Alibaba, IPO and Other Noise



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2014 Market Performance Review (as of 09/19/2014)

            S&P 500:       

YTD Price Change:                                           9.74%

Qtr. to date:                                                     1.88%

Current Dividend Yield:                                    1.91%

            Global equities ex-US:

                        Developed Markets (EAFE) YTD:                     -0.76%

                        Emerging Markets (MSCI Index) YTD:                         5.11%

            Bonds (Barclays US Aggregate Index):

                        Total Return YTD:                                             3.83%

            Interest Rate Change (10 Yr. Treasury Yield):        -13.33%
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It is apparent, as we watch and read the current media reports, that the basic fundamentals of economics and investment markets are not of enough interest to simply report them as facts and observations.  The Alibaba IPO, the enormously successful Apple iPhone launch followed by the viral “bend it” reports, the ISIS battle and all other global woes have been enough new fodder to replace the daily elevation of stocks for no apparent reason, yet not enough to drastically send them tumbling.  Perhaps the distraction of these recent notable events has served as a way for investors to look away and then back with a fresh perspective and consideration.



The future of returns cannot be determined by just a few days, weeks or months.  That said, the speed of communication has compressed returns and volatility.  This is not to say they have been reduced, but rather the frequency of their change can come more rapidly and frequent.  The increasing noise of outside influences has not changed our already conservative and careful view of our portfolio construction, but it has affirmed our commitment to it.



We are of the opinion that interest rates will likely remain relatively low, economic growth tepid and Federal Reserve obsession will continue.  As our bond allocation is naturally reducing itself through maturities and amortization schedules, we are carefully determining the best use and commitment of those funds.  It seems prudent to us to allow our cash position to slightly grow to simply allow for more “dry powder”.  We keep our eye on the available cash both as a motive to pursue better returns than anemic rate on money market while balancing the defensive benefits of having something saved for a “rainy day”.  Something will give and more clarity will be offered.  We just are not sure when that will occur.  Until then, careful stewardship and nimble moves will mark our daily decisions.

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