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3rd Quarter September 2015


As we discussed in our interim newsletter, volatility has increased in the third quarter. We saw the DJIA drop more than 10% and although it recovered somewhat it appears we may be retesting those lows. This is not unusual and can happen during periods of sharp declines. When markets drop, which is normal and expected, we evaluate how the investments in our portfolio are performing. With diversification, our goal is to have some investments that will be more stable during these periods such as high-quality, shorter term bonds. Those will also be the very investments that have low returns during robust markets. We have noticed that managers that own high-quality dividend paying companies have generally underperformed the S&P 500 this year somewhat. At times they tend to do better than non-dividend payers in periods of interest rate increases. In the last significant fed funds rate increase from 2004 to 2006, dividend paying stocks, as represented by the Dow Jones U.S. Select Dividend Index, outperformed the S&P 500. We believe it is prudent to hold these types of investments during changing market cycles.

International and emerging markets have also had corrections. China has been getting the most attention. While their markets are small the economy is very large and will likely impact the rest of the world. Energy prices (oil) have fallen significantly, over 50%, and could remain low for longer. However, emerging markets and energy are areas of opportunity.

We have been talking about the likelihood of a correction for the last few years. We recognize it is unnerving to watch large swings daily and hear and read scary headlines. Despite all that has already happened, most portfolios are down in low-single digits depending on how aggressive they are positioned. Do not let day-to-day market returns on negative years discourage you on changing your long-term strategy. These are the periods where permanent loss can occur if you react to short-term events. Negative and flat returns are built in to our planning assumptions. Wealth accumulation over time requires discipline. The Fed has postponed raising interest rates, to the surprise of some, but it appears that a small increase could still happen this year. It is hard to imagine it would cause much reaction, but anything is possible.

We are continuously monitoring the investments you own, the markets and our strategy. We will communicate with you when markets become unusually volatile or if we think a change is warranted. We meet with managers and review them regularly as well as attend conferences of leading economists, hedge fund managers and our colleagues nationally on a regular basis. In addition, our website will feature the most current information, white papers, and newsletters as well as links to many resources we hope you find helpful. Always reach out to us if your circumstances have changed or you have questions or concerns.

40th Anniversary

Our Client Event and Golf Outing in August was a great success. The weather was wonderful and we had 170 in attendance. Our speaker, Andy Zolper, Chief Information Security Officer at Raymond James gave us fascinating insight as to how financial institutions stay ahead and tips on how we can improve our own security online. It is always such a fun day and enjoyable to see everyone as well as meet new friends and family members. Thank you all for such a memorable evening.

War Room for Cyber Security at Raymond James

Raymond James gets high marks from regulators on their security implementations. Andy's additional recommendations for individuals include using a Mac as opposed to a PC. Using Google Chrome as your browser engine is one of the most secure options. He recommends never opening unfamiliar emails and having multiple, complex passwords. He also suggested that you do not have to be overly concerned about writing passwords down. Cyber criminals do not usually break into your house. They usually hack into your computer. He also suggested having two email addresses. One you can use for online shopping and one for personal reasons. That way you can easily shutdown one or the other, especially if a credit card got hacked, etc. This would prevent your personal account from being affected and you from having to start over.

Continuing Education and Conferences

I recently attended the Raymond James Women's Symposium which featured Katty Kay, lead anchor BBC World News America; she spoke on women in the workplace. You have also seen her on Meet the Press and other news programs. She is the author of The Confidence Code. This is a good book to give your daughters or granddaughters no matter what they choose to do in life. I highly recommend it.

Also featured were Shelley Broader, President and CEO of Walmart EMEA, who is also a board member of Raymond James Financial and Elizabeth Smith, Chairman of the Board of Directors and CEO of Bloomin' Brands.

We also had breakout sessions highlighting that aging in America is a woman's issue as we are outliving men and are the predominant residents of assisted living and nursing homes in the country today, which will only increase. Portfolio managers I heard believe we are still in a recovery stage that has a while to run and do not see signs of a recession. The weakness in China and political concerns with Russia will always trump a strong, local economy should they worsen or take an unexpected turn. There were also speakers on the current political climate and some speculation as to how this landscape will unfold. The takeaway was that early frontrunners are not necessarily going to make it to the White House. No matter what your political view, it has certainly been an unusual process this time around!

Best Regards,


Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.
Past performance may not be indicative of future results. Expressions of opinions are as of this date and are subject to change without notice. Any opinions are those of Sherri Stephens and not necessarily those of RJFS or Raymond James. Stephens Wealth Management Group is independent of RJFS.
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 information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected.
Diversification does not ensure a profit or guarantee against a loss. International investing involves special risks, including currency fluctuations, differing financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets. Investing involves risk and investors may incur a profit or a loss.

Financial Market Update* Year-to-date change as of September 30, 2015
S&P 500 Index -5.29%
Morningstar Commodities
Broad Basket Category -16.40%
MSCI EAFE US$ (International) 5.28%
Barclay US Aggregate Bond 1.13%

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Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.