4Q11 FUNdamental Facts
- The yield on the 10-Year U.S. Treasury bond ended the year at 1.89%. This is the first time on record (60+ years) that the yield ended a calendar year below 2%.
- The Dow Jones Industrial Average crossed 12,000 on a day-to-day basis, twenty-five times in 2011. – Wall Street Journal
- There were 69 days, or about 1/3 of trading days during 2011, in which about 450 of the S&P 500 stocks, moved in the same direction. This is more days than the combined total from two other volatile years, 2008 and 2009. – Lasair Capital
- Since the NYSE began using decimals in 1996, there has never been a day that all 500 S&P stocks were up on the same day. Prior to decimalization it never happened because as many as 20% of stocks would be unchanged as the minimum move was 1/16 or 6 cents. – Segall, Bryant & Hamill
- “Risk on” and “Risk off”. On August 11, 2011 there were 498 stocks that advanced for the day (S&P 500 up 4.63%). On November 9, 2011 there were 499 stocks down for the day (S&P 500 down 3.67%). – Segall, Bryant & Hamill
Asset Strategies Portfolio Services, Inc. is an independent institutional investment consultant located in Auburn Hills, Michigan.
For information please call (248) 373-9900.
Fourth Quarter 2011, Capital Markets Commentary
The U.S. economy continued expansion at a modest pace. Reported unemployment trended down, ending the year at 8.5%. Inflation at the consumer level fell with the Consumer Price Index declining by -0.54%. The Federal Reserve maintained its historically low Fed Funds range of 0 – 0.25%.
U.S. equity markets rebounded sharply from the abysmal third quarter lows. Value stocks outperformed growth stocks, across all capitalizations. Small cap stocks outperformed large cap stocks. All sectors of the S&P 500 posted positive returns. Energy (+18.22%), driven by a 25% increase in crude oil prices, was the best performing sector. The next best performer was Industrials (+16.61%). Telecommunications (+7.62%) was the worst performer.
The flight-to-safety into Treasury bonds diminished as investors rotated into equities. Demand for U.S. Treasuries was strong due to concerns over the Eurozone debt crisis. The best performing investment-grade bond sector was long-maturity treasuries (Barclays Long Treasury, +1.86%). U.S. credits (Barclays U.S. Credit, +1.70%) outperformed government-related debt (Barclays U.S. Government, +.84%) and mortgage-backed securities (Barclays U.S. MBS, +.88%). U.S. high yield bonds (Barclays U.S. High Yield, +6.46%) outperformed all bond sectors by a wide margin.
Foreign equity investors received some relief with positive returns for both developed and emerging stocks. Emerging markets (MSCI Emerging Markets, net, +4.42%) outperformed developed markets (MSCI EAFE, net, +3.33%). European stocks (MSCI Europe, net, +5.39%) rallied as European lenders attempted to address the growing default crisis. Pacific region stocks (MSCI Pacific, net, -.30%) fell as Japan’s economy continued its slow recovery from the March earthquake and tsunami.
This was not a good year for hedge funds and other types of alternative investments, in general (see FUNdamental facts for some reasons). Commercial real estate however, was one of the best performing asset class, owing to the reduced risk-perception by investors. This perception brought many investors back to the asset class and drove prices up significantly. Most appreciation was due to ‘perceived values or accounting valuations’ rather than transaction-based values.
Asset Strategies Portfolio Services, Inc. is an independent institutional investment consultant located in Auburn Hills, Michigan. For additional information please call (248) 373-9900.
December 2011: Capital Markets & U.S. Economic Update
Capital Mkts & US Econ Mthly Update Dec11
Asset Strategies Portfolio Services, Inc. is an independent institutional investment consultant located in Auburn Hills, Michigan. For additional information please call (248) 373-9900.
November 2011: Capital Markets & U.S. Economic Update
November 2011: Capital Markets & U.S. Economic Update
Asset Strategies Portfolio Services, Inc. is an independent institutional investment consultant located in Auburn Hills, Michigan. For additional information please call (248) 373-9900.
As year end draws near . . .
During this 2011 holiday season, we will be reminded of ‘wise men’ and in turn, reflect often on those wise individuals who influenced us the most us. Let’s be reminded of these wise words:
You cannot help the poor
by destroying the rich.
You cannot strengthen the weak
by weakening the strong.
You cannot bring about prosperity
by discouraging thrift.
You cannot lift the wage earner up
by pulling the wage payer down.
You cannot further the brotherhood of man
by inciting class hatred.
You cannot build character and courage
by taking away men’s initiative and independence.
You cannot help men permanently
by doing for them what they could, and should, do for themselves.
Abraham Lincoln
Let us hope our great nation will soon, yield a leader(s), with the wisdom, courage and strength of this great president.
Asset Strategies Portfolio Services, Inc., is an institutional, investment consultant located in Auburn Hills, Michigan. For information please call 248-373-9900.
October 2011: Capital Markets & U.S. Economic Update
October 2011: Capital Markets & U.S. Economic Update
Asset Strategies Portfolio Services, Inc. is an independent institutional investment consultant located in Auburn Hills, Michigan. For additional information please call (248) 373-9900.
FUNdamental Facts; 3Q11
- The third quarter stock market loss was the worst in 37 years. According to Barron’s there have been fifteen quarters since 1964 in which the S&P lost 10%plus. Twelve of the following quarters saw rallies, with average gains of 10%.
- As of August, Apple was the largest company in the world by market capitalization with enough cash on its balance sheet to buy Bank of America/Merrill Lynch and still have $7 billion left over.
- The U.S. Government budget deficit for the 2011 fiscal year (ended 9/30) was $1.3 trillion, or 8.5% of of our countries annual output (GDP).
- This is the third-largest budget deficit in U.S. history. It was exceeded only by the budget deficits of 2009 and 2010.
- Also from Barron’s: For every one dollar taxpayers sent to Washington, the U.S. government borrowed another 56 cents.
Asset Strategies Portfolio Services, Inc. is a registered investment advisor with the SEC. Serving institutional investors since 1992.
2635 Lapeer Road, Auburn Hills, Michigan 48326
248-373-9900
Third Quarter 2011, Capital Market Commentary
Sluggish industrial production and consumer spending caused r GDP to fall to a 1.3% annual rate as unemployment remained above 9%. The Consumer Price Index rose 0.5% with higher prices in core consumer good slightly offset by a 0.10% decline in food and energy prices.
U.S. equity markets fell in all three months of the quarter. Large cap growth stocks slightly outperformed large cap value stocks. Value names outperformed growth in the mid- and small-cap ranges. For the quarter, large cap stocks outperformed small cap stocks by a wide margin.
Utilities (1.55%) was the only sector with a positive return. The next best performing sector was Consumer Staples (-4.26%). Economically sensitive sectors; Materials (-24.06%), Financials (-22.86%) and Industrials (-21.02%), were the weakest.
US and Euro zone countries’ lack of austerity plans and inability to control government spending sent investors to the safety of U.S. Treasuries: This, in the face of a downgrade of U.S. Treasury debt by Standard & Poors. Long-maturity treasuries (Barclays Long Treasury, +24.66%) outperformed short-term maturities (Barclays 1-3 Year Index, 0.50%). Credit spreads widened by 78 bps resulting in corporate issues (Barclays U.S. Credit Index, +3.03%) underperforming government issues (Barclays U.S. Government Index, +5.84%). U.S. high yield bonds (Barclays High Yield Index, -6.06%) were the worst performers within the U.S. bond market.
A global flight to safety depressed returns for foreign equity investors as well. The U.S. dollar strengthened against the Euro, eroding returns for dollar-based investors (MSCI Europe, net, -22.61%). The Yen strengthened during the quarter, improving Pacific region stocks (MSCI Pacific, net, -11.70%) performance in dollar terms. Emerging markets stocks (MSCI Emerging Markets, net, -22.56%) sold off due to slowing China economic growth.
Asset Strategies Portfolio Services, Inc. is an SEC registered investment advisory firm providing consulting to institutional investors. Located in Auburn Hills, Michigan, we can be reached at 248-373-9900.
September 2011: Capital Markets & U.S. Economic Update
September 2011: Capital Markets & U.S. Economic Update
Asset Strategies Portfolio Services, Inc. is an independent institutional investment consultant located in Auburn Hills, Michigan. For additional information please call (248) 373-9900.
GEORGE VITTA TO SPEAK AT AGRIP/NLC-RISC CONFERENCE
Association of Governmental Risk and Insurance Pools (AGRIP) and the National League of Cities Risk Information Sharing Consortium (NLC-RISC) will present an Investment Management & Oversight conference on October 5 & 6, 2011. Members of AGRIP and NLC-RISC will attend education sessions geared toward building a sound investment program for their pooled risk funds.
George Vitta will attend and speak at the conference. In addition to his participation in panel and round-table discussions, George will present a session on Performance Measurement. When managing a risk pool, an important component to success is the ability to assess the portfolio’s performance. George will discuss the concept of benchmarking and how to determine an appropriate benchmark.
The current economic environment has been unpredictable and volatile; making this conference timely and fitting. Other sessions will provide an update on the latest developments in the markets, including current interest rates, yield spreads, and major market trends as they pertain to the public funds investor. Also included will be a review of key economic data and what it indicates about where we are in the economic recovery process.
George Vitta is President of Asset Strategies Portfolio Services, Inc., an institutional, investment consulting firm located in Auburn Hills, Michigan. For more information about our firm, our consultants, or the services we offer, please call 248-373-9900.
