History Has Steered Folks to Environmental, Social and Governance Investing.
In this Milwaukee Journal Sentinel article from July 15th, Tom Saler explores socially responsible investing (SRI) and breaks down some recent high-profile examples.
Read July article.

 

New Firm Targets Socially Responsible Investors.
In this article from January 9th, Milwaukee Journal Sentinel reporter Kathleen Gallagher explores Greg Wait's launch of a new company that combines socially responsible investing and online investment advice.
Read January article.

 

Investment Trends, with insights by Greg Wait. In the Milwaukee Journal Sentinel's October 17th article, Kathleen Gallagher and Greg Wait discuss the recent rise of environmental, social and governance, or ESG investing. Greg provides insight into how reduced risk and improved returns are causing money managers to include ESG investing in their portfolios. Read October article.

 

Responsible Investing: Creating Financial and Non-Financial Value by Greg Wait. Do investors sacrifice returns in pursuit of their goal of advocating for a better world in which to live?
Learn more.

 

Ten-Year History of Investment Manager Performance by Greg Wait. As part of our process, we have conducted investment manager research and due diligence resulting in manager or fund recommendations to our clients. Here are our findings.

 

The month of September, 2013 marked the 10-year anniversary of Falcons Rock serving our clients and building relationships. We are grateful for all the years of friendship, loyalty, and support, and look forward to our next decade!

 

Investment Trends, with insights by Greg Wait. In the Milwaukee Journal Sentinel's July 20th article, Kathleen Gallagher and Greg Wait discuss the rising U.S. Treasury rates and using duration as a measure of risk. Greg's comments relate to whether we'll be "looking back on this short-term increase in yields as the warning shot for the much-anticipated longer-term rise in interest rates." Read July article.

 

Dec 9, 2012, Journal Sentinel's Kathleen Gallagher interviewed Greg Wait on current Investment Trends. Read the full article: "Low-quality stocks continue to provide strong returns."

 

We've Grown! Meet our new investment consultant: Tony Sebranek.

 

Investment Trends column of Milwaukee Journal-Sentinel shows Top-Down investment strategies are achieving positive results.
Read article on Top-Down Investing

 

Additional articles in the Milwaukee Journal Sentinel featuring Falcons Rock:
One is a fascinating story about a Mequon drug development company, which has a few of our clients as private investors.
Read article about our angel investors

 

Another features us in the Market Trends column: Strategy targets uncertain economy - and how Falcons Rock confronts specter of slow growth.
Read how we help clients get ready

 

There is a great deal of debate in the investment industry regarding active vs. passive (indexing) investment management.  We researched this topic and the results might be surprising to you.  Please see our research paper on this subject...more

 

We have experienced interesting situations with our clients. To update you on our firm’s activities, check out examples of recent work we have done for our clients...more

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US SIF Member 2017

The Final Four!

 

2015 Quarter 1 Market Review

Our beloved Wisconsin Badgers men’s basketball team just completed a tremendously successful season, as they were Big Ten Conference champions during the regular season, won the Big Ten Conference Tournament, earned a #1 seed in the NCAA National Tournament, and got to the Final Four for the second consecutive season under coach Bo Ryan! After beating the previously undefeated Kentucky Wildcats, the Badgers season came to a disappointing conclusion with a tough loss to the Duke Blue Devils in the national championship game. This group of talented, but fun-loving, players took all their fans on quite a ride this season.

Wisconsin Final Four

The “Final Four” may have a very different meaning to young Americans who are expected to live longer and therefore will have many more years of retirement to enjoy…it is very possible that future generations will have a final four decades of retirement! Even today, for married couples who have reached the traditional retirement age of 65, there is an 89% probability of at least one of them reaching age 80 and a 47% likelihood of at least one of them living to age 90. So, if a person retires today, there is about a 50/50 chance that they will need to fund for retirement expenses during the last half of their 60’s, full decades through their 70’s and 80’s, and part of their 90’s. The life expectancy for younger workers is even greater, requiring even more dollars to fund retirement expenses.

In the most recent “The Future of Retirement: Life After Work” study commissioned by HSBC (with survey results through 2013), US workers expect their current retirement savings to last 14 years, which leaves an average expected shortfall of 7 years. This report is the ninth in the series and represents the views of more than 16,000 people in 15 countries. This year’s report is subtitled “A new reality,” reflecting changing perceptions of workers around the globe. Some of the key findings include:

  • Younger workers expect to retire earlier than older workers…potentially a big problem because they will live longer.
  • 42% of working age people now expect to “semi-retire” on average at age 57.  44% of people who expect to semi-retire said they would do so to remain physically and mentally active; however 64% of semi-retirees regret giving up full-time work so soon.
  • Living in retirement is more expensive than many people think.  More than half of retirees say they continue to spend as much as, or more than, they did before they retired.
  • Current working age people expect the state to account for less than a quarter (24%) of their retirement income, down from 37% for current retirees, reflecting an acceptance of a reducing role for governments.
  • 45% of retirees are either financially supporting another family member or expect to do so at some point during their retirement.
  • 48% of people surveyed have never saved specifically for retirement.
  • There is a link between having a financial plan in place and saving more money for retirement:  44% say that as a result of financial planning, they have saved more for retirement.

From a societal perspective, inadequate savings/income for longer-living retirees portends many economic issues. Medical expenses continue to rise and are even more costly for older citizens. Retirees who have inadequate income spend less money, and as the number of retirees continues to rise with the Baby Boom generation, this could impact US economic growth. There is a question of who has the obligation to care for retirees who have no means to care for themselves. Working class wages have been stagnant for many years, which will make it more difficult for most workers to financially care for elderly family members. All of us can do our children a favor by guiding them on these issues at a fairly young age. The HSBC survey asked current retirees about the best pieces of financial advice they have ever received. Their responses included a few basics that are timeless: start saving at an early age, start saving a small amount regularly (easy to do today as most employers offer a 401k plan), don’t spend what you don’t have, and develop a financial plan for your future.

Passing this advice along to the younger generation of workers just may allow them to make it to their Final Four, and be a contender!

First Quarter 2015 Review

The S&P 500 Index generated another positive return in Q1 2015, with a modest gain of 1.0%. Equity mutual funds posted their tenth positive quarter in the last eleven. The best performing sectors in the S&P 500 Index during Q1 included Health Care (+6.5%), Consumer Discretionary (+4.8%) and Telecom (+1.5%). The worst performing sectors during the quarter were Utilities (-5.2%), Energy (-2.9%) and Financials (-2.1%). Small cap stocks and growth-oriented investment strategies were rewarded during the quarter.

Although the US Dollar continued to advance relative to most other currencies, thus detracting from US investor returns in foreign securities, non-US stocks produced significant gains (+5.0% in US Dollars, +11.0% in local currencies) during the quarter. In US Dollars, the best performing countries included Russia (+18.6%), Japan (+10.3%) and Germany (+8.4%). Countries with the worst returns during the quarter included Brazil (-14.6%) and the United Kingdom (-0.9%).

Bond markets were mostly positive during the quarter, as yields continue to fall around the world. Overall, most balanced portfolios and alternative strategies posted small gains during the quarter. Commodities markets continue to be hit hard by oversupply and reduced global demand and fell another 5.9% during Q1.

Here are the returns for select market indices for Q1 (as stated in U.S. dollars):


This and That

  • The Consumer Net Worth Index in Q1 2015 is on track to grow $5.8 trillion year-over-year to a record $85T (25% above the 2007 peak).
  • Eleven developed nations now have 10-year bond yields of less than 1%...kind of makes our US 10-Yr Treasury Bond yield of 1.92% look attractive.
  • Index funds garnered a record 38% of domestic equity mutual fund assets, considered by some a danger zone for investors. This is reminiscent of investor sentiment in late 1999-early 2000.
  • The US Unemployment Rate (5.48%) is now below the 50-year average rate of 6.1%; however, current wage growth of 1.8% is well below its long-term average of 5.5%.
  • Merger and acquisition deals continued to get done in the first quarter, with eight deals totaling more than $10 billion each, headlined by the Heinz/Kraft combination.
  • The Milwaukee Brewers opened their 2015 campaign with a disappointing 0-3 record, losing all three of their first home games of the season…oh, well there are 159 games left!

As always, there are plenty of risks in the investment world. Well-diversified portfolios provide investors with the best chance of managing volatility while achieving investment goals. A new US stock market peak is upon us, but since the last peak (October 2007), a portfolio of 100% stocks, a 60/40 stock/bond mix, and a 40/60 stock/bond mix have all generated similar returns. However, since the market bottom (March 2009), it took the 40/60 portfolio only 9 months to recover, the 60/40 mix needed 20 months to recover, and it took the 100% stock portfolio 36 months for a full recovery.

Thank you for being a client of Falcons Rock.

Greg Wait, President of Falcons Rock

Gregory D. Wait, President
Falcons Rock Investment Counsel, LLC

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