Fourth Quarter Investment Pulse

Contributed by: Angela Palacios, CFP® Angela Palacios

Some great research this quarter!  From a headline grabber, to sage words of wisdom from long tenured investors, take a look!

Kevin O’Leary from Shark Tank – 11/18/16 CFA® Society of Michigan

The investment department had the opportunity to listen to “Mr. Wonderful” himself discuss what he has learned being an entrepreneur and his outlook for 2017.  Highlights included that he prefers to invest in companies run by women because they set and accomplish achievable goals for themselves and their employees.  He also discussed his plan for the future generations of O’Learys.  He is not interested in handing his children a privileged life on a platter.  Rather he will pay for them from birth through college and then they are on their own to make their way in life.  The same will happen for their children and so on.  He said his mother taught him this important lesson:

“The only birds that dies leaving the nest are the ones that don't learn how to fly.”

Kevin's predictions for 2017 included:

  1. Donald Trump wins the election (he called this a week before the election on television)
  2. Oil will end 2017 under $50
  3. The 10 year US Treasury bond interest rate will end the year under 3%
  4. The S&P 500 will end 2017 at 2,300
  5. Financials will underperform the S&P 500 in 2017
  6. Real Estate Investment Trusts will outperform the S&P 500 in 2017
  7. Energy will underperform the S&P500 in 2017
  8. Russell 2000 will outperform the S&P 500 in 2017
  9. Europe (currency unhedged) will surprise in 2017 and outperform US markets
Investment team gathers before the presentation: From left to right: Jaclyn Jackson, Portfolio Administrator and Financial Associate, Lauren Adams CFA®, Director of Client Services, Melissa Joy CFP®, Partner; Angela Palacios CFP®, Director of Investments; Nicholas Boguth, Investment Research Associate

Investment team gathers before the presentation: From left to right: Jaclyn Jackson, Portfolio Administrator and Financial Associate, Lauren Adams CFA®, Director of Client Services, Melissa Joy CFP®, Partner; Angela Palacios CFP®, Director of Investments; Nicholas Boguth, Investment Research Associate

David Fisher of American Funds

It was a pleasure learning from David Fisher, equity portfolio manager at Capital Group, and his 50 years of investment experience.  David spent time discussing the culture of their firm and how important it has been over the years to attract and retain high quality investment professionals.  Analysts are compensated on how they perform relative to a benchmark rather than relative to each other.  They feel this has contributed strongly to their years of serving clients well.  David spent his career researching media, consumer electronic and electrical equipment companies.   He discussed how vastly those markets have changed over the years.  He said:

“If you don’t obsolete yourself, someone else will obsolete you.”

He was referring to Eastman Kodak.  Remember those cameras?  The type where you would have to take your film in to develop?  The company held the patent to digital technology and didn’t develop it because it would have put their profitable film and camera areas out of business!  Oops!

Scott Davis, Portfolio Manager of Columbia Dividend Income Fund

We have sat down many times with Scott.  He brings great perspective to our portfolios with his dividend growth focused strategy.  Many investors have chased dividend yields over the past few years when they found their bond portfolios lacking.  Scott argues that the quality of the dividend rather than the yield is most important.  Dividends are not contractually committed to like bond interest.  It is completely up to a Board of Directors whether the dividend is paid or not.  A high yield is only positive if it is sustainable.  A stock price generally depreciates very strongly before a dividend cut occurs, which is why the work Scott does is so important. 

He also discusses with corporate management the type of shareholders that they want to have.  A company’s shareholder base changes when they commit to paying/growing a dividend.  When doing this they have a more stable investor base that tends to hold a position longer term.

Angela Palacios, CFP® is the Director of Investments at Center for Financial Planning, Inc.® Angela specializes in Investment and Macro economic research. She is a frequent contributor The Center blog.


The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Angela Palacios and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Holding investments for the long term does not insure a profitable outcome. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Investments mentioned may not be suitable for all investors. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility. Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors. Investing in the energy sector involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors. Dividends are not guaranteed and must be authorized by the company's board of directors. Raymond James is not affiliated with and does not endorse the opinions or services of Kevin O'Leary, David Fisher, Capital Group, Scott Davis and/or Columbia Dividend Income Fund.