July 4th Holiday Office Schedule:

The U.S. financial markets will close early tomorrow, Wednesday, July 3rd at 12:00 noon Central Time.  They are also closed Thursday, July 4th in observance of Independence Day.  Our Offices will close early on Wednesday at 2:00PM and will be closed on Thursday, July 4th and Friday, July 5th.  We will be back as usual at 7:30am on Monday, July 8th.  You can contact us via email or by calling Rick’s cell phone-405-706-6415-if you have anything you need while our offices are closed for the July 4th Holiday weekend. Relax and enjoy the July 4th Holiday in celebrating our Nation’s Independence!

Group Meeting Schedule:

If you have not already done so, please call now to reserve your spot at one of our scheduled Mid-Year Group Review Meetings.  We still have some seats available for each scheduled time.  The scheduled meeting dates/times are:

Tuesday, July 9th: 3:00PM

Thursday, July 11th:  10:00AM

Friday, July 12th:  10:30AM

Tuesday, July 16th:  3:00PM

Wednesday, July 17th: 10:30AM

Tuesday, July 23rd:  5:30PM

We will provide a review of the first half of 2013 as well as details of our outlook and strategies as we move into the second half of the year.  If you prefer a private meeting or phone appointment, please call us as well and schedule a time that best fits your schedule.

CALL TODAY TO RESERVE YOUR SEATS:

405-844-9826

 The Markets:

The second quarter of this year provided renewed volatility in most all asset categories, from stocks, to bonds, to commodities.  The fear and reaction of the possible “tapering” by the Federal Reserve of their current bond purchase program (QE3) spooked the markets into what we feel was an overreaction during the second half of May and into the end of the quarter.

The chart below illustrates the increased volatility of the Dow Jones Industrial Average for the daily point move just from May 28th through June 27th.  You can see the fluctuation was extreme on both the upside and downside each trading day.

djiavol

What Happened in the Second Quarter:

Most asset categories saw declines this quarter, in fact, the usually considered “conservative” assets dropped more in some cases than the stock market in general.  Ironically, the best performing asset category for the quarter was the U.S. stock market as measured by the major stock indices.  Our portfolios were underweighted in stocks/equities in light of our longer term view, and were pretty well balanced with fixed income/bonds, stocks, and “alternative assets” depending on risk level.  The following chart illustrates the overall performance of certain asset categories for the second quarter as measured by the corresponding ETF (Exchange Traded Fund):

Q2-2013-AssetPerformance

Past performance cannot guarantee future results.

Interest Rates Rise Sharply

Interest rates spiked during the quarter, pushing fixed income/bond prices lower and mortgage rates higher.  The following graph shows the impact on the 30 year mortgage rate and the rise we have seen, especially during May and June.  The rate has jumped to almost 4.50% from a low of around 3.4% during the quarter.

30year Mortgage

Looking ahead

We still feel interest rates will start moving lower once again over the next 12-18 months, with a possible bottoming in 2014-2015.  If this occurs, bond prices should move higher as the yields start to fall again, benefitting the fixed income portion of our portfolios.  We don’t believe the Fed can stop the bond purchase program at this point as the overall economic data is still coming in weaker than normal overall.  The first quarter Gross Domestic Product (GDP) for the U.S. had to be revised downward to a meager 1.8%. (Reuters News Service)  Unemployment also remains well above normal.

We feel the stock market is currently overvalued relative to historical measures at present  We have been underweighted in stock/equities and plan to take advantage of more reasonable valuations in the future if and when they occur.

If the Federal Reserve does continue the “QE3” program as we expect, we would then look for commodity prices to rise as well, benefitting the “alternative” portion of our current allocation.  After riding through the changes of the second quarter, we feel we are still positioned where we want to be in our portfolios for what may be coming over the next 12-18 months.  We were early in our changes based on our longer term outlook, but still have the same opinion of what we think may be in store for us in the future.

As investors, it is important that we continue to be “forward looking” as to what we anticipate in the future, and now with what has already occurred in the past. We hope you will take advantage of our mid-year review meetings so we can go over in more detail our current outlook, plans, and strategies for the balance of this year.  We wish you all a very safe and happy July 4th and hope you do get to spend some time relaxing with family and friends.  We truly do appreciate the privilege to be of service and look forward to working with you in the years to come.

God Bless,

Your TEAM at F.I.G. Financial Advisory Services, Inc.

 

 

1 The Dow Jones Industrials Average is an unmanaged index of 30 major companies which cannot be invested into directly.  Past performance does not guarantee future results.

3 The S&P 500 Index is an unmanaged index of 500 larger companies which cannot be invested into directly.  Past performance does not guarantee future results.

 Past performance does not guarantee future results.

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All items discussed in this report are for informational purposes only, are not advice of any kind, and are not intended as a solicitation to buy, hold, or sell any securities. Nothing contained herein constitutes tax, legal, insurance, or investment advice.

Stocks and bonds and commodities are not FDIC insured and can fall in value, and any investment information, securities and commodities mentioned in this report may not be suitable for everyone.

U.S. Treasury bonds and Treasury bills are guaranteed by the U.S. government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. U.S. government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Treasury bills are certificates reflecting short-term (less than one year) obligations of the U.S. government.

Past performance is not a guarantee of future performance. Different investments involve different degrees of risk, and there can be no assurance that the future performance of any investment, security, commodity or investment strategy that is referenced will be profitable or be suitable for your portfolio.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.

Before making any investments or making any type of investment decision, please consult with your financial advisor and determine how a security may fit into your investment portfolio, how a decision may affect your financial position and how it may impact your financial goals. 

All opinions are subject to change without notice in response to changing market and/or economic conditions.