Date post: | 22-Dec-2015 |
Category: |
Documents |
View: | 214 times |
Download: | 0 times |
Christian Koch, CFP® |
KAM South
Shifting into Second Gear
ECONOMIC RECOVERY 2011
Jobs, housing and slow GDP growth prevent the economy from reaching full speed
2
• KAM South is a boutique investment management and financial planning firm located in Atlanta, GA.
• We are a “fee only” firm that is completely objective and 100% on your side of the table.
• We offer a unique goals based approach to financial planning coupled with customized portfolio management.
• Christian Koch, CFP® has over 15 years of active investment management experience. Prior to founding KAM South, he worked as an equity research analyst for a large institutional money manager, bank trust department and as a financial analyst for a mutual fund complex. He is a Certified Financial Planner ™ and is a member of the New York Society of Securities Analysts, the Financial Planning Association of Georgia and the Harvard Business School Club of Atlanta.
Shifting into Second Gear | About Us
3
Shifting into Second Gear | Today’s Agenda
• Why does the economy feel like it’s stuck in second gear?
– Reasons for optimism
– Improvements in GDP
– Encouraging markets
– Growth in manufacturing
– Improving economic indicators
– Reasons for caution
– Persistent unemployment
– Depressed housing sector
– What does it mean for investors?
4
Shifting into Second Gear | Economic Update
Longest U.S. recessions (months)Start Date
Recession ends June 2009
Recession ends June 2009
Recession is over!
Source: National Bureau of Economic Research
5
-8
-6
-4
-2
0
2
4
6
8
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
1Q
09
2Q
09
3Q
09
4Q
09
1Q
10
2Q
10
3Q
10
4Q
10
1Q
11
Real GDP
Gross Domestic Product – 1981 to 1Q 2011
Source: Bureau of Economic Analysis
Economy slowing – but it’s still growth
Shifting into Second Gear | Reasons for Optimism
6
Shifting into Second Gear | Reasons for Optimism
-5.00 0.00 5.00 10.00
U.S. Treasury Bonds
Emerging Markets Debt
Global Bonds
U.S. Inv Grade Bonds
Inflation Linked Bonds
Cash
High Yield Bonds
International Equity
Real Estate
Emerging Mkts Equity
World Equities
U.S. Large Cap
U.S. Small Cap
Financial Markets PerformanceSelected Markets (in USD)
Q2 2011 YTD 2011
• Returns were modest and markets were volatile as investors reacted to softening economic data and sovereign debt concerns.
• Supply chain disruption related to the earthquake in Japan, higher energy prices and fiscal problems in Greece roiled financial markets.
• Riskier assets fell out of favor as investors turned to more conservative choices.
Source: SEI, in USD, Small Cap = Russell 2000, Large Cap = Russell 1000, World Equities = MSCI World Index, Emerging Markets Equity = MSCI EME, Real Estate = DJ Wilshire RESI Index, Developed International Equity Markets = MSCI EAFE, High Yield = Merrill Lynch US HY Master II Constrained, Cash = ML USD LIBOR 3M, Inflation Linked = Barclays Capital 1-10Yr U.S. TIPS and Barclays Capital 1-5 Year US TIPS Index, U.S. Investment Grade Bonds = Barclay’s Capital U.S. Aggregate, Global Bonds = Barclay’s Capital Aggregate Global Bond Index, Emerging Markets Debt = JP Morgan EMBIGD, Treasury = Treasury component of the Barclay’s U.S. Aggregate
7
Leading Economic Indicators –November 2009 to June 2011
Source: The Conference Board
100
102
104
106
108
110
112
114
116
118
Modest economic expansion
Shifting into Second Gear | Reasons for Optimism
8
Shifting into Second Gear | Reasons for Optimism
Purchasing Managers Index
Source: Institute of Supply Management
Growth in manufacturing
50 and above equals manufacturing growth
50 and above equals manufacturing growth
9
Shifting into Second Gear | Reasons for Optimism
Consumers are spending morePercentage change from previous period
Source: Bureau of Economic Analysis
10
Shifting into Second Gear | Reasons for Optimism
U.S. is exporting more goods
Source: U.S. Department of Commerce
11
Shifting into Second Gear | Reasons for Optimism
Loan delinquencies declining
Source: Federal Reserve Board
12
Depressed housing market
Source: National Association of Home Builders
Shifting into Second Gear | Reasons for Caution
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
New Homes
Existing homes
Sale of new and existing homes (thousands of units)
13
U.S. Unemployment Rate (%) December 2009 to June 2011
Source: U.S. Bureau of Statistics
Shifting into Second Gear | Reasons for Caution
8.2
8.4
8.6
8.8
9
9.2
9.4
9.6
9.8
10
10.2
Stubborn unemployment
14
Shifting into Second Gear | Reasons for Caution
Pace of job growth slowing
Source: Bureau of Labor Statistics
15
Shifting into Second Gear | Employment by industry
Most industries show drop in unemployment
Source: Bureau of Labor Statistics
16
Shifting into Second Gear | Employment by region
Unemployment significantly below national average in 25 states.
Unemployment rates same as national average in 20 states.
Unemployment remains troublesome in the West due to distressed housing market
Midwest greatly improved due to surge in manufacturing.
Northeast has lowest jobless rate of all regions.
Source: Wall Street Journal, June 17, 2011.
17
Shifting into Second Gear | Reasons for Caution
Volatile energy prices
Source: Dow Jones and Company
Spot oil prices: $/barrel 2000-2011
18
Shifting into Second Gear | Reasons for Caution
Economic slowdown is a global affair
Real GDP Annual Percentage by Region
* Projection
Source: International Monetary Fund
19
What does it all mean?
• Recession is over – even though it may not feel like it
• Reasons for optimism
• Investment markets are cooperating
• Manufacturing is heating up
• Economic indicators are encouraging
• Reasons for caution
• Unemployment stuck at unacceptable levels
• Housing market appears to have retreated
• Remember, you’re not alone
Shifting into Second Gear | Conclusions
20
Shifting into Second Gear | Message for Investors
Follow the “Three Rs”1. Review your financial goals
2. Re-examine you investment strategy
3. Remain invested
Source: GE Asset Management. Past performance does not guarantee future results. An investor cannot invest directly in an index or average and they do not include sales charges or operating expenses associated with an investment in a mutual fund, which would reduce total returns.
9.35%
* Invested in the S&P 500 Index Jan. 1, 1980 to December 31, 2010
21
Benefits of working with us:
• Identify and reconfirm short-term and long-term goals
• Maintain customized investment strategy that supports individual objectives
• Provide guidance through fluctuating markets, avoiding emotion-driven mistakes
• Access broad selection of diversified mutual funds and other securities
• Advise during market crisis, upcoming bull market and the next market dip (they will all happen again!)
• Educate so you can understand and make the right investment decisions
Shifting into Second Gear | Our Role
22
Disclosure
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.
SEI Investments Management Corporation (SIMC) is the adviser to the SEI Funds, which are distributed by SEI Investments Distribution Co. (SIDCo.) SIMC and SIDCo are wholly owned subsidiaries of SEI Investments Company. Neither SEI nor its subsidiaries are affiliated with your advisor
Carefully consider the investment objectives, risk factors and charges and expenses before investing. This and other information can be found in the Funds’ prospectuses, which may be obtained by calling 1-800-DIAL-SEI. Read it carefully before investing.
There are risks involved with investing, including loss of principal. Current and future portfolio holdings are subject to risks as well. Diversification may not protect against market risk. There is no assurance the objectives discussed will be met. Past performance does not guarantee future results
Index returns are for illustrative purposes only and do not represent actual portfolio performance. Index returns do not reflect any management fees, transaction costs or expenses. One cannot invest directly in an index.