Fourth Quarter
October 2014
AN INDEP ENDENT FIRM
The Eagle’s View
INVESTMENT MARKETS
AND THE US ECONOMY
BY PAUL J. TULLY
I know it sounds a bit like a broken record (for those who recall the days of records), but 2014, at least through the 3rd
th
quarter ending September 30 , has been slow, steady, and pretty boring . The economy and employment are heading in the right direction,
but on a trajectory that is weak by historic standards. Inflation and interest rates are both at multi-year lows and show no sign of reversing
anytime soon. Both will rise sooner or later, with one (inflation) likely
to be a major cause of the other (interest rates) going up.
Geopolitical issues, including Iraq, ISIS and Ebola have captured media
attention and are serious issues
that have implications if not dealt
with. It is the opinion of Jeff Saut,
Raymond James Chief Investment
Strategist, that these issues “from
a market perspective, are just
noise. They are not going to disrupt this bull market.”
INSIDE THIS ISSUE
During the last week of September
into October, I attended a conference in Chicago where several of
the main presenters were from two of the world’s largest and most respected asset management firms, Fidelity Investments and Goldman
Sachs. Both firms offered what I felt were compelling and positive outlooks for the US economy and investment markets in the coming years.
The speaker from Fidelity Investments felt that “we are in the early in-
 Paul gives his quarterly
commentary on the markets
Continued on next page
Economic Update .............. 1-3
Concierge Services ............. 3
News at EWS ...................... 4-5
Toys for Tots ............... 4
SPECIAL POINTS OF
INTEREST
 NEW! EWS now offering
Concierge Services to clients
 See what the EWS team has
been up to this past summer
 EWS to host toy drive
this holiday season
INVESTMENT MARKETS AND THE US ECONOMY (CONTINUED FROM FRONT PAGE)
nings of a possible 10-year bull market.” He also felt that
“this is the most hated bull market ever because many
people have not been invested.” Fortunately our clients
have been invested, but it is well known that many people remain “on the sidelines” out of a fear of market volatility.
Though no one has a crystal ball, their consensus is that
our combination of domestic energy production, innovation in technology and medicine, improving housing
markets and “re-shoring” of a lot of manufacturing, really enhances our economic outlook. They pointed to several issues, especially the natural gas boom currently being experienced and the cost of land and labor
rising in key areas of China compared to that same labor and land cost in the southern US.
They did caution that short-term volatility can happen at any time and those remarks seem similar to
the pilot on the way to Chicago announcing, “We expect a smooth flight and on time arrival in Chicago,
but please keep your seatbelt fastened securely during the flight, just in case we experience unexpected
turbulence.” Fortunately, on days when the stock markets drop, you do not need instruction about an
oxygen mask dropping from your ceiling!
Interest rates, and therefore the rate of return on short term investments like CDs, remain low, not only
in the US, but in other major economies as well. While our 10-year government note interest rate is currently under 2.5%, in Germany and Japan it is under 1%, so savers are struggling pretty much everywhere while investors have enjoyed over 5 years of very good results.
Generally I do not like to comment on anything not from the quarter of the year that the newsletter covers, but volatility this month, even though in a new quarter, can use a little comment. In the past few
weeks, we have seen a number of 200 point days, up or down, in the Dow Jones Industrial Average.
While not as big a deal as in the past in percentage terms, those days, nonetheless, gets peoples’ attention so I thought some context would be helpful.
The markets have declined less than 10%
since the August peak value. A “correction”
is classically defined as greater than a 10%
decline and a “bear market” defined as a
20% or greater decline.
While you cannot rule either of these out,
as stated above, some very well regarded
investment people do not see a bear market
as likely.
2
Corrections on the other hand, occur about every 18 months and since we have not had one since 2011,
clearly we are overdue. Since 1980, there have been 19 years in which a 10% or greater correction has
occurred. The below chart shows the frequency and severity of market declines.
S&P 500 Index Price Declines (Excluding Dividends) 1946 - 2014
Pullbacks
Corrections
All Bears
"Garden Variety"
Percent
Decline
5-10%
10-20%
20+%
20-40%
"Mega-Meltdown"
40+%
Type of Decline
58
19
12
9
Average
Change
(7)
(14)
(28)
(26)
Duration In
Months (avg.)
1
5
14
11
Recovery In
Months (avg.)
2
4
25
14
3
(51)
23
58
Count
Source: Capital IQ, Standard & Poor’s
We are currently in the fourth longest period without a 10% correction since 1929 (source: Wall Street
Journal). We have already had a 5% decline this year (January) and the subsequent recovery took
place in less than two months.
Although we understand the angst some of these days can cause, we always caution anyone against
waiting for a pull back to commit money to investments. You cannot predict rises or declines in the
market and I would argue it’s really not worth trying. For example, even if you had invested on the day
before the market began its most recent very severe meltdown (late 2007 when the S&P 500 was at
1565), through August 31, you still would have averaged a 6% per year return. If you had remained in a
money market instead, your return would have been approximately 1/10 of that.
While volatility is not pleasant, either in a plane or in an investment, it is part of the process to arrive
successfully at your destination. ◊
Concierge Services
Now Being Offered
Do you need to repair a leaky roof or renovate your kitchen,
but not sure who’s best for the job? We’ve got you covered.
EWS is now offering reliable referrals for a variety of local services including home, auto, and health service requests.
Through this process we will be collecting word-of-mouth referrals from our clients and using our clients’ businesses first
to provide you with a list of trusted local services. In addition,
through our Angie’s List membership, we can provide you with
a few more highly rated vendors that others have used with
great success.
Please ask about this at your next meeting or give us a call and
we will be happy to assist you! ◊
NEWS AT EWS
Continuing education
A lot of recent business travel for Paul, Chris and Steffanie to attend investment and financial planning conferences around the country.
Chris traveled to New York in
late September for an investment conference with Goldman Sachs, JP Morgan and
Credit Suisse. Paul was in
Chicago for a combination
investment and practice management conference. Steff
attended the Raymond James
20th annual Women’s Advisor
conference in St Petersburg, which dealt with many financial planning issues,
in particular those that impact women the most.
We are very selective about which conferences we attend because of both the
cost and time commitment, but these three conferences occurring back to
back to back all proved to be very worthwhile in terms of knowledge we received in investment management, financial planning, practice management
and client service.
Later this month, Paul is participating in a national forum via webinar for
other financial advisors on the topic of financial planning for women. Paul
was one of three people invited by Investment News, one of our leading weekly financial publications, to participate in this event.
In the community
Jessica played in the
Fourth Annual River Cup
at PPL Park on September
6. The River Cup is an annual soccer match between
the Philadelphia Union
front office and the Sons of
Ben. The match came
down to penalty kicks with
the front office capturing
the cup. This was Jessica’s
second year playing. The
event raised over $30,000
with all proceeds benefitting the Philadelphia Union foundation, which supports programs in Chester and the Greater Philadelphia Region.
4
In September, Steffanie was in charge of running the first annual United Way Women’s
Leadership Council Scavenger Hunt. Kathy Repici and Kathy Tully participated in the hunt…
and won! Proceeds for this event supported
local charities throughout Gloucester County.
Kathy volunteered through Atlantic County Revive doing work on homes that were damaged
during Super Storm Sandy, more specifically at
a home in Ventnor. The home owner, Dolores
Wright, moved back into her home on Sunday,
September 28. Check out the photo to the right
of Kathy and her husband, Tom, along with the
group she worked with for the day — youth
group members from Wenonah Memorial
Presbyterian Church.
On September 25, some of the EWS crew attended Gloucester County’s Dancing with the
Stars hosted by the Greater Woodbury Chamber of Commerce. This fun night out benefitted
some amazing local charities including the
Boys & Girls Club where Chris is a board member and Finance Committee member.
Paul recently completed his two-year term
as the chairperson of the Rowan University
Foundation. During Paul’s tenure, the
foundation created its own venture capital
fund that is expected to finance early stage
business ideas for Rowan related businesses. Currently it will be open to students,
faculty and alumni for consideration. Rowan received national publicity and Paul
did several interviews with both the Philadelphia Inquirer and KYW radio as a result.
Paul remains on the foundation board and
also has recently been appointed to two new committees. One is the search committee to select the
new dean for the Rohrer College of Business and
the other is as a member of the Dean’s Executive
Advisory Council.
Summertime fun
Steffanie took some time off in August to vacation
with her family down in Disney World — Landon’s
first time there! It was a hot one, but Landon
(turning 3 years old in December), had a magical
time!
5
AN INDEP ENDENT FIRM
Peach Tree Professional Center
877 Kings Highway
Suite 300
West Deptford, NJ 028096
Phone: (856) 845-4005
Fax: (856) 845-4121
[email protected]
www.eaglewealthstrategies.com
Securities offered through Raymond
James Financial Services, Inc. Member FINRA/SIPC
Eagle Wealth Strategies is an independent firm in West Deptford, New Jersey.
Our team of financial advisors provides comprehensive financial and retirement
planning services to successful individuals and families, retirees and those nearing retirement, single, widowed and divorced women, and attorneys, accountants
and physicians.
Each of our financial advisors – Paul Tully, Steffanie Lerch and Chris Tully–
holds the CERTIFIED FINANCIAL PLANNER™ certification. This distinguished
industry credential is awarded to a select number of financial professionals who
satisfy the CFP® Board of Standard’s rigorous educational and examination requirements, and who agree to adhere to its high level of ethical and professional
standards.
____________________
Paul J. Tully
__________________
Steffanie A. Lerch
___________________
Christopher T. Tully
CERTIFIED FINANCIAL PLANNER™
CERTIFIED FINANCIAL PLANNER™
____________________
Jessica L. Hauser
__________________
Dana F. Rohach
___________________
Kathy M. Repici
CHIEF OPERATIONS OFFICER
CLIENT COMMUNICATIONS &
MARKETING ASSOCIATE
CLIENT SERVICE ASSOCIATE
CERTIFIED FINANCIAL PLANNER™
The information contained in this report does not purport to be a complete description of the securities, markets, or develop ments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. 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. Any opinions are those of
the advisors at Eagle Wealth Strategies and not necessarily those of RJFS or Raymond James. Keep in mind that individuals cannot invest directly in any index, and index
performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance
does not guarantee future results.