2017 October Newsletter

One of our favorite Warren Buffet quotes is that “investing is simple, but not easy”. What does this mean?  Read this quarter’s newsletter to find out. 

Topics of interested include:   

  • 3Q market activity update
  • Weathering the storm:  reinsurance investments
  •  Sterneck Capital Management’s recent community stewardship
  • Planning for the unexpected

Click here for Oct. 2017 Newsletter

2017 July Newsletter

The S&P 500 has been trading at the “high-end of fair value” for some time.  What does this mean?  Read this quarter’s newsletter to find out. 

Topics of interested include:   

  • 2Q Market Activity Update
  • Historical Perspective of the S&P 500
  •  Sterneck Capital Management’s Community Outreach

Click here for July 2017 Newsletter

2017 April Newsletter

Has the transition of power in Washington DC impacted the market?  Read this quarter’s newsletter for an overview of: 

  • 1Q market activity update
  • Sterneck Capital’s perspective of “index orphans”
  • Scaling ideas to find income generating assets with low market correlation

Click Here for April 2017 Newsletter

2017 January Newsletter

2016 is over.  What’s to come? 

Is it time to partner with a trusted investment advisor?  Review our January 2017 newsletter for a glimpse into our thinking and investment approach.  You’ll see why our expertise is trusted by so many.

This quarter’s newsletter covers the following:

  • Our take on 2016
  • Thoughts on 2017
  • Sterneck Value Opportunity’s fund strategies expanded to individual client accounts
  • Women’s Educational Series Road Trip to Saint Louis

Also – check out Sterneck Capital’s footprint map!  If we aren’t servicing clients in your state yet, contact us.  We might be able to change that.

Click Here for January 2017 Newsletter

2016 October Newsletter

October 2016 Newsletter is available!

Check it out to learn about the following:

  • Sterneck Capital’s 3rd Quarter review
  • Our thoughts on interest rates
  • Semi-Liquid (Interval) Fund options
  • The election & the market
  • Educational Opportunity for Empowered Women

 

click-here-for-october-2016-newsletter

 

2016 July Newsletter

July’s Newsletter highlights Sterneck Capital Management’s value investment strategy.

Check it out to learn about the following:

  • Warren Buffet and Sterneck Capital’s shared philosophy
  • How Moore’s Law impacted investing
  • Research reflecting cheap stocks, on a relative basis, perform best over time

Click Here for July 2016 Newsletter

Sterneck Capital’s Latest Non-Correlation Option: AQR Equity Market Neutral Fund

As we continue a conscious pursuit of non-correlation within investment portfolios, we have recently added a new position broadly across numerous accounts.

AQR Equity Market Neutral Fund

Designed as a market neutral strategy, AQR Equity Market Neutral Fund (QMNIX), seeks to achieve positive rates of return over a full market cycle, regardless of the conditions or direction of the general market. The fund intentionally seeks to position itself in both long and short equity and equity like positions, to remain as un-correlated as possible to global equity markets. QMNIX is able to achieve this by looking globally at broad asset allocations and security selections by using three criteria:

  • Value indicators to identify investments that appear under-valued based on systematic fundamental metrics.
  • Momentum indicators to identify emerging directional trends, both positive and negative.
  • Quality indicators to identify stable companies with profitability and stable earnings.

Using value, momentum and quality metrics, the fund individually scores a large universe of stocks, then buys the top decile, and shorts the bottom decile. This long-short, market neutral strategy is the source of non-correlation. But, their systematic approach is a very different than most fundamentally driven long-short funds. It is the systematic nature of their process that removes impact of manager discretion and allows true non-correlation to emerge.

For details, see AQR Equity Market Neutral Fund Fact Sheet @ https://funds.aqr.com/~/media/files/fact-sheets/emnmfi.pdf

2016’s Initial Market Activity

Wondering what has been impacting market activity thus far in 2016?

Get perspective from thoughts shared by Frank Sterneck regarding:

  • Oil
  • China
  • Fed Rates.

Link to January 2016 Market Commentary

Weathering The Storm: Observing Non-Correlation

Last month’s newsletter previewed our Non-Correlation Strategy, which pursues investments that behave independent of the traditional asset classes such as stocks, bonds, and real estate.  The market volatility in August and September provided a useful stress test for the strategy.  Despite the domestic market being down nearly 11% toward the end of August, our no-correlated strategy performed as expected.   Review the linked analysis to review the encouraging results:

August-Sept 2015 Analysis Updated10192015

Sterneck Capital’s Market Reaction? Patience

A note from Sterneck Capital Management’s Investment Committee:

First, we feel it is important to frame the recent pullback by placing it in the context of the total market move during this current six-year bull run. From the 2009 low to recent highs, the broad market has moved up 217%. The recent pullback was 15%.

Under the surface, a large number of stocks have been in steep declines for the last few months. The indexes have been held up by a small number of large cap stocks that have a disproportionate impact on the indexes’ price. With these large cap names now ceding ground, it is placing further pressure on the broad sector of already weak names, it is in these stocks  where the potential opportunity lies. These are names that are now down 30/40/or 50% or more from their 52 week highs. However, there is no reason to be a hero in these stocks and catch every last penny of an up move. This is a message we have been communicating in recent presentations: knife catching is for circus performers, not investors. Even at current prices, few stocks are extremely cheap. Despite the pull-back, most are up considerably over a 3 and 5yr period. However, if and when markets stabilize and earnings visibility or sentiment improve, then we can initiate and accumulate new positions. We are less concerned about missing the first 5 or 10% of an individual stock move, if it is set to appreciate 30 or 40%. Conversely, we care deeply about avoiding 20 or 30% draw-downs, since we know that it takes a 40% upside return to make up for a 30% downside move.

The current price action in oil is an excellent example of why one should not simply buy something because it is down a perceived large percentage from its highs. In July of last year oil was at $107. Should it have been bought when it fell 20% to $80, particularly since it is known the demand for oil is high, and resources finite? A 20% drop must be a buying opportunity, yes? Or perhaps one should have bought it at $50, down over 50% –what an opportunity! Well, the good news is if we didn’t buy it at either of those spots, we can buy it today for $38 p/barrel, down 66% from its highs!  Even the lucky few who bought their oil on the March low of $42 (who were likely bragging about their 50% returns when oil was at $60 in July) are now underwater!

Using a previous price as a reference point for where to buy something is a perfect example of the common psychological fault of “anchoring” that we often discuss.

So what is the message? The message is patience. Returns are not made in a day; but significant losses can impact portfolios for a long period of time. Oil would have to double from here to get investors back to even on the oil they bought down 25% from its high. The old adage of “be very aware of the downside, and the upside will take care of itself” is very relevant in the current environment. This said, the wider market move has potentially set up some excellent opportunities, but we prefer to be patient stalkers of those opportunities rather than foolhardy knife catchers.