After a month of rough patch of financial market performance for the past month, the SP500 has recouped over half of the recent losses while bonds have given back about half of their recent gains. The SP500 lost about 10% from the recent highs in September to the lows last week. The average stock was punished much worst as represented by the SP600 small cap index losing 13%.
It appears that the selloff in stocks was largely emotionally driven. Initially, the decline was sparked by economic concerns from Europe, further fueled by Ebola fears, propelled by index fund investors bailing out, and the downward trend was accelerated by high frequency traders. As was pointed out as a potential catalyst for change in sentiment in our 4th quarter Outlook, corporate earnings have been coming in generally strong. Intel, Texas Instruments, most of the major banks reported solid earnings last week. Interestingly, the banks showed nice loan growth, a sign that the economy is growing. On the downside, IBM, McDonald’s, and Coke reported weak results. IBM missed the move the cloud and mobile, while McDonald’s is out of touch with customers, and consumers prefer water over carbonated drinks.
Specific to core holdings in client accounts, six companies have reported with most have been solid, Verizon the weakest with competition hurting margins, but still growing. However, Apple was the star so with the strongest growth in years and solid guidance for the December quarter. Apple’s new iPhone 6 is being very well received and the new Apple Pay offers a more secure payment method. Oh yes, to get Apple Pay you will need to buy a iPhone 6.
Looking forward, the growing economy provides the background for corporations to produce earnings growth. Overtime, earnings growth will drive stock prices higher from modest valuations. Also, we are about to enter the seasonally strong period for stock market performance from November to May.
Information sources used to prepare this report include Argus Research, Value Line Investment Survey, Zacks, Barron’s, Kiplinger’s, Fidelity, and Decision Economics. Founded in 2010, Andrew Hill Investment Advisors, Inc. is registered as an investment advisor with the State of Florida and with the State of Texas and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Andrew Hill and clients of AHIA hold positions in the investments mentioned in this report. Please contact Andrew Hill Investment Advisors, Inc. if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Our current disclosure statement is set forth in Form ADV, Part 2 and is available for your review upon request. Tax and estate planning advice is general in nature and the firm is not engaged in the practice of law.
Andrew D.W. Hill, CFA
President & Co-founder
Andrew Hill Investment Advisors, Inc.
4081 Tamiami Trail North, Suite C-105
Naples, FL 34103
Direct Dial: 239-777-3188
Visit us on the web: www.responsibleadvisors.com
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Andrew Hill Investment Advisors, Inc., is registered as an investment advisor with the State of Florida and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements.
Please contact Andrew Hill Investment Advisors, Inc. if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Our current disclosure statement is set forth in Part II of Form ADV and is available for your review upon request.
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