Performance Archives - Page 3 of 4 - NorthStar Capital Advisors

Market Timing & Emotions ~ Afflictions of the Average Investor

Click to enlarge

This chart of 20 years of market data vividly demonstrates a painful lesson. The average investor* badly trails all classes of investment assets.

The primary culprit for this deficit is ill-fated attempts to time the market and emotionally driven decisions to move in and out of the markets.

Most individuals claim to be long-term investor until their portfolio drops 10% and suddenly there’s panic.

Our primary role as an investment advisor is to help our clients have the discipline to ignore the gyrations of the markets and keep the long view when it comes to their investments.

* Average investor refers to individual investors across the United States

North Carolina Stocks Were Strong Performers in 2013

The fifty largest publicly traded companies headquartered in North Carolina fared very well overall in the 2013 stock market. The Tarheel group gained 28.3%, comparable to the 29.6% put up by the S&P 500.

Note the 2013 returns were much larger than the long-term average.

These NC stocks have return 12.3% per year over the last 5 years, far outperforming the S&P 500 which delivered only 4.8% over the same time period (2008-2013).

North Carolina’s 50 largest publicly traded companies, excluding companies that went public during the year. They are in order by annual revenue.

Company	Headquarters	2013 close	2012 close	2008 close	1-year return	5-year return
Bank of America Corp.	Charlotte	$15.57	$11.61	$14.08	34%	11%
Lowe’s Cos. Inc.	Mooresville	$49.55	$35.52	$21.52	39%	130%
Duke Energy Corp.	Charlotte	$69.01	$63.80	$45.03	8%	53%
Nucor Corp.	Charlotte	$53.38	$43.16	$46.20	24%	16%
VF Corp.	Greensboro	$62.34	$37.74	$13.69	65%	355%
BB&T Corp.	Winston-Salem	$37.32	$29.11	$27.46	28%	36%
Family Dollar Stores	Matthews	$64.97	$63.41	$26.07	2%	149%
Sonic Automotive Inc.	Charlotte	$24.48	$20.89	$3.98	17%	515%
Reynolds American Inc.	Winston Salem	$49.99	$41.43	$20.16	21%	148%
Pantry Inc.	Cary	$16.78	$12.13	$21.45	38%	-22%
Laboratory Corp. of America	Burlington	$91.37	$86.62	$64.41	5%	42%
SPX Corp.	Charlotte	$99.61	$70.15	$40.55	42%	146%
Lorillard Inc.	Greensboro	$50.68	$38.89	$18.78	30%	170%
Harris Teeter Supermarkets	Matthews	$49.35	$38.56	$27.65	28%	78%
Hanesbrands Inc.	Winston Salem	$70.27	$35.82	$12.75	96%	451%
Ingles Markets Inc.	Black Mountain	$27.10	$17.26	$17.59	57%	54%
Carlisle Cos. Inc.	Charlotte	$79.40	$58.76	$20.70	35%	284%
Babcock & Wilcox Co.	Charlotte	$34.19	$26.20	N.A.	30%	N.A.
Chiquita Brands International	Charlotte	$11.70	$8.25	$14.78	42%	-21%
Alliance One International	Morrisville	$3.05	$3.64	$2.94	-16%	4%
Old Dominion Freight Line	Thomasville	$53.02	$34.28	$12.65	55%	319%
Martin Marietta Materials	Raleigh	$99.94	$94.28	$97.08	6%	3%
Snyders-Lance Inc.	Charlotte	$28.66	$24.12	$22.94	19%	25%
Coca-Cola Bottling Co.	Charlotte	$73.19	$66.50	$45.96	10%	59%
Cree Inc.	Durham	$56.04	$52.96	$13.22	6%	324%
Fresh Market Inc.	Greensboro	$62.52	$33.98	$15.87	84%	294%
Red Hat Inc.	Raleigh	$40.50	$48.09	N.A.	-16%	N.A.
Piedmont Natural Gas Co.	Charlotte	$33.16	$31.31	$31.67	6%	5%
RF Micro Devices Inc.	Greensboro	$5.16	$4.48	$0.78	15%	562%
EnPro Industries Inc.	Charlotte	$57.65	$40.90	$21.54	41%	168%
First Citizens Bancshares	Raleigh	$222.63	$163.50	$152.80	36%	46%
Horizon Lines Inc.	Charlotte	$0.84	$1.50	$87.25	-44%	-99%
Fairpoint Communications Inc.	Charlotte	$11.31	$7.95	N.A.	42%	N.A.
Cato Corp.	Charlotte	$31.80	$27.43	$15.10	16%	111%
Salix Pharmaceuticals Ltd.	Raleigh	$89.94	$40.47	$8.83	122%	919%
Pike Corp.	Mount Airy	$10.57	$9.55	$12.30	11%	-14%
Unifi Inc.	Greensboro	$27.24	$13.01	$8.46	109%	222%
Polypore International Inc.	Charlotte	$38.90	$46.50	$7.56	-16%	415%
Highwoods Properties Inc.	Raleigh	$36.17	$33.45	$27.36	8%	32%
Xerium Technologies Inc.	Raleigh	$16.49	$3.05	$13.20	441%	25%
Speedway Motorsports Inc.	Concord	$19.85	$17.84	$16.11	11%	23%
Krispy Kreme Doughnuts Inc.	Winston-Salem	$19.29	$9.38	$1.68	106%	1048%
Tanger Factory Outlet Centers Inc.	Greensboro	$32.02	$34.20	$18.81	-6%	70%
Insteel Industries Inc.	Mount Airy	$22.73	$12.48	$11.29	82%	101%
Culp Inc.	High Point	$20.45	$15.01	$1.98	36%	933%
Powersecure International Inc.	Wake Forest	$17.17	$7.81	$3.29	120%	422%
Hatteras Financial Corp.	Winston-Salem	$16.34	$24.81	$26.60	-34%	-39%
Swisher Hygiene Inc.	Charlotte	$0.55	$1.73	$0.37	-68%	49%
Triad Guaranty Inc.	Winston-Salem	$0.27	$0.07	$0.38	286%	-29%
Cornerstone Therapeutics Inc.	Cary	$9.49	$4.73	$2.65	101%	258%

NC 50 OVERALL					28.3%	12.3%
S&P 500					29.6%	4.8%
						annualized

source: Charlotte Observer

All 10 Stock Sectors Post Gains in Big Year

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All 10 of the S&P 500’s stock sectors finished 2013 in positive territory. Stocks most closely tied to economic growth fared best in 2013, while those typically regarded as the safest bets logged the year’s smallest gains.

Source: WSJ

Annual Returns by Asset Class

These charts show how different asset classes rank each year over the past 10 years (best performers on top). This is an excellent demonstration of how hard it is to predict the future and how often the least-popular investments outperform common expectations.

Click to enlarge

Source: J.P. Morgan

The Cost Of Sitting On Cash

According to the latest financial security index by Bankrate.com, here’s how Americans prefer to invest money that they don’t need for more than 10 years:

26% say they prefer cash for long-term investments. Cash is arguably a great place to store your wealth briefly, however 80 years of data show cash is a horrible long-term investment.

The following chart shows that cash has averaged a negative real, after-tax return (be sure to click on the chart for a closer look). Inflation and taxes are killers.

Click to enlarge

“Americans not saving enough is well-documented, but hunkering down in cash investments and settling for low returns will only magnify the problem of not having a sufficient nest egg to meet longer-range financial goals such as retirement,” said Greg McBride, CFA, Bankrate.com’s senior financial analyst. “Other choices may not do the trick either, as real estate is not only very cash-intensive, but often illiquid. And precious metals spit out zero cash flows, with gains solely dependent on price appreciation.”

Sources:
BankRate.com

BlackRock

Are You Better Off? Take a Look at the Stock Market

Are you better off now? This is not meant as a political question. We’re actually trying to make an important point regarding investor behavior.

As of September 14, the S&P 500 index with dividends is 87% higher than it was on inauguration day, January 19, 2009.

This fact shocks many people because it’s just hard to believe given the financial fallout of the Great Recession and the ensuing slow recovery. As humans we tend to be backward looking. The pain we experienced collectively and personally persists. However, the stock market is focused on the future and investors judge the long-run prospects of the entire U.S. economy to be strong.

Bottom line: Your personal experience, economic opinions, and intuition are often a poor guide to managing your investments.

For example, is your stock portfolio up 87% as well or did you invest emotionally and cash out at the depths of the Great Recession?

Best Stock Market Rally Since WWII

The current stock market recovery came out of the Great Recession of 2008 and is now more than 3 years old. Despite the persistent worry and extreme caution of investors, this is one of the strongest stock market recoveries since World War II. The charts below demonstrate not only is the current stock market recovery the best ever this far into the economic recovery, but nearly the best through out the entire recovery cycle.

Post-War Stock Market Rallies — Cumulative Return from Recession Low
(red highlight denotes current recovery stock market rally)

Post-War Stock Market Rallies — Cum Return from Recession Low to 870 Days
(red highlight denotes current recovery stock market rally)

Source:
Wells Capital Management
BEST EVER Post-War Stock Market Rally!
August 20, 2012

Staying the course pays off for investors

Time heals financial wounds: Holding stocks for 20 years can turn bad returns to good

Historical data compiled by Oppenheimer show that stocks have not suffered an average annualized loss in a 20-year holding period (measured in rolling monthly periods) since 1950.
“Historical evidence suggests that longer investment horizons typically produce better results,” says Oppenheimer’s chief investment strategist Brian Belski.
“The lesson here is: Chill, stay invested, stay disciplined and be diversified,” Belski said.
Much of individual investors’ lagging performance is blamed on psychological factors. More often than not, they buy high and sell low rather than the classic winning strategy of buy low and sell high. Put another way, they sell the dips, rather than buy the dips.
“Fear,” Harvey said, often prompts investors to bail out of stocks after prices have fallen far and the worst of the decline is over. They make matters worse “by delaying getting back in” early enough to participate in the eventual recovery.
A key reason why investors who stay the course end up doing well is the fact that stocks go up roughly two-thirds of the time.

Read more in this article:

Staying the course pays off for investors | FLORIDA TODAY | floridatoday.comhttp://www.floridatoday.comThe long term used to mean three-, five- or 10-year holding periods for stock investors looking to wring out risk and boost their odds of making money. Then came the 2000s, dubbed the Lost Decade, when the U.S. stock market posted negative returns in a decade for the first time since the 1930s.

Beware Top Funds With Poor Investor Returns

Investor Return versus Fund Return

Investor return can be very different from the widely quoted figures for total fund return.
For example, the top-rated Fidelity Leveraged Stock fund has an annual return over the last 10-year period of 14.5%. However, the average investor in this fund had an average annual return of only 4.0%.
The reason for the gap is, most investors didn’t buy and hold for the 10 years. Instead, the average dollar in the portfolio stayed invested for short periods.
Many studies have shown that long-term shareholders receive the best returns.

Learn more in this article:

Beware Top Funds With Poor Investor Returns – Yahoo! Financehttp://finance.yahoo.com/news/Beware-Top-Funds-With-Poor-tsmf-514712389.html?x=0If you invested in Fidelity Leveraged Stock a decade ago, your total annual return would have been 14.5%. But the typical shareholder had an investor return of only 4.0%. The reason for the gap is, most investors didn’t buy and hold for the 10 years. Instead, the average dollar in the portfolio…

Numbers You Can’t Count On

Five ways in which a fund’s impressive record vs. peers may not realy indicate much:

The best performance came under a portfolio manager who is no longer with the fund
The fund has become too large to efficiently invest in the market segment or style that produced its best results
The fund invests differently than most of the others it is being compared to, so the peer group isn’t a good fit
The fund has a flexible charter and tends to bounce among categories; its numbers look good in one category but look like a laggard in another
The fund changed its investment mandate partway through the time period you are looking at

Learn more about how common measures of mutual-fund performance sometimes tell you a lot less than you might think in this Wall Street Journal article from Michael A. Polluck.

Mutual-Fund Performance Numbers May Tell You Less Than You Might Think – WSJ.comhttp://online.wsj.comSome of the most common investor tools—from numbers of stars to comparisons with benchmarks—have quirks and limitations that can render them far less helpful than people think.

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Market Timing & Emotions ~ Afflictions of the Average Investor

North Carolina Stocks Were Strong Performers in 2013

All 10 Stock Sectors Post Gains in Big Year

Annual Returns by Asset Class

The Cost Of Sitting On Cash

Are You Better Off? Take a Look at the Stock Market

Best Stock Market Rally Since WWII

Staying the course pays off for investors

Beware Top Funds With Poor Investor Returns

Numbers You Can’t Count On

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