Year End 2014 Newsletter
Quarter 4, 2014
As you read this, the New Year is already underway. We hope you and your loved ones had an enjoyable holiday season. This is a time most use to both reflect on the previous year, which seemed to fly by, and refocus goals for 2015. It is also a time of year when many people make predictions about what the economy and the markets will do in the year ahead. The best part about these predictions is that very few people let the inaccuracy of last year's predictions have any bearing upon their gusto for this year's prophecies. The issue is not that their predictions were so horribly wrong, but rather that predictions of any kind in the market often have undesirable outcomes.
In our view, sound portfolio management should not be about predicting what will happen from now until the end of the year. Instead, it should be based on finding leadership in the market, and attaching a discipline that offers rules for accepting when a particular trend is no longer working. Our discipline is based in part upon the economic principles of supply and demand, which dictate that we move into assets controlled by demand and away from those controlled by supply. In the end, this philosophy means that while others may spend the month of January predicting, we spend all 12 months of the year listening to the market and adapting to changes.
We tend to hear much discussion this time of year about predicting when the market will peak, or when the price of crude oil will bottom. Some very public market participants have recently called an end to the bull market in 2015, and perhaps the market will prove them right. However, let’s let the market decide.
We enter 2015 in a similar way we entered the previous three years, with US Equities ranked as the number one asset class out of the six major asset classes. As long as that remains the case, we will continue to focus on US Equities for opportunities to accumulate wealth. Similarly, Crude Oil has been trading in a negative trend on its Point & Figure chart since July 2014 when a barrel of Crude was around $99. The chart shows no sign of a bottom being put in yet. When the charts begin to show buy signals (i.e. the market tells us Crude has bottomed) then we can consider taking some action.
We hope your 2015 is off to a good start, and that your New Year resolutions are still alive and well. If you have any questions or concerns about your portfolio, please give us a call; we would love to hear from you. As we all prepare for tax season, remember that we need your written permission, or signature on a standing letter of instruction, to share information and statements or tax documents for your account, with your tax professional. If we do not have a letter on file for you, we can help you set one up. This is also a good time of year to review the beneficiaries on your retirement plans, insurance policies, and annuities, to be sure your current estate plans and goals are reflected.
As always, we thank you for your business and support.
The Galarneau Group
