FourStar Wealth Advisors CEO Brian Kasal discusses his 2015 Outlook and Commentary

Brian L. Kasal, CEO and Chief Investment Officer

2014 Results 

SPX – 11.4%

NASDAQ 13.4%

DJIA 7.5

 

“WE HAVE LIFTOFF”

This was the signal announced by Houston control when a spaceship cleared the tower and was hurtling into orbit. Ok, well, maybe this is a bit stronger of a view than is warranted, but it does appear that the economy in the US is starting to accelerate. 

Our friends at the Atlanta FED say that they see the economy accelerating for the most part.  After holding in the 1-2% range of GDP growth for 5 /12 years, we are now showing stronger growth and have been 3-5% for the last 6 months.    

Q3 real GDP 5.0% rate 

 

JOBS JOBS JOBS

321,000 new jobs in November is the best in three years as we saw a very good number for the November period. Jobs are heating up and this is good news. To keep this in perspective however,  

The Reagan recovery produced 23 months of 300,000+ job additions and even the Bush “jobless recovery” had 7 300M+ jobs, this recovery since June of 2009, 5/12 years, had had only 2. The other reality is that the population has grown by approx. 29% and with a larger size the number that would require 400,000+ jobs growth months to have the same impact. The expectation is that job growth will continue to be stronger than the 5 year previous average and if the economy heats up we could see stronger job growth in 2015. We all would like to see better growth.

 

THE BIG STORY – CHEAPER OIL 

The first week of the New Year had led to Crude oil, as measured by West Texas Intermediate Crude, trading below $50 per barrel. This is good news for consumers who spend and those who are most affected are those most likely to spend much of the savings. So this trend could also help the economy. The cheaper gas is at the pump the more retail spending should happen in the short run. The flip-side to the cheaper oil is jobs. The almost 1% unemployment  rate in North Dakota was caused by growth in the fracking activity and that will now slow due to lower oil prices. The lower oil can effect hiring and economic activity.  Also hedge funds that invested heavily in energy funds are sporting massive losses that can slow all aspects of growth. 

 

MARKET SIGNALS – US Stocks 

Recently the markets are acting as if rates will rise quicker than expected, bank stock rally, etc. and the risk there is that the market is out front of that.  The uptrend in the market has gone on for 5 years and until this week showed no signs of abating. We are seeing a selloff to start the New Year and while many think this is just a correction there are those who think this is the beginning of a serious downturn. Time will tell. 

 

OTHER INVESTMENTS 

The conditions that lead us to where we are now, with US markets are leading the world and all other investment classes, are still in place. Record low interest rates, and relatively slow growth. Commodities continue to be the worst ranked and worst performing, International stocks continue to perform poorly with most other economies, besides the US, sputtering. Real estate has stabilized and begun a growth cycle after the disastrous downturn of the 2005-2012 period.  While there are opportunities in unique trades, US stocks might still show the strongest performance from here.

 

WHAT TO DO?

As always, investors need a plan in line with their goals. Any assets invested in riskier categories needs to be long term in nature with the ability to manage through cycles should they occur. Any dollars needed near term or simply are not desired to be at risk, need to be in cash and low risk categories like short term bonds. Income investors have been using REITs Master Limited Partnerships (MLP’s) and Preferred stocks. While these categories don’t quite carry stock like risk profiles, they can be riskier than bonds so one needs to be careful when investing. The FourStar team manages various absolute return portfolio models design to help investors manage the risk of volatile categories and those should be considered as part of an overall strategy.    

BUT WAIT …….THERES MORE

 

ITS OVER – BAILOUT COMPLETE

Its over – Federal government sold its final stake in the auto industry bailout, by selling its remaining shares in Ally Financial, the former GM financial.  On balance it was a success as the government logged in a tidy profit and jobs were saved

OVERHEARD 

– Greece is again the sick man of Europe and might possibly fail again and possibly leave the Eurozone. 

– Germany is showing signs of deflation which is commonly considered to be worse than inflation. 

– If not for the energy industry in the last few years the US would have had negative growth. 

 

This update is provided by FourStar Wealth Advisors, LLC (“FourStar” or the “Firm”) for informational purposes only. Investing involves the risk of loss and investors should be prepared to bear potential losses. FourStar is an SEC registered investment adviser that maintains a principal place of business in the State of Illinois. The Firm may only transact business in those states in which it is notice filed or qualifies for a corresponding exemption from such requirements. For information about FourStar’s registration status and business operations, please consult the Firm’s Form ADV disclosure documents, the most recent versions of which are available on the SEC’s Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov.