April 2013 Client Letter

One of the simplest economics lessons I received came decades ago from my dad. He would tell me to look at copper to gauge the economy. When copper prices are rising, the economy is probably expanding. Falling prices could signal trouble ahead. Dr. Copper is what he called the metal because it has a PhD in economics.

Another economic indicator is the stock market. Generally speaking, one would expect a rising stock market to occur during favorable times. Today, with the market near all-time highs, it would be reasonable to assume we have an economy supporting the stock market’s rise.

To check in on the U.S. economy, we can take a look at Dr Copper. Certainly, a stock market nearing all-time highs will be confirmed by a decent trend in copper prices.

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March 2013 Client Letter

The anxiety-ridden days of the financial crisis get pushed further back in the minds of investors as the Dow and S&P 500 hover around all-time highs. Fear is no longer the dominant theme on Wall Street. Greed is back in favor. Investors appear convinced the next major move in the stock market will be up rather than down.

The strong performance from stocks over the recent years can seem puzzling. Economic growth is weak, unemployment is still nearly 8%, and private-sector real incomes remain below pre-crisis levels. How have stocks managed such an impressive recovery in the face of a slow economy?

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February 2013 Client Letter

It’s hard to believe the S&P 500 has not kept pace with inflation during the past 15 years. Since year-end 1999, the index had an average annual return of just 2%. Even with an impressive rally since 2009, the broad-based index has been unable to recover significantly from two vicious bear markets during this period. And looking ahead does not inspire total confidence among investors, who see a lack of fiscal discipline from politicians and a Fed willing to continue with a monetary policy punitive to savers and potentially inflating another asset bubble.

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January 2013 Client Letter

Are you familiar with the U-6 unemployment rate? The “U-6” rate is one of many different unemployment numbers released by The Bureau of Labor Statistics each month. However, the unemployment number referenced by the government and the media is known as “U-3”. The differences between the two numbers are significant.

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November 2012 Client Letter

This month I had lunch with retired BB&T Chairman and CEO, John Allison. Speaking with John was a special privilege given his unique background in the financial industry. John was the longest-serving CEO of a top-25 financial institution, serving BB&T from 1989 through 2008. During his 20-year term, BB&T grew from $4.5 billion to $152 billion in assets, becoming the 10^th-largest financial services holding company headquartered in the United States.

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