Barrington Financail Advisors Sept Commentary BARRINGTON FINANCIAL ADVISORS, INC.
a Registered Investment Advisor
(Celebrating 42 years of Professional Service)
August 2014 Rebound
EQUITIES, MLPs and REITS:
We just experienced the best August in 14 years as the S&P 500 gained 3.8%. One indicator of why this happened is the S&P 500 Volatility index (VIX), which fell from 17.03% at the beginning of August 2014 to 12.09% at the end of August 2014. As you may know, this Index is a measure of fear in the market where many consider below a 20.0% index generally corresponds to less stressful, even complacent, times in the markets. Our Equity, MLP and REIT portfolios returned from a 4.2% to a high of 5.2% performance for August 2014 with the average of 4.65% thus beating the S&P 500 while having a lower risk rating.
During the month I put more of our money to work using the larger cash position to purchase MU, HCLP,HES,WLK,DOW,CPE,AMZN,UA,LNKD,FISI,REX,BITA,PLNR,CMI,Z,SWIR,EPD,TWTR and HMES. I also sold SINA. This was a lot of activity but many of the purchases were to buy back stocks that I sold at the end of July before the large drop in the market on July 31, 2014. These buybacks are now performing for us. A few examples are BITA up 9.48%, CPE up 5.99%, FB up 21.27%, FISI up 4.30%, HCLP up 12.82%, PLNR up 14.30% and WLK up 9.39%. Some have not yet began to perform such as SWIR down 1.96%, UA down 1.71% and EMES down 0.50% since these were purchased towards the end of August 2014 and have not had time to move.
In summary of the Equity, MPL and REIT holdings, I am well-pleased with our August 2014 performance and hope September is a good month as well.
FIXED INCOME:
We experience little change in the Fixed Income portion of our portfolios while keeping the percent of the total portfolio very low in relation to the overall Total.
ECONOMY
This is not the way things are supposed to be five years into an economic expansion, yet it’s the conclusion of yet another report probing chronic economic gloom. The new survey, by the Heldrich Center at Rutgers University, found 71% of Americans feel the recent recession changed the nation permanently and only 16% feel the next generation will end up better off. In 1999, 56% felt life would be better for future Americans.
It’s axiomatic that something is wrong with the U.S. economy — but gloom itself may be part of the problem. Americans are so dour by some measures, they seem to be looking past opportunities as if programmed to see only pitfalls. Prosperity doesn’t come from the places many people seem to be seeking it, and if the middle class is, in fact, in decline, a large part of the reason may be a lost instinct for how to get ahead.
To be sure, there are well-known problems with the economy that aren't easily solved. Wages are stagnant for many workers, household wealth remains depressed and many families are falling behind. Adding to the gloom, policymakers in Washington seem incapable of finding solutions, and they even make some problems worse.
It’s also true, however, that the economy is growing at a decent pace, companies are hiring, and consumer spending, on the whole, is pretty good. In reality, we don’t have one U.S. economy, we have two: one that looks like the old one, in which people work hard and get ahead, and another filled with those glum, underemployed laborers living on the edge. There has always been an American underclass, but it seems to be growing, fed by a continual drip of downwardly-mobile people departing the middle class.
The recession officially ended more than five years ago and ought to be a distant memory. These should be boom times with widespread optimism and robust spending. Yet, consumers are gloomy and the economy is limping along at subpar levels of growth.
It’s becoming clear why: While jobs have returned, incomes have not. The latest evidence is a study by the U.S. Conference of Mayors that highlights stark disparities between the jobs lost during the recession and jobs gained since. The types of jobs lost paid nearly $62,000 per year, on average. The jobs gained during the past six years pay only about $47,000. That 23% shortfall adds up to about $93 billion in lost wages per year — money not being spent because it vanished from the economy.
That startling wage gap reflects the demise of well-paying jobs that don’t require a college degree, which may be the single-biggest challenge facing families trying to uphold a middle-class lifestyle. The two sectors that lost the most jobs during the recession are manufacturing, with average pay of about $63,000, and construction, at about $58,000. Employment in those two fields is still about 3 million workers short of where it was at the start of 2008.
It is my prayer that America wakes up to the reality of how poor the country’s leaders are doing in managing our economy and we make a drastic change in the elections that are coming up soon. We need elected people who understand how to solve the economic problems facing our nation. A recent poll of American voters revealed that many people think that Global Warming is a greater threat to America than the threat from Terrorists. We need to support Israel and build our defenses before we have another attack on American soil. May America return to God and receive His continued blessings. AMEN.
Have a Blessed Day,
William C. Heath, CFP®
Chairman & CEO
(713) 785-7100
9/18/14...a big day for the markets and your funds? I'm reading the 18th to decide the price and the 19th for go live.
http://www.cnbc.com/id/101997655However, that seems to go against the Chinese thing with numbers. The 18th makes more sense since the number 8 is a very good number for the Chinese.
Virtus And Newfound Hit The Market With Alternative Income Funds Whatever you do, don't buy the Class C shares. Those poor folks obviously don't know what they are getting into. See below:
Hmmm......I think I'll buy a fixed income fund with an annual expense ratio of 2.87%.
Sounds like a great idea.
Oops, forgot, they temporarily lowered the expense for the Class C shares from 2.87% to 2.16%. Much better deal.
These people should be arrested. For crimes committed against Class C shareholders. And they are not very nice to their Class A shareholders either.
Virtus And Newfound Hit The Market With Alternative Income Funds
Virtus And Newfound Hit The Market With Alternative Income Funds re. VASBX
FEL= a
mere 3.7
5%
Contingent deferred sales charge= 0.
50%,
18 frigin' months?(
uh, I don't think so)
e.r.= 1.41% ["gross" expenses of 2.12%...
indeed]
It's The Aston Way, writ large.
No thank you very much.... I'll pass. @Old_Skeet What has happened to your standards? Deplorable! :)
The Closing Bell: U.S. Stocks End Lower HCP having tough time lately.
Down 5-6 percent this week.
But I bought it back in March when it was under $36.
Closed Friday @$40.55. Still couple % above 200d average.
Ping Junkster: VWALX and VWIUX Robert, you are right in that junk munis are a different animal than junk corporates. The average junk muni fund has over 50% of their assets in investment grade while the average junk corporate has only around 10%. Morningstar I believe counts the "not rated" sector as junk so EIHYX and the other junk munis who all have unrated bonds will have a higher % there than just adding up BB to below B.
Ping Junkster: VWALX and VWIUX Thanks for your helpful comments, Junkster. I'd just assumed VWALX was in the High Yield category because of its name and e.g. YTD return, and although I know it's not at the top of the High Yield category, I thought that was because it's more conservative. .
Not an asset class I know anything about, but it seems that even the Hi Yield Muni Funds/"Junk" Muni Funds have the bulk of their assets in investment grade bonds.
Take for example a junk muni fund that has been mentioned on MFO many times, Eaton Vance High-Yield Municipal Inc I EIHYX, which is in Morningstar's Hi Yield Muni category.
Only 16% of the bonds are rated below investment grade. Interesting.
