In our January commentary, we thought 2015 would be a year in which the markets would have difficulty. Our view did not center around China, their problems, and the steps they would take to protect their economy.
The stock market had never gone up seven years in a row and this was one of the reasons we thought 2015 would be a difficult year. We are now witnessing the items which concerned us come into the investment landscape. As we go through this difficult period, we will use history as a guide along with our skill set to either protect or enhance capital. On a historical basis, we have not had as much as a 10% correction since the summer of 2011. Over the long term, 10% downdrafts have certainly been plentiful. We are currently down 4.5% in the S&P 500 stock index with the index down 5.8% last week. While most investors' focus has been on Greece during the past 8 months, China decided their economy was in need of a rescue and they suddenly devalued their currency. The devaluation was followed by a disappointing economic report and the markets sold off both here and throughout the rest of the world in a decisive manner last week. We know we are in a period of traditional market weakness. Late summer into fall has certainly been a time of market weakness, therefore we must keep this in perspective when analyzing current events. What we understand is that in order to get equity returns (8-10%), we have to take equity risks. This means volatility of return. From a normal perspective, this simply means the markets' returns are not linear. This includes all asset classes including bonds. The problem every investor faces (individual or institutional) is that traditional fixed income investment vehicles are paying very little in the way of interest and certainly to us lack attractiveness in this market vis a vie the dividend yields and general valuations which equities have relative to them . However, as I mentioned above, there are 2 elements to your investment needs we have been able to offer to our investors. One is understanding history and with collectively over 150 years of history, we are not lacking in this respect. From a skill perspective, we have in the past and I must mention there is no guarantee we can repeat past performance skills, certainly not been afraid to take proper action to protect portfolios should our work indicate that an adjustment of more than 10% is coming. Along with our normal investment meetings, we will be having special meetings to determine the proper course of action for the current market environment. As always, we are here to answer any questions you may have and rest assured we are on guard to protect your capital. Thank you once again for allowing us to advise you on your portfolios.
About Beirne Wealth Consulting Services, LLC
Beirne Wealth Consulting Services, LLC (“BWC”) is a growing, privately owned, SEC Registered Investment Advisor with about $2 billion in assets under management and over 25 employees in Connecticut, Pennsylvania and Florida. BWC provides independent, fee-based investment management services and customized financial planning solutions. Our institutional business provides consulting expertise to defined benefit and defined contribution plans, endowments, foundations and non-profit organizations. Our private clients include high net-worth individuals and prominent families, many of whom bring complex wealth management challenges and multigenerational planning needs. For more information, please visit www.beirnewealth.com or give us a call today at 888-231-6372.