2014 Winter Newsletter: Happy New Year!

Happy New Year and may the Lord bless you in 2014!

The Economy

The economy appeared to strengthen during 2013. As we enter 2014, there is a real possibility of 3% growth or so, about 1% more than last year. While not great, it at least is solid growth as opposed to the stagnation we had the past few years. Several factors feed into this. One is that as the recession fades in the rearview mirror, companies and individuals are contributing to a self-reinforcing cycle. Second, the real estate sector is healing and we are at the point that new construction may start spreading throughout the economy. Finally, the oil and natural gas energy boom may begin to add incrementally to the economy. However, risks continue to be present. Risks include the unintentional consequences of a zero interest rate policy by the Federal Reserve, potential inflation from this loose monetary policy, and the unsustainable debt situation of our country and most other developed countries.

The Markets

While 2013 will be remembered as a wonderful year for US equities, it was not as much of a layup as many suppose. Developed foreign equities were up about half as much as the US, while emerging market stocks, Real Estate Investment Trusts, commodities, and bonds were either negative or had small positive returns. While LPL Research and several of our sources concur that US stocks do not appear overvalued here using some measures, I would be remiss if I did not mention that using other measures the market does appear overvalued. However, my concern lies more with investor behavior. Many investors will notice that US stocks have done very well last year and that the five year returns (thanks to 2008 dropping off) for them looks pretty good. Then they will see that for the first time in recent memory (1999) US bonds lost money. I am afraid many will chase stocks here, driving them initially higher, but then possibly leading to a nasty crash. There is no way to know, but I can state that at market extremes sticking with your allocation is usually the wiser move.

Portfolio Performance

Please contact your wealth manager to go over your personal portfolio and performance. Generally speaking, however, having a well-diversified portfolio hurt us in 2013. Yes, the investments in US equities did very well, and the more a portfolio had there - the better it did. (Past performance, of course, is no guarantee of future results.) Our holdings-depending on the client-in developed foreign equities, emerging markets, natural resource stocks, REITs, some alternative strategies, and most especially bonds detracted from returns. But that is the nature of a well-designed portfolio-some component will likely outperform the total portfolio. It is just a bit harder sometimes to understand when all we hear from the press is how well the S&P 500 or the Dow Jones has done. It reminds me a little of 1999 when investors were dissatisfied with solid returns when the NASDAQ was skyrocketing. Many forgot that risk is also part of the equation. We do our best not to forget that. We don't manage your portfolio for the next 3 or 12 months. Rather, we manage your portfolio in the context of your big picture and for the next 3, 5, 10 and even more years.

The Firm

Our firm, thanks to you, continued to do well in 2013. Here are a few highlights to mention. Towards the end of the year, I was listed as one of the Best Financial Advisers for Doctors by Medical Economics magazine (an award based on experience, geography, fee arrangement, minimum portfolios and regulatory record). Our firm was recognized by MD Preferred Services for our work with physicians. Also in order to be more user-friendly we have launched our own Smartphone App! You can find us on the Apple or Android app stores listed as Armstrong Wealth. This app will allow you to receive informational articles and videos, ask us a direct question, or even schedule an appointment right from the app! We have also added a webcam at the office. I will continue to blog, but will also occasionally make it a vlog and post it to our website. This webcam will also enable us to Skype our long-distance clients for reviews. Last, but certainly not least, we may hire an additional staff member to ensure our service to you remains second to none.

Personal

Jacqueline and her fiancé, Greg Colker. I am pleased to announce that my daughter Jacqueline graduated summa cum laude from Ave Maria University in December with a B.A. in Biology and even more pleased to announce she is engaged to be married in June to Mr. Greg Colker of Atlanta (so you know where the money I saved by her graduating one semester early is going).Also, on May 4th of this year, my wife and I will celebrate 30 years of marriage together, which makes her a candidate for sainthood.

You

Finally, thank you for your continued trust. We know that you could have selected anyone to be your financial advisor. We appreciate the confidence you have in our firm and in your wealth manager. If there is anything we can do for you, please let us know.

Have a great year!