Newsletter: April 2015

02
Apr

Newsletter: April 2015

The book for the first quarter of 2015 is officially closed and it is time to flip the calendar to the month of April.  The market sharply zigged and zagged over the past three months only to end up near where it began in 2015.  Volatility continued in the month of March - the Dow Jones Industrial Average has finished with triple digit #s in 16 of last 22 trading days with no back-to-back daily gains – a highly unusual pattern.  In the past 5 months the market has registered nine 3.5%+downdrafts, only to be followed by equally rapid rebounds.  Obviously, the markets have no day-to-day memory.

The biggest market news of the quarter was in mid-March when the NASDAQ Composite crossed and finished above the 5000 mark for the first time in 15 years!  This feat was accompanied with non-stop commentary comparing the current NASDAQ market with the highly speculative conditions of the last time the NASDAQ reached 5000.  This 1999-2000 period of NASDAQ speculative-excess has been aptly named the “dot.com or tech bubble.” Basically, the market bears are out trying to provide some basis for their predictions of a severe market selloff.  Every time I read these stories of imminent gloom I think of Warren Buffett’s famous quote – “The only role of stock market forecasters is to make fortune tellers look good.”  

Well, we were managing money in 1999-2000 and the market today is nothing like it was then.  First of all, there was a tremendous level of hype/excitement about the market – especially with the technology sector’s “new paradigm” shift.  Most NASDAQ stocks were hitting new highs – today only 150 of 3000 are busting out.  The 1999-2000 period was a crazy time where individual hot tech stocks wouldsoar or crash on a daily basis.  Investors were piling into these same tech names – companies like Nortel, Lucent, JDS, Uniphase, etc. – all which have long-since gonedefunct.  Finally, NASDAQ stock valuations were 2X to 3X the current levels.  In sum, almost all of today’s comparisons to the 1999-2000 period fall short.  In fact, most are borderline ridiculous.

As usual, uncertainty abounds.  Questions such as: Is our economy slowing?  When will the FED raise interest rates?  What impact will the slower GDP growth have on our employment picture?  Will the strengthening U.S. Dollar significantly hurt firms doing business globally and for those companies converting earnings from weaker currencies to US Dollars?  Does the lack of job growth in “goods producing” industries portend tougher times ahead?  All these questions feed the “wall of worry.”  I think the late great comic Gilda Radner summed it up best with her classic line – “it’s always something.” 

From our perspective, the markets seem to be in “decent” technical and fundamental shape.  Our key market valuation, investor psychology, interest rate, and leading economic indicator variables are all positive.  Federal Reserve Chairwoman Janet Yellen reiterated that her committee will remain patient with raising interest rates – basically telling us the overall economic conditions will dictate the next move.  Low interest rates and the lack of viable investment alternatives to stocks have been the key drivers of the six-year bull-run.  Now the International Central Banks have embraced our low interest rate/stimulus policy in an attempt to bolster their economies and markets.  We still have no problem finding attractive securities.

Bottom-line: OUR ADVICE IS TO MAINTAIN A FULLY INVESTED POSITION.

New addition to our Madison Park Advisors Team:

We are pleased to announce that one of our colleagues at CONCERT, Randall Buck, has joined us here at Madison Park Advisors. 

Randall joined CONCERT a little more than a year ago after being partner and portfolio manager at a large registered investment advisor in Bellevue. He is a Chartered Financial Analyst (CFA) and a member of the Investment Analyst Society of Seattle and Chicago.  Randall has an MBA in Finance & Statistics from the University of Chicago and has 30 years of senior level investment management experience.  He currently serves as head of the equity group on CONCERT Capital Management’s Investment Committee.  Randall provides custom portfolio management with a focus on individual stocks and favorable risk/reward alternative investments, including a unique discounted market linked CD strategy. 

We are pleased to have Randall join our team and contribute to our investment process.

As always, feel free to contact us any time to review your overall situation and particular needs.  We offer both portfolio management and financial planning (plus good old fashioned general advice) as part of our basket of client services.

If you would like to inform us of any updated contact information, please let us know as well.

Thank you,

Doug, Victoria, Ross, Patrick, and Randall