Consistency Matters

October 15, 2015 SEIA


Brian D. Holmes was recently ranked in Barron’s list of the top independent financial advisors for the ninth consecutive year. See the full article here.

JAPAN: PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RETURNS

September 4, 2015 SEIA


Global investors and even Japanese citizens are woefully although understandably under allocated to Japanese stocks. Why? For most of our “investment” lifetimes, the island nation has been a place to avoid, with equities (Nikkei 225) still unable to fully recover from the Japanese bubble that popped 25­years ago. From the 1989 top to the 2009 bottom, Japanese stocks lost 83% of their value. Even despite recent gains, a $1 million Japanese equity investment made in 1989 would be worth $500,000 today compared to $6 million if invested in U.S. stocks (S&P 500).
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Like Any Summer Squall, This Too Shall Pass

August 25, 2015 SEIA


On May 21st, U.S. stocks (S&P 500®) reached an all-time high of 2130. But summer squalls overseas (Greece, China, etc.) have subsequently rattled global investors and caused many to hit the sell button, pushing stocks lower into “correction” territory – a drop of 10% from their springtime highs. The sudden bout of volatility may seem out of the ordinary but only because stocks have traded in their narrowest band ever through the first eight months of the year. But the lack of volatility is by no means merely a 2015 story. Over the last three calendar years, at no time have stocks retrenched more than 7% from their highs, which is in stark contrast to historical averages. Dating back to 1980, the average intra-year drop is 14.2%!
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Japan: Past 25-year Performance is Not Indicative of Future Returns

June 15, 2015 SEIA


Global investors and even Japanese citizens are woefully although understandably under allocated to Japanese stocks. Why? For most of our “investment” lifetimes, the island nation has been a place to avoid, with equities (Nikkei 225) still unable to fully recover from the Japanese bubble that popped 25-years ago. From the 1989 top to the 2009 bottom, Japanese stocks lost 83% of their value. Even despite recent gains, a $1 million Japanese equity investment made in 1989 would be worth $500,000 today compared to $6 million if invested in U.S. stocks (S&P 500). And that pain wasn’t merely limited to a bad investment made during a narrow window in late 1989. The same investment into Japanese stocks made 6 years later (the typical length of a normal business cycle) would still be down 1% compared to a 350% gain here stateside. Is there any wonder why investors love U.S. stocks and seemingly despise the third largest economy on earth?
 
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GLOBAL EQUITY HORSERACE: AN UPDATE ON EUROPE

June 10, 2015 SEIA


Six years into an economic cycle is bound to bring on some changes. In every bull market, as it matures, consumer sentiment improves. It’s only natural that we should collectively feel better as our stocks gain wealth. However, “happier” investors tend to fuel exuberant over sustained rallies, and eventually greed begins to take hold. As the herd mentality sets in, prices move ever higher—until ultimately valuations become too stretched and the inevitable downslope of the business cycle begins and equity prices correct.
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The Global Equity Horserace: An Update on Europe

May 10, 2015 SEIA


The month of March marks a couple of key milestones in recent investor lore. On March 9th 2000, the NASDAQ broke through 5000 and peaked one day later at 5048 (the only two days the index closed above that mark). Fifteen years later, the index is once again poised to break through the momentous level as it rests at 4976 at the time of this writing. March 9th also marks the sixth anniversary of the current (U.S.) bull market which has taken the S&P 500 index from a then low of 676 to a late February high near 2115—a gain of over 1440 points! The nearly 230% gain has led most major global indices and vaulted the S&P 500 back into the spotlight as the world’s darling, fulfilling our 2011 SEIA Report hypothesis that “the time will soon be upon us when stocks again regain their status as king of the investment choices.” While the media will focus on the NASDAQ and compare and contrast 2015 with 2000, we believe that it is more prudent to analyse the S&P 500 and compare today with the economic landscape of just a few years back. Our conclusion? The biggest gains from U.S. stocks may be behind us as the world’s thoroughbred rounds the last turn in this business cycle.
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THE ECONOMICS OF OIL PRICES AND POTENTIAL IMPACT TO YOUR PORTFOLIO

March 17, 2015 SEIA


On June 19th of last year, Crude Oil was trading at $106.83/barrel. A mere seven months later, on January 19th, frenetic trading had brought the price per barrel down to $46.47 (a historical drop of 56%). Yet demand is holding steady and, in fact, projected to increase over the next couple of years. The problem today is not a demand problem but rather a “supply” problem that’s directly attributable to the U.S. Shale Oil revolution. In short, the world is awash in too much oil.
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Crude Oil

February 20, 2015 SEIA


Several years ago, many of the discussions in SEIA’s Investment Committee (IC) centered on whether the commodity “Super Cycle” of the last decade had finally come to a close. Long-term investors will recall that the period of the 2000s was marked by outperformance from commodities due in part to strong Emerging Market economies. China’s rapid ascension gave a boost to any commodity needed to urbanize a vast and populous country (copper and iron ore to build, coal to run the power plants that provide electricity, and crude oil to fuel a new car-buying nation). The influx of capital into these economies strengthened their currencies at the expense of a weaker U.S. Dollar. These stronger currencies could then be used to buy more commodities to build more things, and the “super cycle” was on.
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2014 MID TERM ELECTIONS: A LOT CAN CHANGE IN 6 YEARS

December 31, 2014 SEIA


Six years after the 2008 election, which netted Democrats 60 Senate seats and a super majority (along with the ability to enact broad legislation), the 2014 midterm “Republican wave” changed the balance of power, resulting in the most dominantly Republican Congress since 1929. In the Senate, Republicans picked up at least seven seats giving them a 52-54-seat majority (races are still to be decided in Alaska and Louisiana). In the House, they gained 13 seats to give the party its largest majority since before World War II.
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The 2014 Autumn Fall: Have the Leaves of Global Growth Changed Color?

October 11, 2014 SEIA


Three weeks ago, the S&P 500 (a measure of U.S. Large Cap stocks) hit a new closing high of 2011.36 (intraday high of 2019 a day later) and was up 10% for the year after returning 32% the year prior. Such fantastic returns over a relatively short period of time prompted the SEIA Investment Committee to mention this past July that investors should “revisit ones asset allocation as the moves over the last 18 months may have left some investors overexposed.” But now that the U.S. stock market has backed away from its historical high, investors are now asking whether anything has changed or rather has the change in fall colors coincided with a change in our outlook for economic growth.
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Brian Holmes, CEO of Signature Estate and Investment Advisors, Named to Barron’s Top 100 Independent Financial Advisors List for 8th Consecutive Year

October 1, 2014 SEIA


This article features Brian Holmes as one of Barron’s top independent financial advisors for the 8th consecutive year.
To read the full article click here.

Paul Taghibagi of Signature Estate and Investment Advisors, Named to Barron’s Top 100 Independent Financial Advisors List for 3rd Consecutive Year

October 1, 2014 SEIA


This article features Paul Taghibagi as one of Barron’s top independent financial advisors for the 3rd consecutive year.
To read the full article click here.

WHY THE TRADITIONAL ASSET ALLOCATION PLAYBOOK MAY BE OBSOLETE: THE X’S AND O’S OF ALTERNATIVES

September 4, 2014 SEIA


Asset allocation “strategies” have traditionally been limited to determining what percentage of a portfolio should be invested in stocks vs. bonds. Bond yields around the globe are at historical lows. Rates are eventually heading higher, which will lead to interest rate risk for bond holders’ principal. Domestic equities are arguably in the later innings of an all already above average bull market in terms of length and returns. So it is therefore safe to say that “traditional” asset allocation is not what it once was. Consequently, high net worth investors are increasingly turning towards Alternative Investments (“alts”) as a part of their overall long term game plan. With this in mind, let’s break down the game film on alternative investments:
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THE RECIPE FOR A MATURING BULL MARKET

June 30, 2014 SEIA


FEAR: A five-year-old bull market can change people. Not that long ago, we were preaching to anyone who would listen the merits of stocks. But the conversation proved difficult as fear overwhelmed many investors. As recently as February 2011 we said, “Even with our current bull market posting a near 100% gain…history suggests that this bull may still have room to run.”
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Los Angeles Signature Estate and Investment Advisors SEIA Continues Rapid Growth Now at 4 Billion in Managed Assets

June 30, 2014 SEIA


Signature Estate and Investment Advisors, LLC (SEIA), a full service wealth management firm headquartered in Southern California, has surpassed $4 Billion AUM* and is growing at a rapid pace, with a completely organic approach that exemplifies the power of independent financial advice. The firm has created an advisor-client-community service ecosystem second to none, that fuels growth by optimizing the way clients receive financial advice.
 
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Globalization vs. the U.S. Business Cycle: The Effects on U.S. Interest Rates

April 22, 2014 SEIA


Many investors believed that U.S. interest rates, which started the year at 3.02%, would move north this year and approach 3.50%. But in fact, the opposite has occurred and rates now sit at 2.50% as of August 4th. What happened? This year, Europe joined Japan with another aggressive attempt at further easing of monetary policy, which pushed interest rates lower across the Atlantic. German government bonds (Bunds) are now at an historic low yield of just over 1.15%. Even in troubled Spain, corresponding bond yields have moved below 2.30% to reach their lowest yield dating back 225 years to 1789! Although low, European yields are not the lowest in the developed world. Across the Pacific, Japanese government bonds (JGBs) have an astonishingly low yield of 0.50%. In an era of globalization and rapid money movement, it is hard to argue that current U.S. yields of 2.50% are unattractive compared to corresponding bonds overseas. The 135 basis point (bps) spread between Treasuries and Bunds is rapidly approaching record levels. In fact, the last two times the spread was this wide it soon reversed course leading to one of two results, higher Bund yields or lower Treasury yields. But which outcome is most likely? Let’s analyze each case.
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2014 Q1 EQUITY MARKET OUTLOOK: “DO THE MATH”

March 30, 2014 SEIA


Analysts can value assets in many ways. For real estate, metrics such as Costper-Square Foot and Capitalization Rates are common. For equities, valuation ratios include Price-to-Cash Flow (P/CF), Price-to-Sales (P/S), Price-to-Book (P/B) and the lengthy Enterprise Value-toEarnings before Interest, Taxes, Depreciation and Amortization (EV/EBITDA).
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THE FEDERAL RESERVE: “MEET THE NEW BOSS, SAME AS THE OLD BOSS.”

December 31, 2013 SEIA


The Federal Reserve (the Fed) was not the original central bank of the United States. In 1791, the then fledgling U.S. government granted the First Bank of the United States a charter to operate as our central bank until 1811 when Congress refused to renew its charter. Five years later, the Second Bank of the United States was established but it again lost its charter in 1836.
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ALL COUNTRY WORLD INDEX (ACWI): A BETTER MOUSETRAP

September 30, 2013 SEIA


A lot can change in six years. For example, in 2007, Apple launched its game-changing mousetrap (the iPhone); but that year also marked the beginning of the financial crisis. In October 2007, U.S. equity markets started to retreat from their recent all-time highs and markets fell into turmoil.
Download our full report here.

WHEN SAFE BECOMES RISKY, TIME TO REBALANCE

June 30, 2013 SEIA


Last quarter we suggested that although equity markets were approaching six-year highs, “higher yielding securities will continue to perform.” That prognostication quickly proved true as investors’ constant thirst for yield pushed income-oriented assets northwards as dividend securities (Utilities, Consumer Staples, Pharmaceutical Companies, Telecom, Master Limited Partnerships, etc.) enjoyed a rousing first quarter. But now with the S&P 500 at historic peaks, many are questioning whether the market can continue to advance or to heed the catchy rhyme of “Sell in May and go away.”
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BULL MARKET TURNS 4!

March 31, 2013 SEIA


BULL MARKET REVIEW: In early February, the venerable Dow Jones Industrial Average, with its long and storied past, traded above 14,000 for the first time since October 2007, moving to within 180 points (1.3%) of its all time high. The S&P 500, meanwhile, moved above 1500, to levels last seen in December 2007. With major U.S. equity indices approaching all time highs, it may be a good time to step back and reassess where capital markets could go from here. But before we look ahead, let’s look at where we have been.
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ELECTION 2012: WINNERS AND LOSERS

December 30, 2012 SEIA


One beneficiary of the result will be Federal Reserve chairman Ben Bernanke, who will have the continued support of the President, rather than face Mitt Romney, who announced he would not renew Bernanke’s term. From this perspective, markets can relax as quantitative easing (QE) money printing is set to continue and interest rates should remain low. Other winners include:
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POLITICAL PRIZEFIGHT

September 30, 2012 SEIA


Congress is poised for another showdown on taxes and the budget deficit later this year—and this time, like any memorable heavyweight title bout, it has a name. Fed Chairman Ben Bernanke, leader in monetary policy, coined the year-end fiscal policy decisions as the “The Fiscal Cliff.” While it doesn’t pack the same punch as “The Thrilla-in-Manila,” the stakes are higher.
 
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A MODERN GREEK TRAGEDY 2012: “A Midsummer Dream or Nightmare”

June 30, 2012 SEIA


Europe matters once again—and once again the problems center on Greece. At its core, the European sovereign debt-crisis (ESDC) involves debt ridden countries (Greece) that are no longer able to refinance their own government debts without assistance and loans from a third party (Germany). In exchange for the loans, austerity is promised in order to reduce spending and deficits, however, it’s not working. The defensive posture we outlined here late last year began to take shape in early April as fears over the European-debt crisis began to flare up—again.
Download our full report here.

How Will this Year’s Presidential Election Influence the Financial Markets

June 29, 2012 Brian Holmes


Every presidential election highlights stock market performance as a function of whichever party is in office. Read the full text here.

What are some financial opportunities I should look for?

March 30, 2012 SEIA


Every year brings some financial change, and 2012 is no exception. Here are some relevant changes relating to investment, tax and estate planning for this year. Retirement Plans. Annual limits for 401(k), 403(b) and 457 contributions rise slightly to $17,000, and you can contribute an additional $5,500 to these accounts if you are 50 or older this year. IRA contribution levels are unchanged from 2011: The ceiling is $5,000, $6,000 if you will be 50 or older in 2012.
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Year End Review, 2012 Preview

December 31, 2011 SEIA


Twelve months ago the US equity markets wrapped up 2010 with a 15% gain. Small caps and emerging markets fared even better with 20%+ gains. It appeared that Ben Bernanke’s Quantitative Easing programs staved off recession and continued recovery and expansion were in store for 2011. Our year end review highlighted trades in the capital markets that would profit from this ongoing recovery.
Download our full report here.

Relative Valuations Amid Economic Uncertainty

September 30, 2011 SEIA


The government recently said that the economy grew at a 1% annual rate in Q2, down from its initial estimate of a 1.3% pace and not much better than Q1’s 0.4% growth rate. With the two most recent quarters posting growth rates below 1%, recession worries have increased as periods of 1% growth or less have preceded nine of the past 11 recessions. Year-over-year GDP now stands at 1.5% which is again below the level at the onset of all the recessions since the first quarterly GDP was calculated — with one exception: The six-month recession in 1980 started in a quarter with lower GDP (1.4%). On only one occasion (Q1 2007) has GDP dropped below 1.5% without a recession starting in same quarter—but in that case the recession began three quarters later in December 2007.
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Soft Patch be Damned – Time to Get Patriotic.

June 30, 2011 SEIA


I think we all know that the media tends to over analyze not only what is wrong but also what could go wrong. Although it is not the end of the world (that prophecy proved false on May 21st), this year is looking more and more like last year. Recall the 2010 summer doldrums and economic soft patch that caused downward pressure on equity prices. Goldman Sachs states that:
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Is Inflation my Friend or Foe?

June 29, 2011 Brian Holmes


Inflation is once again in the financial headlines, even though just two years ago the consumer price index was negative for the first time in 55 years. Read the full text here.

Tax Laws in 2011

March 30, 2011 SEIA


After months of political power plays, in the waning hours of 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization, and Jobs Creation Act.
Download our full report here.

Is California a State to invest in or Avoid?

October 28, 2010 Brian Holmes


The Economic demise of California is greatly exaggerated. Read the full text here.

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