Enclosed you will find your Fourth Quarter 2014 Performance Report. As a reminder this report is a summary of your monthly statements and transactions you receive directly from our outside custodian along with the IRS tax basis for each of your investments. This report summarizes the last 90 days investment activities and consolidates multiple accounts (if applicable) into one total comprehensive view that focuses on asset allocation and portfolio diversification.
In this annual report you will find 5 years of Historical Account Value quarterly bar chart to go along with our YTD Cash deposit and Withdrawals ledger report, and greater return details than in our normal quarterly reports.
While our favorite US equity index, the S&P 500, ascended over the year, virtually all other equity markets struggled, especially overseas. We continue to believe US equity markets are frothy at best and longer term, greater value may be found outside of US borders. We never go “All In” on any capital allocation, but we will “lean” and continue to hold well diversified portfolios.
Bonds/Fixed Income were where the action was in 2014, with long term (10 yr) rates tumbling ever lower in part helping to stabilize returns. We believe longer term rates carry great risk and are investing accordingly. Looking forward to 2015, we feel the Federal Reserve Members have a VERY strong desire to increase short rates. In our Q1 2015 Newsletter, we discuss in great detail the average short term fed funds rate of 5.10%. Barring a major outside event, a raise from the rock bottom .15% current short term level will occur. We are prepared in our fixed allocations for this, and look forward to the added safer portfolio income as rates normalize.
We will be sending a separate tax report mid February that will summarize taxable items and help in your government tax filing requirements should you have a taxable account. IT IS VERY IMPORTANT YOU WATCH FOR THIS REPORT AS IRS RULES HAVE MANDATED CUSTODIAL REPORTING, WHICH WILL NOT BE 100% ACCURATE DURING THE TRANSITION PHASE. OUR REPORT WILL BE THE MOST ACCURATE.
We have included our latest private policy statement for your review. Also, we want to take this opportunity to offer our latest ADV filings; Requests for review will be accepted via phone, mail or email, and mailed immediately upon request.
John A. Kvale CFA, CFP
Enclosures (Fourth Quarter 2014 Performance Report, Private Policy Statement)