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First Quarter 2016 – Client Commentary

First Quarter 2016

“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.”

Warren Buffett

The Power of Discipline – Investing Commentary

Financial Market Indices as of December 31, 2015Last 3 MonthsLast 12 MonthsLast 3 Years (annualized)Last 5 Years (annualized)Last 7 Years (annualized)
Barclays U.S. Aggregate Bond Index(0.89%)0.55%1.41%3.25%4.09%
Lipper S&P 500 U.S. Stock Index5.15%1.05%15.43%12.26%14.52%
Lipper Large-Cap U.S. Growth Stocks5.89%5.64%17.17%12.18%16.05%
Lipper Large-Cap U.S. Value Stocks4.04%(3.70%)13.05%10.02%12.48%
Lipper Small-Cap U.S. Growth Stocks2.02%(1.04%)13.14%9.57%15.54%
Lipper Small-Cap U.S. Value Stocks1.57%(7.15%)9.65%7.33%13.21%
Lipper International Developed Country Stocks2.05%(1.37%)4.96%3.22%8.41%
Lipper Emerging Market Stocks(0.88%)(14.51%)(6.14%)(4.30%)7.70%

As we review market returns in the chart above, we note a wide dispersion in performance across asset classes over the past one, three, and five year time periods. While it may be easy to become frustrated about this disparity in performance, we believe that a diversified portfolio and a long-term perspective is still the appropriate path to follow. Although it takes great discipline, we continue to see compelling reasons to include international developed and emerging market equities in portfolios. We believe that easy-money policies in Europe and Japan will lead to better economic times. We’re seeing evidence that businesses in those countries, which generate a significant portion of their sales from exports, are already benefiting from weaker currency values relative to the U.S. dollar. With emerging market stocks, valuation levels are very attractive in our opinion, and we believe this sets the stage for possible out-sized returns over the next five plus years. Investors with allocations to non-U.S. stocks, particularly those of emerging markets, need their diversification discipline now as much as ever.  

When considering discipline, we think of athletes who demonstrate great discipline with their training and then achieve great victories. The truth is, there is a challenging side to discipline. It is relentlessly obeying the early alarm clock, putting in training, and following an often restrictive diet. Discipline keeps us on track and compels us toward our goals when other motivations fail us. Using an athlete as a comparison, we find parallels with current financial markets and our investment portfolios.

Discipline with investing means staying with your investment diversification strategy when markets decline or when certain investments go through a period of underperformance. We are compelled by our long-term goals to put up with these hurdles, in the same light that we think about athletes staying with their training schedule. There can be a temptation to sell the investments that have done poorly and to purchase more of the investments that have had the highest, most-recent returns.  While we cannot predict which asset class will be the top performer in the short-term, one thing we know from history is that no single asset class remains the winner for all time. Each one has cycled in and out of favor, and we believe remaining diversified and rebalancing your portfolio throughout these cycles adds value over the long-term.

As always, we appreciate the continued trust you have placed in our team and welcome your questions and comments concerning your investments.

Your Investment Team,

Chad-A-Sander-4784

Chad A. Sander, CFP®

Direct Phone: 812-602-6302

Email Chad

Taylor-Payne-5130

T. Taylor Payne, CPA/PFS, CFP®

Direct Phone: 812-602-6301

Email Taylor

Bethany Muensterman

Bethany Muensterman, CFA

Direct Phone: 812-602-6308

Email Bethany

Kyle-Reynolds-4948

Kyle Reynolds

Direct Phone: 812-602-6303

Email Kyle

Fulfilling Resolutions – Planning Commentary

2d500b58-6c35-4b74-9b85-49ff64a266c9Another new calendar year is here.  With that, discussions about New Year’s Resolutions begin.  According to Statistic Brain Research Institute, 45% of Americans usually make New Year’s Resolutions.  However, the same research indicates that only 8% of people are successful in achieving their resolutions.  No doubt there are numerous reasons the remaining 92% are unsuccessful.

As children, many of us didn’t like discipline because it meant difficult situations we had to experience to create a better future for our benefit.  Even as adults, day-to-day discipline in our financial lives can be very challenging.  However, we see those who practice discipline in their financial lives often reap huge rewards for their efforts.  The ultimate goal, in our opinion, is not to accumulate more wealth nor to see account balances get larger every year.  Instead the prize is to lead one’s best life by consciously and happily exchanging the insignificant things for the most important things in life.  We believe planning helps with this by continually visualizing and reminding ourselves of the payoffs (both current and future) of discipline.

How many more people would be successful in achieving their New Year’s Resolutions if they had a partner help them determine their ability to achieve their goals, to provide proactive accountability along the way, to help monitor their progress, and whose goals align with theirs?  That’s exactly what our team is built to be – a financial partner with motivations aligned with yours so you can continue experiencing success in your financial life planning.

As 2016 begins, our planning team will continue directing our resources and technology towards what’s most important to you.  We are here to answer any questions you may have about your personal planning site so this tool can be useful to you.  As a reminder, your personal planning site can be accessed in the Client Center of our firm’s website by clicking on “Planning Login.”  https://paynewealthpartners.com/client-center/

The information in this material is only as current as the date indicted, and may be superseded by subsequent market events or for other reasons. Statements concerning financial market trends are based on current market conditions, which are subject to change and which Payne Wealth Partners, Inc. does not undertake to update. While all information prepared in this document is believed to be accurate, any statements of opinion constitute only current opinions of Payne Wealth Partners, Inc., which are subject to change and which Payne Wealth Partners, Inc. does not undertake to update. Accordingly, you should not put undue reliance on these statements.

Contact Our Offices

Payne Wealth Partners, Inc.
Keystone Financial Consulting
601 N Cross Pointe Blvd
Evansville, IN 47715
Phone: 812-477-6221
Toll Free: 888-477-6221
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