Glen Ellyn Wealth Advisors



FORD WEALTH MANAGEMENT LLC

Integrity•Independence•Insight

536 Pennsylvania Avenue

Glen Ellyn, IL 60137

630.545.2800



Erik G. Ford, CRPC®, AIF®, CFP®

Principal

erik.ford@

Trent E. Warren, CRPC®, AIF®

Vice President

trent.warren@

September 26, 2014

“We do not live in the past, but the past in us.” Ulrich Bonnell Phillips, historian.

“During my 44 year investment career, I have known many brilliant investors, analysts and regulators. I have not met any, however, able to consistently predict how stock markets will perform.” Ronald Barron, CEO and CIO of Barron Funds

Dear Follow Investors:

We truly enjoy putting these letters out as an opportunity to sort through the noise for our readers and hopefully convey some optimism during what seems like a constant flow of worry and fret. The worry and fret is not without basis, but the right mental framework can make all the difference. After a brief recap of the markets and commentary on current conditions we have some news about our firm that we look forward to sharing.

Perspective, perspective, perspective. Those are three of our favorite words when we approach investments and recent market performance only reinforces that for us. As of Friday’s close on the 26th, the S&P 500 is down 1.15% for the week. This being the final result of a week where daily ups and downs ranged from 1.31% down to 0.86% up. While unsettling, all this moving around is less significant than the fact that we have so recently witnessed records with the S&P up 195% from its 2009 low.

All the recent moving around has left us up just 1.17% for the quarter and 8.30% year to date as of today’s close. Of that year to date gain, 45% is accounted for in 10 stocks. That’s right; half of the YTD gain in the S&P 500 is in 2% of the index stocks. What this tells investors is the importance of keeping perspective as to time and risk. Measuring one’s performance against an arbitrary index over a shorter period may not be as informative as we think. As long term investors we want to consider where the economic opportunities are, or will be, and be patient so as to realize them. Managing risk properly is not consistent with concentrated positions.

Securities offered through LPL Financial. Member FINRA/SIPC.

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Ford Wealth Management

September 26, 2014

A good part of the recent market volatility is the steady stream of conflicting signals. Economists seem to be generally positive on growth prospects, but the consumer is not convinced. Bloomberg reported this week that their “Consumer Comfort Index” fell to a four month low. This negative signal follows positive moves in home sales, auto sales

and capital goods orders. Add to this a new high in American wealth and a low in debt service and you would think we consumers would be a happier lot.

Corporate earnings continue to perform well. After more than 90% of the S&P 500 reported, earnings were up 13% from the prior year. GDP growth for the second quarter improved sharply to a 4.6% annual rate (on the second revision), with increases noted in inventories and facilities construction (someone is expecting to sell something!). This performance left the negative (and later revised further down) first quarter growth in the rearview mirror.

The Fed continues to sail into uncharted waters, going where no Fed has gone before. After the recent Fed policy meeting, the timing of the first rate increases are still uncertain as the employment picture and negligible inflation remain concerns. Some see the first rate increases coming in late 2015, others not until 2016. The market’s contemplation of the eventual rate increase reminds us of the Beckett classic Waiting for Godot. The Fed also outlined some new tools for extracting some of the mountains of cash it has injected into the economy since 2008. Like we said; uncharted waters.

During this Fed induced period of low interest rates, many capital users have taken the opportunity to lock in very low capital costs for very long periods. Appetite for this debt was helped by the aversion to the equity markets holding over from 2008. We are just starting to see this reverse itself as fund flows in and out of mutual funds indicate funds are moving toward equities.

Corporate bond sales are in record territory adding to corporate cash hordes (remember those higher earnings?). A fair amount of this cash is going into share buybacks and dividends, but it is eventually going to find its way to capital investment. Effectively employing capital is good for shareholders. Locking in a chunk of that capital at low rates for a long period is also good for shareholders. And of course higher earnings are good for shareholders. Returns after debt service, after all, belong to those same shareholders.

Now the astute reader will notice we have not mentioned any of the global crises currently leading the news as risks to hide from, such as global jihad, Ebola, Vladi Putin, etc. Not to mention the danger imposed by our own political system. As longer term students of history, we realize we have weathered worse and these bumps in the road of history also bring opportunities. So to counter the above, we see those crises with favorable capital (cost and amount) and technological advances (like that supercomputer in the palm of your hand) and raise our wager with US energy independence.

Securities offered through LPL Financial. Member FINRA/SIPC.

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Ford Wealth Management

September 26, 2014

Making the right choices with patience and perspective can make a huge difference. To update an example we have cited before, the average equity mutual fund returned 8.7% from 1994 to 2013 while the average investor in those same funds realized a return of only 5.0% (study by Dalbar, Inc. and Lipper). Why? Emotional decision-making instead of exercising patience and perspective.

Now for some changes at our firm. After nearly six years of operating our advisory business under LPL Financial as the Registered Investment Advisor (RIA), we are taking the next step as an independent advisory practice and establishing Ford Wealth Management as its own RIA. We remain very satisfied with our affiliation with LPL Financial. We are continuing our relationship with LPL and will continue to utilize their support and services for our trading, custodian and brokerage business. Very little will change for the client regarding statements, online access and reporting. We believe this change will provide us with more flexibility in our advisory platform and service delivery to our advisory clients. We expect the transition to be smooth and painless for all concerned and we will be happy to discuss this and answer any questions.

In preparation for making this change, both of us obtained our Accredited Investment Fiduciary® (AIF®) designation. The study for this professional designation covers the creation and implementation of prudent investment policies and practices in our own firm as well as assisting others in doing the same. We have always operated under these principals, but think it is important professionally to confirm this via the AIF®.

We also take pride in noting that we have been recognized as a Five Star Wealth Manager for the 5th year in a row by the Five Star ProfessionalSM organization. We will be featured in a special section in the November Chicago magazine as a result. This is a selection based on peer and client feedback and evaluation against 10 objective criteria.

That is all for this quarter. We are excited about the future for both the investment opportunities and the aforementioned changes for our firm. All will require the patience and perspective we continually emphasize. We will leave you with this thought from James Thurber, “Let us not look back in anger or forward in fear, but around in awareness”. Thank you all and enjoy the fall.

Sincerely,

Erik G. Ford Trent E. Warren

Securities offered through LPL Financial. Member FINRA/SIPC.

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Ford Wealth Management

September 26, 2014

The Standard and Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Securities offered through LPL Financial. Member FINRA/SIPC.

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