Archer Investment Corporation
Balanced Investment Management
9000 Keystone Crossing, Suite 630
Indianapolis, IN 46240
The Latest Market Update:
By Troy C. Patton CPA/ABV
By Troy Patton, CPA/ABV, Portfolio Manager -
The opinions contained herein are not intended to be investment advice or a solicitation to buy or sell any securities.
Archer Investment Corporation manages The Archer Funds. You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund’s prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund’s prospectus by calling 800-
Past performance is not a guarantee of future results. The investment return and principle value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Distributed by Arbor Court Capital, LLC, 8000 Town Centre Drive, Suite 400, Broadview Heights, OH 44147 Member FINRA.
Posted: Tuesday 1/7/2016 10:02 AM
Archer 2016 Annual Update and Outlook:
All we can say is thank goodness 2015 has come to close! 2015 was supposed to be a typical pre-
With a return just north of 1% in the S&P 500, this has turned out to be one of the worst pre-
In difficult years like 2015, there is usually a rainbow that shines and shows us solid returns in our diversification strategy. Asset Allocation strategists like ourselves diversify so that when one area is weak, there is usually an area to be thankful for. According to Bianco Research, LLC and Bloomberg there has not been one year since 1995 where at least one asset class did not return 10% or more. Further, over the last 90 years, there were only 4 years where returns were under 4%. 2015 happens to break the track record since 1995. It did not matter what you invested in: Stocks, bonds, foreign developed, emerging markets, commodities, real estate. They all turned in boring returns at best and, in the case of commodities and Emerging Markets, returns were sharply negative. Real Estate was the top performer in 2015 at 2.5%.
Enough of 2015, what roads will be paved in 2016? What is going to give us a smoother ride? The answer is not so simple. The groundwork has been laid by the Fed clearing the way for higher rates. Historically when the Fed begins a tightening campaign as the first chart shows at right (Performance Around 1st Hike -
The 2nd chart at right (Chart 5 -
Let’s look at another chart at right( Performance Around 1st Hike -
To ascertain how 2016 will perform, let’s look at the main earnings growth drivers, or lack thereof, for 2015. In 2015, we saw margin expansion of near 0.8%, share repurchases of 2.2% (corporations had excess cash and some issued low cost debt to buy their own stock), but we saw revenue decline mainly due to the increase in the US Dollar. This negatively impacts those corporations doing a majority of their business overseas. The increase in the dollar not only impacts revenues but ultimately impacts earnings as well. Another main driver of negative earnings (EPS) in 2015 was the decline in Oil and Commodities (also partly due to the increase in the Dollar). See the JP Morgan charts (at right) how oil impacted earnings and how it will likely assist in pulling the market back out of the earnings slump we saw in 2015.
If Oil and the US Dollar were to stay unchanged this would help the year-
These factors with ongoing share repurchases similar to 2015 and no margin expansion should make way for an increased market by 5-
With potentially added volatility in 2016 from the Fed raising rates, muted earnings and sales growth, a possible slowing manufacturing, why would the markets turn in a positive performance in 2016? Currently, the Forward P/E ratio is 16 which is close to the average of 15.8 since 1990. With growth of GDP in the US between 1-
The Archer Team
Troy C. Patton, CPA/ABV
Steven C. Demas
John W. Rosebrough, CFA
The opinions contained herein are not intended to be investment advice or a solicitation to buy or sell any securities. Archer Investment Corporation manages The Archer Funds. You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund’s prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund’s prospectus by calling 800-
JP Morgan charts