Q 1 2015 Quarter Performance Report Cover Letter (Clients)

Dear Investor:

To Raise or Not To Raise, that is the question

As the year commenced we felt very comfortable that short term interest rates (think checking accounts), currently near zero would begin normalizing back towards their longer term average of 5% (maybe not all the way, but at least begin moving from zero). Recent economic data has been weak enough to put doubt Federal Reserve officials, as well as in most market participants timing of an expectation of mid-year, to later in the year.

We have been proponents of higher rates sooner, as we think the usefulness has run its course and may now be doing more harm than good. We still believe rates will rise, but maybe at a slower pace.

US Markets

US Capital markets ended the quarter right near where they started. This is not surprising as earnings are the ultimate driver of higher prices (most of the time) and earnings are actually expected to be down significantly this quarter and about flat for the year 2015.

In this quarters Newsletter, we dig deep into multiple charts for a straight forward view of the current US Capital market valuations. In short they are at least frothy as we compare the current market “feel” to 1998 or 1999.

International Markets

International market, which we have been “leaning” towards for some time took off like a rocket, however, the strength of the US dollar against the rest of the world essentially negated the gains. The sudden strength of the dollar against the rest of the world is and was not unprecedented, but the speed at which is happened did break tons of records. The good news on currency movements is they work themselves out over time.

Commodities

Also a subject of our current Newsletter we discuss black Gold, oil, as well as the shiny material, gold. While we never go “all in” in any investment, our commodity holdings may be a terrific value. Due to their extreme volatility, we are always cautious with our exposure.

IN CLOSING we wish you a happy spring here in the USA and look forward to the changing of season across the country and the world for those across the various ponds!

Sincerely,

 

John A. Kvale CFA, CFP

Enclosure (Q1 2015 Performance Report)

What are your thoughts ??

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s