Tag Archives: Quarterly Cover Letter

Fourth Quarter 2017 Cover Letter Review – Private Policy

Do you recall the last time you went to a movie, maybe even begrudgingly, because expectations were low, but the movie turned out good, making for a wonderful surprise? Starting out the new year of 2017, most, including us had minimal expectations for the year 2017; A bad movie.

What If We Already had a Bear Market?

In our “What if we already had a Bear Market?” article in the coming Q1 2018 Newsletter the early 2016 drops across most asset classes except the more popular ones were 20% to over 30%. While markets don’t usually repeat, they often rhyme, again setting low expectations for the 2017 movie.

Sleepy VIX

Not only did we not start out bad, (Good Movie) but we may have just experienced a generational “Fear-Less” year. In our record breaking low “VIX Fear” article again in our coming Newsletter, a reading less than 10 on the VIX (Volatility/Fear Index) had occurred just 9 times over the last 26 years. Our surprisingly good movie year recorded 53 end of day VIX closings below 10, five times as many as ever recorded. Good movie.

Interest Rates

Post great recession of 2007-2009 most expected the FOMC (Federal Open Market Committee) controlled rates ascent to begin moving back up as they always did through history. Thanks to a stubborn, data watching, Janet Yellen (FOMC Chair) rates have been correctly moved up gradually. The current Federal Funds rate was increased 3 times in 2017, once in December to the targeted level of 1.25-1.5%. Officials are on record for another 3 moves or .75% in the next year, gradually pushing rates nearer their more normal historical levels.

Janet Yellen will be leaving her post next year and we look for her replacement to continue on the transparent, methodical, data watching, path of rate increases that keep market participants personal VIX/Fears in check.

Next Year’s Movie?

Looking into next year’s movie, we think it is healthy to have a conservative view again. We are not predicting or welcoming a bad movie, but just staying vigilant! Good movie or bad, we will be prepared.

In Closing

Your Fourth Quarter 2017 summary is enclosed on the front page of this report we have included our most recent investment allocation from your Investment Policy Statement. This is also the time we attach our Private Policy Statement for the year along with our 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


Our Promise to You

As a client of J.K. Financial, Inc., you share both personal and financial information with us.  Your privacy is important to us, and we are dedicated to safeguarding your personal and financial information.

Information Provided by Clients 

In the normal course of doing business, we typically obtain the following non-public personal information about our clients:

  • Personal information regarding our clients’ identity such as name, address and social security number;
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  • Client financial information such as net-worth, assets, income, bank account information and account balances.

How We Manage and Protect Your Personal Information

We do not sell information about current or former clients to third parties, nor is it our practice to disclose such information to third parties unless requested to do so by a client or client representative or, if necessary, in order to process a transaction, service an account or as permitted by law.

In order to protect your personal information, we maintain physical, electronic and procedural safeguards to protect your personal information.  Our Privacy Policy restricts the use of client information and requires that it be held in strict confidence.

Client Notifications

We are required by law to annually provide a notice describing our privacy policy.  In addition, we will inform you promptly if there are changes to our policy.

Please do not hesitate to contact us with questions about this notice.

Third Quarter 2017 Cover Letter Review

There are times when capital markets are sensitive to a whiff of any disturbances, with the least seeming un-important event causing dramatic sentiment and then of course capital movement.  

We are not in those times currently! 

Over the latest quarter, we have seen Mother Nature flex her muscles in some of the most terrible disastrous Hurricanes in a century. Participants and markets mostly relieved after the conclusion of multiple landings, took the damage in stride and continued to move forward.  

On a regular occurrence, over the last 90 days, international countries have fired powerful test fired weapons, garnering much headline banter from neighboring countries, United Nation members and multiple leaders of countries. Participants and markets yawned and moved forward again. 

An old foe of times past, debt ceiling concerns and debate, even arose during the latest quarter. Upon an extension capital markets had a relief moment but nothing near the size of just a few years ago, when even a whiff of debt ceiling talk sent participants running for cover and capital markets into a tailspin.  

Our friends at the FOMC (Federal Open Market Committee) have set a plan to lower the balance sheet, over an extended period of time, slowly and diligently. Market participants and capital markets once again looked past the news and forward with very little disruption. 

Today, capital market are acting like the Eveready Bunny; they just keep going, which is fine by us, but there will be a day when that changes as this has been one of the longest runs in market history with not even a 5% correction.  

Happy Participants and Capital Markets have created a problem finding valuations that look inexpensive to reasonable as their ascent has pulled most domestic assets to high levels. Good news comes from our friend across the pond. It appears our international friends are getting their acts together in a big way and with a less rising Unites States dollar, the stars may be finally aligned for tailwinds from abroad. 

Our core article in the coming Newsletter discusses from a high level several valuation metrics, world capitalizations and even the US currency, its long-term average and recent movement. 

Historically we are entering a favorable time for market participants and capital markets as they frequently embrace in a positive way, the Holiday seasons. We will see if they do the same this year, and if not, we will be ready. 

Have a good fall season and we hope to see you at our Holiday Party at the Dallas Arboretum the Saturday before Thanksgiving weekend.

John A. Kvale CFA, CFP