Summer is a wonderful time for vacations, family reunions, backyard barbeques, and reading a good book among other things. It’s a time to reconnect, recharge, and relax. We hope you are able to take some time and enjoy this season.

Mid-Year Report: 2015 Shows the Advantages of Diversified Portfolios

Shifting over to the financial markets…We experienced an increase in volatility during the second quarter, driven by rising interest rates, somewhat disappointing corporate earnings, and fears over global sovereign debt, particularly in Greece. This yielded modest returns for the best performing asset classes and in some cases declines for the worst performers. The S&P 500 increased only 0.3% for the quarter (+1.2% YTD), while the Aggregate Bond Index (AGG) declined 1.7% (-0.2% YTD) and REIT’s (Real Estate Investment Trusts) declined 10% (-5.8% YTD).  The good news is that E|Financial Alliance diversified portfolios did comparatively well based on the Dimensional Funds small cap/value tilt in equities, with our selective mix of bond and short-duration instruments outperforming the AGG on the fixed income side.

As many of you do, we like to read a lot of articles/books on the financial markets in an effort to continuously learn and stay current on the issues affecting the markets. Recently, we have seen no shortage in the amount of pessimism coming from many prognosticators and financial commentators.  This really shouldn’t come as a surprise to us as we often note how bad news and fear attracts eyeballs and sells advertising (the goal of most media outlets).  Whether it’s the factors noted above, concerns over equity valuations or specifically the fear over Greece leaving the European Union (receiving the most airtime as of the writing of this letter), there are plenty of issues being highlighted. It calls to mind a quote from legendary investor, Sir John Templeton. He noted “…In all my 53 years of investment counsel there’s never been a year without problems, but for every problem we have ten blessings. You only hear about the shocking things so don’t be discouraged by the horrible things that you are flooded with.

The Rewards of Persevering With a Proven Strategy

We hope you find encouragement in these comments. As we have mentioned before, we believe risk and reward are closely related. In the pursuit of return, there will be volatility. We want to be mentally prepared for that possibility. As another legendary investor Benjamin Graham stated “In the short run, the market is a voting machine but in the long run it is a weighing machine.” With this in mind and because consistently predicting which markets will outperform in a given year is almost impossible, we continue to believe a long-term view utilizing goals based planning is the most effective approach.

As always, at E|Financial Alliance our mission is to help to give you peace and comfort with a plan for success – thank you for allowing us to partner with you on your future success.

Mitch & Destin