Naysayers and doubters will eat crow pudding.

Naysayers and doubters will eat crow pudding.

Naysayers and doubters will eat crow pudding.

“Pie makes everybody happy.”

– Laurie Halse Anderson

Naysayers and doubters will have their day, but not until they’ve eaten their crow pudding for the holidays. 

In large doses no doubt.  Market averages continue to reach record highs and look poised to go even higher.  All the discussion surrounding valuations, earnings, world politics, and trade have not deterred US equity markets.  They are on course to report out sized gains for the year.  And for all those with vertigo there are places in the market for you to invest. 

Markets are being driven by two reasons.

  • The Fed has been easing and the US consumer continues to consume.  The Fed changed its course early this year after last December’s debacle.  A Fed on autopilot is not the kind and gentler central banker world markets took kindly to.  Stopping the balance sheet run-off and rate increases made for more liquidity.  With bond yields at anemic levels, capital soon found better places to put money to work.
  • And let’s not forget the consumer.  As two-thirds of our nation’s output, this segment remains healthy and looks poised to continue doing those things it does well, borrow and spend.  Consumer debt continues to rise but in line with GDP. Delinquencies on consumer loans remain low and average credit scores on mortgages and autos remain elevated and stable.  Mortgage rates are low and with employment at all-time highs and wages increasing, (at a pace which keeps the Fed from becoming nervous) the consumer should continue to be the prime factor pushing our economy toward sustained growth.  Manufacturing will get the press, but the consumer is the sector in the room where it happens.

An accommodative Fed, along with good employment across most sectors, bodes well for continued expansion of our economy.  So, I’ll pass on the avian offering for now.   Make mine figgy pudding and Happy Thanksgiving to all.

As you consider the information provided with the Salt Creek Investors Asset Allocation Platform (the “Program”), please review the following:

The information and descriptions provided about the Program are for educational and information purposes only and should not be used or construed as investment advice, an offer to sell, a solicitation of an offer to buy, a recommendation for any security, or suggest any course of action. LaSalle St. Investment Advisers (“LSIA”) does not guarantee that the information or descriptions supplied about the Program are complete or timely. LSIA makes no warranty with regard to any results obtained from the Program or its deployment. LSIA is not responsible for any direct or incidental loss incurred by relying on information provided about the Program. The allocations presented herein are illustrations and completely hypothetical. None reflect actual investments or investment results and do not reflect allocation of any individual portfolio. Asset allocation and its results vary over time. Other allocations or asset investment categories not offered in the Program may have characteristics similar or superior to those illustrated. Past performance of any model or allocation is no prediction of future results. Neither the Program nor any system/model can predict the future of any market or price movement in a market. Diversification and asset allocation do not guarantee against the risk of investment loss, including risk of loss of principal. Information provided regarding the Program is as of the date of publication and may change at any time without notice. Information has been included which was obtained from third parties and is believed to be reliable and complete. LSIA does not warrant the accuracy or completeness of such information. LSIA is a registered investment advisor and does not provide tax, accounting or legal advice ‒ the information and/or descriptions provided do not constitute such advice. More information regarding LSIA and its investment strategies can be found in the LSIA brochure, ADV Part II, which is available online or through LSIA. Asset allocation may not be suitable for all investors. Before deciding to invest, potential participants should consult with an investment adviser to determine an appropriate investment strategy and methodology which meets the investor’s specific financial needs, objectives, goals, time horizons and risk tolerance. The information and description provided herein has been made without consideration of any investor’s particular suitability for investing in the Program. Asset allocation also involves investment in various asset classes which are not insured by the government. Investing in fixed income and/or high yield securities involves additional concerns including interest rate risk, credit risk and reinvestment rate risk. Investing in securities outside the United States may entail greater risk than investing in domestic U. S. markets. These risks typically include political and economic uncertainty of foreign countries as well as currency exchange fluctuations, including foreign currency exchange rates, political risks, different methods of accounting, financial reporting and foreign taxes. The prospectus accompanying a security should carefully be reviewed before investing. The services described herein are available to persons residing in any state where they would otherwise be contrary to local law or regulation.

 

Copyright © 2019 LaSalle St. Investment Advisors, LLC., All rights reserved.

Tea leaves predicting little chance of recession

Tea leaves predicting little chance of recession

Tea leaves predicting little chance of recession

“I don’t look to jump over 7-foot bars.  I look for 1-foot bars that I can step over.”

– Warren Buffet

With most of the economic tea leaves predicting little chance of an oncoming recession there are few reasons the equity market should not continue higher. 

New highs seem to be a concern for many of the less informed but consider the number of new highs the market has achieved over its history.  Market acrophobia seems to be a real disorder.  Of course, the path to higher highs is not predictable or linear.  Retractions are inevitable, but as long our economy has growth in labor and productivity, market prices will reflect the same trajectory.

“Buying the dip” strategy has been and should continue to be an effective way to gain new or increased exposure to equity markets.  Why? Inflation remains contained, which should keep the Fed in a more accommodative mood.  The PCE index (Fed favorite) has year over year core inflation at 1.7%.  This is well below the targeted rate of 2%.  The job market remains tight with U-4 predicted at 3.7% in 2019 and 3.8% in 2020, yet wages are showing only modest increases.  Even the broadest measure of unemployment U-6 is now at 6.9%, the lowest in almost 20 years. 

With the Fed supplying liquidity and consumers getting paychecks, our economy driven predominantly by consumer actions should grow.  Manufacturing has suffered a slowdown but even now this looks to be on better footing. 

But forecasting matters of the economy will never be so simple.  Potholes in the road to accuracy are numerous.  Trade talks, out-sized inflation, slowing consumer spending, or the bursting of a now unidentified asset bubble could change the narrative.  For now, stay invested, stay diversified, and stay disciplined.  In markets, what goes up does not have to come down.

As you consider the information provided with the Salt Creek Investors Asset Allocation Platform (the “Program”), please review the following:

The information and descriptions provided about the Program are for educational and information purposes only and should not be used or construed as investment advice, an offer to sell, a solicitation of an offer to buy, a recommendation for any security, or suggest any course of action. LaSalle St. Investment Advisers (“LSIA”) does not guarantee that the information or descriptions supplied about the Program are complete or timely. LSIA makes no warranty with regard to any results obtained from the Program or its deployment. LSIA is not responsible for any direct or incidental loss incurred by relying on information provided about the Program. The allocations presented herein are illustrations and completely hypothetical. None reflect actual investments or investment results and do not reflect allocation of any individual portfolio. Asset allocation and its results vary over time. Other allocations or asset investment categories not offered in the Program may have characteristics similar or superior to those illustrated. Past performance of any model or allocation is no prediction of future results. Neither the Program nor any system/model can predict the future of any market or price movement in a market. Diversification and asset allocation do not guarantee against the risk of investment loss, including risk of loss of principal. Information provided regarding the Program is as of the date of publication and may change at any time without notice. Information has been included which was obtained from third parties and is believed to be reliable and complete. LSIA does not warrant the accuracy or completeness of such information. LSIA is a registered investment advisor and does not provide tax, accounting or legal advice ‒ the information and/or descriptions provided do not constitute such advice. More information regarding LSIA and its investment strategies can be found in the LSIA brochure, ADV Part II, which is available online or through LSIA. Asset allocation may not be suitable for all investors. Before deciding to invest, potential participants should consult with an investment adviser to determine an appropriate investment strategy and methodology which meets the investor’s specific financial needs, objectives, goals, time horizons and risk tolerance. The information and description provided herein has been made without consideration of any investor’s particular suitability for investing in the Program. Asset allocation also involves investment in various asset classes which are not insured by the government. Investing in fixed income and/or high yield securities involves additional concerns including interest rate risk, credit risk and reinvestment rate risk. Investing in securities outside the United States may entail greater risk than investing in domestic U. S. markets. These risks typically include political and economic uncertainty of foreign countries as well as currency exchange fluctuations, including foreign currency exchange rates, political risks, different methods of accounting, financial reporting and foreign taxes. The prospectus accompanying a security should carefully be reviewed before investing. The services described herein are available to persons residing in any state where they would otherwise be contrary to local law or regulation.

 

Copyright © 2019 LaSalle St. Investment Advisors, LLC., All rights reserved.

8 New Funds in our models

8 New Funds in our models

8 New Funds in our models

“You have to believe in your process. You have to believe in the things that you are doing to help the team win.”

– Tom Brady

With the Salt Creek fourth quarter re-balance completed on Friday, the new allocation should continue to benefit from ongoing market gains.  The portfolios contain eight funds that are different from last quarter and one new ETF.  There will be two ETF’s in the portfolio for the 4th quarter. 

Our consistent process attempts to identify the best active fund managers based on a quarterly analysis performed by the Salt Creek team.  The use of rigorous mathematical and statistical methods produces a set of managers exceeding certain predetermined criteria when examining their expected alpha, upside potential, downside probability, and style.   It’s worth noting that on occasion no active manager among the hundreds we screen will meet our selection criteria.  When this happens, we feel that to pay for active management is not prudent and thus an ETF is selected for the models. This quarter’s allocation has AGG in one of the bond sleeves and EWJ in the sleeve for exposure to Japan.   

Our goal is to choose those active managers we feel most likely to produce outcomes that align with the objectives of your clients. And by exposing the portfolios to as many diverse and non-correlated factors as possible, we can capture various risk/return premia while moderating downside volatility.     

As you consider the information provided with the Salt Creek Investors Asset Allocation Platform (the “Program”), please review the following:

The information and descriptions provided about the Program are for educational and information purposes only and should not be used or construed as investment advice, an offer to sell, a solicitation of an offer to buy, a recommendation for any security, or suggest any course of action. LaSalle St. Investment Advisers (“LSIA”) does not guarantee that the information or descriptions supplied about the Program are complete or timely. LSIA makes no warranty with regard to any results obtained from the Program or its deployment. LSIA is not responsible for any direct or incidental loss incurred by relying on information provided about the Program. The allocations presented herein are illustrations and completely hypothetical. None reflect actual investments or investment results and do not reflect allocation of any individual portfolio. Asset allocation and its results vary over time. Other allocations or asset investment categories not offered in the Program may have characteristics similar or superior to those illustrated. Past performance of any model or allocation is no prediction of future results. Neither the Program nor any system/model can predict the future of any market or price movement in a market. Diversification and asset allocation do not guarantee against the risk of investment loss, including risk of loss of principal. Information provided regarding the Program is as of the date of publication and may change at any time without notice. Information has been included which was obtained from third parties and is believed to be reliable and complete. LSIA does not warrant the accuracy or completeness of such information. LSIA is a registered investment advisor and does not provide tax, accounting or legal advice ‒ the information and/or descriptions provided do not constitute such advice. More information regarding LSIA and its investment strategies can be found in the LSIA brochure, ADV Part II, which is available online or through LSIA. Asset allocation may not be suitable for all investors. Before deciding to invest, potential participants should consult with an investment adviser to determine an appropriate investment strategy and methodology which meets the investor’s specific financial needs, objectives, goals, time horizons and risk tolerance. The information and description provided herein has been made without consideration of any investor’s particular suitability for investing in the Program. Asset allocation also involves investment in various asset classes which are not insured by the government. Investing in fixed income and/or high yield securities involves additional concerns including interest rate risk, credit risk and reinvestment rate risk. Investing in securities outside the United States may entail greater risk than investing in domestic U. S. markets. These risks typically include political and economic uncertainty of foreign countries as well as currency exchange fluctuations, including foreign currency exchange rates, political risks, different methods of accounting, financial reporting and foreign taxes. The prospectus accompanying a security should carefully be reviewed before investing. The services described herein are available to persons residing in any state where they would otherwise be contrary to local law or regulation.

 

Copyright © 2019 LaSalle St. Investment Advisors, LLC., All rights reserved.

Keep human capital diverse from financial capital

Keep human capital diverse from financial capital

Keep human capital diverse from financial capital

“My interest is in the future because I am going to spend the rest of my life there.”

– Anonymous

As financial advisors your role is critical to the success your clients seek. 

Investing for future needs is the biggest challenge faced by investors and their advisors. In order to retire at 65, today’s millennial needs to save approximately one-half of each paycheck.  That seems a very difficult goal to achieve in today’s environment.

What are some of the components of sound financial advice advisors should be conveying to their clients?  

  1. Most important is to avoid disaster and keep human capital diverse from financial capital.  I mention this because of the Enron debacle and many like it.   Many investors had not only a significant portion of their financial capital exposed to Enron’s stock, but also were employees of Enron which proved to be ruinous to their human capital as well.  A double whammy that caused the financial ruin of many.
  2. Next it is important to reduce the risk or volatility by using non-correlated assets in constructing portfolios.  All asset classes have unique risk and return factors.  Maximizing expected returns and minimizing volatility through a diversified portfolio can enhance returns.   Reduced volatility results in better long-term investment results.
  3. Finally, be conscious of the money illusion that fails to incorporate the effects of inflation on long term goals.  Even though inflation is currently well contained, ignoring the erosive effects it can have on future assets and liabilities will cause future needs to be grossly underestimated.

Planning and investing for the future require skill, discipline, process and a realization of risks that are ever present in an investment market where the future may not look like the past.

As you consider the information provided with the Salt Creek Investors Asset Allocation Platform (the “Program”), please review the following:

The information and descriptions provided about the Program are for educational and information purposes only and should not be used or construed as investment advice, an offer to sell, a solicitation of an offer to buy, a recommendation for any security, or suggest any course of action. LaSalle St. Investment Advisers (“LSIA”) does not guarantee that the information or descriptions supplied about the Program are complete or timely. LSIA makes no warranty with regard to any results obtained from the Program or its deployment. LSIA is not responsible for any direct or incidental loss incurred by relying on information provided about the Program. The allocations presented herein are illustrations and completely hypothetical. None reflect actual investments or investment results and do not reflect allocation of any individual portfolio. Asset allocation and its results vary over time. Other allocations or asset investment categories not offered in the Program may have characteristics similar or superior to those illustrated. Past performance of any model or allocation is no prediction of future results. Neither the Program nor any system/model can predict the future of any market or price movement in a market. Diversification and asset allocation do not guarantee against the risk of investment loss, including risk of loss of principal. Information provided regarding the Program is as of the date of publication and may change at any time without notice. Information has been included which was obtained from third parties and is believed to be reliable and complete. LSIA does not warrant the accuracy or completeness of such information. LSIA is a registered investment advisor and does not provide tax, accounting or legal advice ‒ the information and/or descriptions provided do not constitute such advice. More information regarding LSIA and its investment strategies can be found in the LSIA brochure, ADV Part II, which is available online or through LSIA. Asset allocation may not be suitable for all investors. Before deciding to invest, potential participants should consult with an investment adviser to determine an appropriate investment strategy and methodology which meets the investor’s specific financial needs, objectives, goals, time horizons and risk tolerance. The information and description provided herein has been made without consideration of any investor’s particular suitability for investing in the Program. Asset allocation also involves investment in various asset classes which are not insured by the government. Investing in fixed income and/or high yield securities involves additional concerns including interest rate risk, credit risk and reinvestment rate risk. Investing in securities outside the United States may entail greater risk than investing in domestic U. S. markets. These risks typically include political and economic uncertainty of foreign countries as well as currency exchange fluctuations, including foreign currency exchange rates, political risks, different methods of accounting, financial reporting and foreign taxes. The prospectus accompanying a security should carefully be reviewed before investing. The services described herein are available to persons residing in any state where they would otherwise be contrary to local law or regulation.

 

Copyright © 2019 LaSalle St. Investment Advisors, LLC., All rights reserved.

It’s alpha our clients pay for…

It’s alpha our clients pay for…

It’s alpha our clients pay for…

“It amazes me how people are often more willing to act based on little or no data than to use data that is a challenge to assemble.”

– Robert Shiller

The debate surrounding active versus passive portfolio management has been with us a long time.  Get used to it. 

Just like an argument about which is the better NFL franchise, Vikings or Packers, the case for both are rational and passionately defended.  Which works better?  It depends on who and how many you ask.  It depends on the timeframe.  It depends on what is meant by “better”.  John Rekenthaler of Morningstar was recently quoted in a WSJ article saying, “Active will never die”.  He’s probably correct, but active will need a better environment in which to operate and not all active managers will survive.

It seems over the past few years active has been the victim of low volatility and very good index returns.  A white paper by RVK Investments studied excess returns of active large cap managers under different dispersion environments and concluded that high dispersion (volatility) and index return levels drive active management relative performance.  When an index shows strong returns, active management trails.  When dispersion of returns are low, active trails again.  Market cycles are persistent and deliver the beta both good and bad.  But beta is not what we’re looking for in active management.

We want alpha and it’s alpha our clients pay for. 

Where do we look to find the best active mangers?  What are some of the characteristics of superior managers?   Low fees, protecting the downside, and manager ownership of the fund is a good start, but these lack completeness.  Northill Capital in a 2016 paper that a focused management style was a key to delivering alpha.  A focused fund manager delivers value by adopting a business model that commits all of the management time and resources to a single investment process.  These managers target specialization in one asset class and are not distracted by bringing new products or strategies to the market.

Being a generalist is just another way to under perform. With the Salt Creek Investors platform our strategies and processes are aligned with several of the traits mentioned above with discipline and objectivity being the hallmark.  But just as important are our strategies which are unique and offer our clients a real opportunity to see value, even under an asset allocation structure.  As Howard Marks once commented, “active management strategies demand un-institutional behavior from institutions, creating a paradox that few can unravel.  By operating in the institutional mainstream of short-horizon, uncontroversial opportunities, committee members and staff ensure unspectacular results, while missing potentially longer-term contrarian plays.”

As you consider the information provided with the Salt Creek Investors Asset Allocation Platform (the “Program”), please review the following:

The information and descriptions provided about the Program are for educational and information purposes only and should not be used or construed as investment advice, an offer to sell, a solicitation of an offer to buy, a recommendation for any security, or suggest any course of action. LaSalle St. Investment Advisers (“LSIA”) does not guarantee that the information or descriptions supplied about the Program are complete or timely. LSIA makes no warranty with regard to any results obtained from the Program or its deployment. LSIA is not responsible for any direct or incidental loss incurred by relying on information provided about the Program. The allocations presented herein are illustrations and completely hypothetical. None reflect actual investments or investment results and do not reflect allocation of any individual portfolio. Asset allocation and its results vary over time. Other allocations or asset investment categories not offered in the Program may have characteristics similar or superior to those illustrated. Past performance of any model or allocation is no prediction of future results. Neither the Program nor any system/model can predict the future of any market or price movement in a market. Diversification and asset allocation do not guarantee against the risk of investment loss, including risk of loss of principal. Information provided regarding the Program is as of the date of publication and may change at any time without notice. Information has been included which was obtained from third parties and is believed to be reliable and complete. LSIA does not warrant the accuracy or completeness of such information. LSIA is a registered investment advisor and does not provide tax, accounting or legal advice ‒ the information and/or descriptions provided do not constitute such advice. More information regarding LSIA and its investment strategies can be found in the LSIA brochure, ADV Part II, which is available online or through LSIA. Asset allocation may not be suitable for all investors. Before deciding to invest, potential participants should consult with an investment adviser to determine an appropriate investment strategy and methodology which meets the investor’s specific financial needs, objectives, goals, time horizons and risk tolerance. The information and description provided herein has been made without consideration of any investor’s particular suitability for investing in the Program. Asset allocation also involves investment in various asset classes which are not insured by the government. Investing in fixed income and/or high yield securities involves additional concerns including interest rate risk, credit risk and reinvestment rate risk. Investing in securities outside the United States may entail greater risk than investing in domestic U. S. markets. These risks typically include political and economic uncertainty of foreign countries as well as currency exchange fluctuations, including foreign currency exchange rates, political risks, different methods of accounting, financial reporting and foreign taxes. The prospectus accompanying a security should carefully be reviewed before investing. The services described herein are available to persons residing in any state where they would otherwise be contrary to local law or regulation.

 

Copyright © 2019 LaSalle St. Investment Advisors, LLC., All rights reserved.

Lows of June vs Highs of July

Lows of June vs Highs of July

Lows of June vs Highs of July

“Looking ahead we see the stock market continuing to reach progressive new high levels as we move throughout the rest of 2019 and 2020.”

– Steve Slifer

NumberNomics, October 9, 2019

As Salt Creek prepares for the 4th quarter re-balance, there seems to be little clarity or consensus about which direction markets are headed.   The soup of economic and political debate is constantly being stirred for consumption but looking more like bad tasting medicine than something suited for an epicure.   I seem to have lost my spoon. 

With the lows of June and the highs of July still intact, the movers of markets seem content to let the volatility provide profits when prices rise and fall to the end of the ranges.  Soon things will become clearer and masterful market timers will claim their predictions have been validated, again.   Some things never change.  And this is true of our efforts at Salt Creek.  Our process has been the same since inception.  It is well defined and structured around giving your clients a disciplined and rigorous assessment of the fund managers used in our asset allocation.   We take an unbiased approach to the analysis we perform.  The quantitative outcomes provided to us by Sortino Investment Analytics (SIA) renders solutions that align with the requirements your clients have provided us.  We remain committed to the duty and care of your clients and your efforts.

As you consider the information provided with the Salt Creek Investors Asset Allocation Platform (the “Program”), please review the following:

The information and descriptions provided about the Program are for educational and information purposes only and should not be used or construed as investment advice, an offer to sell, a solicitation of an offer to buy, a recommendation for any security, or suggest any course of action. LaSalle St. Investment Advisers (“LSIA”) does not guarantee that the information or descriptions supplied about the Program are complete or timely. LSIA makes no warranty with regard to any results obtained from the Program or its deployment. LSIA is not responsible for any direct or incidental loss incurred by relying on information provided about the Program. The allocations presented herein are illustrations and completely hypothetical. None reflect actual investments or investment results and do not reflect allocation of any individual portfolio. Asset allocation and its results vary over time. Other allocations or asset investment categories not offered in the Program may have characteristics similar or superior to those illustrated. Past performance of any model or allocation is no prediction of future results. Neither the Program nor any system/model can predict the future of any market or price movement in a market. Diversification and asset allocation do not guarantee against the risk of investment loss, including risk of loss of principal. Information provided regarding the Program is as of the date of publication and may change at any time without notice. Information has been included which was obtained from third parties and is believed to be reliable and complete. LSIA does not warrant the accuracy or completeness of such information. LSIA is a registered investment advisor and does not provide tax, accounting or legal advice ‒ the information and/or descriptions provided do not constitute such advice. More information regarding LSIA and its investment strategies can be found in the LSIA brochure, ADV Part II, which is available online or through LSIA. Asset allocation may not be suitable for all investors. Before deciding to invest, potential participants should consult with an investment adviser to determine an appropriate investment strategy and methodology which meets the investor’s specific financial needs, objectives, goals, time horizons and risk tolerance. The information and description provided herein has been made without consideration of any investor’s particular suitability for investing in the Program. Asset allocation also involves investment in various asset classes which are not insured by the government. Investing in fixed income and/or high yield securities involves additional concerns including interest rate risk, credit risk and reinvestment rate risk. Investing in securities outside the United States may entail greater risk than investing in domestic U. S. markets. These risks typically include political and economic uncertainty of foreign countries as well as currency exchange fluctuations, including foreign currency exchange rates, political risks, different methods of accounting, financial reporting and foreign taxes. The prospectus accompanying a security should carefully be reviewed before investing. The services described herein are available to persons residing in any state where they would otherwise be contrary to local law or regulation.

 

Copyright © 2019 LaSalle St. Investment Advisors, LLC., All rights reserved.