October 2014 Market Review Newsletter

This last quarter has brought many new highs, recent drops in the market, and a lot of other news. The broad market (Morningstar Index) is up 7.33% for the year and up .21% for the quarter ended. We have our first Ebola case in the US, ISIS, Ukraine, Hong Kong protesters, Iranian nuclear enrichment, a White House intruder, the going public of Alibaba ( a Chinese Amazon/Google) the collapse of the Venezuelan dollar, and several other world events. With all this going on it is surprising that the news we are most closely watching is the departure of Bill Gross from Pimco Funds to Denver’s Janus Funds. A little background on Pimco and the 70 year old Gross is helpful. Pimco was founded by Gross in 1979 and has grown to be a 2 trillion dollar firm by assets, one of the largest bond managers in the world. Over 10 billion of assets left Pimco in the 3 days since the announcement. Some pundits are predicting up to 500 billion may leave. We are not moving any of our Pimco positions at time. Currently the strategy’s and goals of the funds are still the same as they were. This may change. We are watching the situation closely and will let you know if this changes. I heard Mr. Gross speak at the Morningstar conference in June after Mohamed El -Erian (the heir apparent) left the firm. Pimco has very experienced traders, analysts, and managers. A firm their size cannot rely on only one or two people. My thoughts at the time were that maybe it would be better if Gross left. I believe Janus may not be getting the same man that built Pimco. They replaced Mr. El-Erian with 6 internal managers. As things progress we will move as needed but not with the knee jerk actions a lot of “fast” money is unwisely doing. Our focus will, as always, be on the best bond positions for you. The economy has had a few setbacks but continues to improve. If you have any questions or concerns please contact us.

As usual we thank you for your trust and business.


Willis Ashby, CFP®

“In general, the art of government consists of taking as much money as possible from one party of citizens to give to the other.” Voltaire (1764)

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