc, your brain files by physical location. This means that the information readily accessible to you in one room (or file) suddenly becomes a lot harder to access when you go to another one. The researchers suggest that saying things out loud as you pass through the doorway can help you remember your mission. You can read more about this study here: http://al.nd.edu/news/27483-walking-through-doorways-causes-forgetting-new-research-shows/

As the young harried mother, I blamed post-partum hormones and work overload on my memory lapse. But the forgotten punch line? I blame that on age. Knowing we are living longer and longer, I refuse to let my brain atrophy!

Doctors have long said that eating right, getting enough sleep and regular exercise are good for the body, including the brain. In addition, certain “brain foods” are thought to help protect brain function. There are also brain “exercises” one can do – crossword puzzles, Sudoku or Ken-Ken can help, or you can register with Lumosity, a free brain-training program developed by a group of neuroscientists. Even playing video games can provide benefit.

In addition to exercise, multiple studies have shown that community involvement, prayer and meditation help maintain healthy brain function. The reason: all three help control stress and anxiety.

And finally, never stop learning. Take up a new language, learn to play an instrument, buy a dictionary and learn a new word every day (and write a sentence using it!). Learn to play chess or poker. Do you want to know more about Higgs boson and the Large Hadrons Collider? Then sign up for the MOOC (Massive Open Online Course) being offered by the University of Edinburgh. In fact, there is a vast and growing world of free online courses covering wide range of topics offered by leading universities. You can get more information here: http://www.openculture.com/free_certificate_courses

I personally love crossword puzzles, and every time my husband and I travel to a new country, we work hard on learning key phrases and words. No matter which method you choose to exercise your brain, you will be doing yourself a favor.

Tracy Allen, CFP®
Financial Advisor

Market Update through 9/15/2013

as of September 13, 2013        
                                       Total Return
Index 12 months YTD QTD MTD
Stocks        
Russell 3000 19.80% 21.20% 6.26% 3.63%
S&P 500 18.20% 20.18% 5.58% 3.47%
DJ Industrial Average 16.60% 19.54% 3.77% 3.93%
Nasdaq Composite 19.87% 24.42% 9.70% 3.72%
Russell 2000 24.90% 25.22% 8.08% 4.33%
EAFE Index 20.85% 14.52% 9.56% 5.36%
         
Bonds        
Barclays US Aggregate -2.62% -3.34% n/a -0.54%
Barclays Intermediate US Gov/Credit -1.26% -1.95% n/a -0.32%
Barclays Municipal  -3.07% -4.49% n/a 0.45%
         
    Current   Prior
Commodity/Currency   Level   Level
         
Crude Oil    $108.21    $107.65
Natural Gas    $3.68    $3.58
Gold    $1,308.40    $1,395.80
Euro    $1.32    $1.32

Mark A. Lewis

Director of Operations

Stating the Obvious

Once again, an article on Bloomberg.com has inspired today’s topic – women matter.

I know, it seems obvious, but this has been a recurring theme in the press lately. I have read several articles in financial industry magazines about how advisors can attract more female clients. One article actually said there was more to it than just putting out fresh flowers in the office. And this is news?

It’s a well-intentioned article, but it just seems a little ridiculous. I’m not denying that there are differences between the genders, but I tend to believe that everyone appreciates a financial advisor who listens, asks valid questions, treats them respectfully, and makes them feel valued, regardless of gender. I would certainly hope that advisors treat all of their clients this way – I know we endeavor to do so in our practice.

The article on Bloomberg.com that caught my eye was also female-centric, but it was about a Dutch private equity fund founded by three women. The fund invests in companies with a balance of male and female top executives, citing research by McKinsey & Co. that found companies with the highest percentage of women directors made a 41% greater return on equity than companies with all-male boards. What I found especially interesting was that the fund is not doing this to “serve the cause of women,” as one of the founders said, but because they think companies with gender-balanced management perform better on average, a belief that is backed by more than one study.

I have to admit I am pleased to see greater efforts being made to include women, whether it’s as potential clients or as vital members of a company’s senior management. Women have something to offer! Who knew?

Sarah DerGarabedian, CFA
Director of Research

More Questions to Ask

Harli’s prior blog post covered some good steps on what you should be considering when hiring a Financial Advisor. An important part of that is having an understanding of the investments that your Advisor recommends when implementing your portfolio. Once you’ve agreed to an asset allocation – how do you go about buying into that allocation?

One important item to understand here is whether or not the Advisor receives compensation for recommending certain investments. At Parsec, we are a fee-only firm which means our sole revenue source is our percentage fee based on the assets we manage for a client. This means we do not receive any compensation through the investments we purchase or sell on a client’s behalf. Other Advisory Firms or Brokers can receive up-front commissions or ongoing annual revenues that vary based on the type of investment they purchase for clients, and we feel this adds an unnecessary bias during the investment selection process.

Along with the importance of knowing if your Advisor is paid based on what they recommend is also knowing how much that investment costs you overall. If you purchase a mutual fund or exchange traded fund within your portfolio you should get a good understanding of their expense ratios to know what that fund costs you on an ongoing basis, and how do their costs impact their performance net of all fees and costs.

At Parsec, we try to limit the overall cost of client investments by tracking the mutual fund costs charged by the investments we recommend. For clients with a larger account size we may buy individual stocks for a large portion of their equity allocation and thus we remove the layer of fund manager costs. Clients will pay a transaction fee to buy or sell the individual stock, but there is no mutual fund expense on those assets – just our annual fee of assets under management.

If when interviewing an advisor you feel like you don’t have a full understanding of the costs of the advice you will receive, or the costs of the investments that will be purchased for you, then ask more questions! If you feel like you aren’t getting an honest answer then that should be a good sign to keep looking around.

Travis Boyer, CFA
Financial Advisor