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Rest, Relaxation and Reflection
Summer is a wonderful time of year. It’s a time for rest, relaxation and reflection. It’s also a time to plan for the rest of 2014. At Red Door, we’re recharging our batteries, and we hope you’re doing the same and that your summer is filled with family and friends.
Recently, Gretchen’s daughter Lyda graduated from Hutchison. They took a wonderful trip to the beach together. Soon, Lyda will head to Knoxville to start college at The University of Tennessee, where she will study fashion and retail.
Fred recently took his eldest son Cullen to Fayetteville, Arkansas, for his first college visit. He and his family will soon be headed to Florida to relax and recharge.
Finally, John and Ivy are joining his family in the Caribbean later this summer for some downtime.
During this time of reflection, conserving and growing your assets is only part of the picture. Visualizing what you want to do with your assets is part of a plan for your life. Keep your goal in full view! Red Door can help you create the plan to make your goals or dreams a reality.
We hope this summer is meaningful and produces ideas for all of us. At Red Door, we will be surveying the landscape for new investment opportunities and market direction. If your time generates ideas that we can help with, please let us know.
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Market Update
What does the stock market have in common with the weather? It appears that the summertime heat has provided support for the stock market to continue its methodical “melt up.” The analogy of something melting up is intended to be an oxymoron, which characterizes our thoughts on the market right now – it’s defying logic. As long-term investors, we look at the market and see a lot of anxiety and contentment at the same time. Rarely can you have it both ways, though. One will eventually win out.
At Red Door, we are still erring on the side of caution and fully expect a washout at some point. If you’re a Memphian, you know that – per the recent weather – when it rains, it pours. We believe that in the next six to twelve months, the markets may react like an abrupt thunderstorm. They may roll in, dump a lot of rain and quickly move on. The slow trek up for the stock market could be met with a quick correction brought on by any of the numerous issues we face today. Both the stock market and weather move in healthy cycles. They allow things to grow, they get trimmed back and then they continue to grow above previous peaks. We have reduced risks and are now awaiting the trimming.
To be clear, we don’t want you to think we are pessimists. We believe that when investing for the long term, it pays to be a realist. We are constantly surveying the commentary of what we call “smart money” investors or economists who have historically been very accurate with their positive and negative forecasts. Here is a taste of what they are seeing:
- Nobel Prize-winning economist Robert Shiller: “The Shiller CAPE P/E ratio is unusually high right now. It hasn’t been this high many times in history, just in 1929, 2000 and 2007.”
- Mohamed El-Erian, former co-chair of PIMCO; current chief economic advisor, Allianz Group: “I am watching patiently from the sidelines. Does it mean I may be foregoing more profits? Yes, it does, but that’s a risk I’m willing to take.”
- Jeremy Grantham, CEO of GMO: “There is simply no alternative to standing your ground and taking it on the chin when crazy markets get even crazier. Our consolation will be knowing that we will win in the end.”
- Bank of International Settlements (BIS) in its annual report, published June 29: “Overall, it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally.”
As difficult as it might be to not chase this market higher, we will stick to our investment discipline of moving the risk needle up or down based on the valuations we see in the market.
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Your Red Door Team
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Disclaimer
This communication and its content are for informational and educational purposes only and should not be used as the basis for any investment decision. The information contained herein is based on publicly available sources believed to be reliable but not a representation, expressed or implied, as to its accuracy, completeness or correctness.
No information available through this communication is intended or should be construed as any advice, recommendation or endorsement from us as to any legal, tax, investment or other matters, nor shall be considered a solicitation or offer to buy or sell any security, future, option or other financial instrument or to offer or provide any investment advice or service to any person in any jurisdiction. Nothing contained in this communication constitutes investment advice or offers any opinion with respect to the suitability of any security, and has no regard to the specific investment objectives, financial situation and particular needs of any specific recipient.
This email represents the opinion of Red Door Wealth Management and is for informational purposes only. It is not a recommendation nor is it intended to be construed as tax or legal advice by the recipient. Past review of investments are no guarantee of future results.
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