Quick Links
Our Website












February 2013 Investment Journal 


As we resume our monthly journal for 2013, stocks picked up right where they left off in 2012, trending higher and leading the major asset classes. Bonds were flattish, while commodities and precious metals are down year to date:
 Stocks have now overtaken gold as the performance leader for the last three years, while US Treasury Inflation Protected bonds are a solid #3:

Since the beginning of 2013, markets have witnessed a palpable pickup in concern over "currency wars". Japan has aggressively moved to lower the value of the yen, while Great Britain lost its coveted AAA government bond rating and has vowed to increase the quantity of sterling (more "quantitative easing"). The US Dollar has appreciated smartly, providing further underpinning to US stocks, while the Euro is weakening.
More and more strategists are writing about the investment implications of this nascent realignment. The short term (1-3 years) implication seems to be that the US Dollar will benefit from its global reserve currency status, especially as the Eurozone struggles. If the Dollar rises, the thinking goes, it could help US bonds, but mostly it will help US stocks (and that is consistent with what we know the US Fed has in mind). It will also continue to push down gold prices, high on the wish list for any central banker.
Longer term, China remains the key player, and will probably continue its policy of diversifying away from the Dollar by purchasing precious metals and other hard assets like agricultural land and mineral and oil deposits. When and how this impacts the value of the Dollar is anybody's guess, but the smart, patient money is banking on a gradual adoption of a multi-currency managed "basket" that will see a much lower value and weighting for the Dollar. The risk is that the "gradual adoption" part of the transition is overwhelmed by market forces, which can quickly assume a "herd mentality" when confidence is threatened, crashing the Dollar and anything else that stands in its way. Time will tell.
Meanwhile, the buzz on the Street in February was that the US Fed was having some internal disagreement about when to end QE3, which could drive up interest rates. According to the latest Fed Minutes: "a number of participants stated that an ongoing evaluation of the efficacy, costs and risks of asset purchases might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred". We're glad they're having that discussion. But at the end of the day, the key players, especially Bernanke, Janet Yellen, Bill Dudley, and Charles Evans, are uber-doves. Don't expect to see any let-up in Fed purchases of long bonds any time soon.
As we head into March, central banks remain historically accommodative (they are flooding the world with money), so developed world stock markets should remain well supported on a liquidity basis. Analysts are watching earnings closely though for any sings of slowing, so if fundamentals regain their mojo, things could look very different. Commodities are weakening, and, since emerging markets are much more impacted by these assets, caution flags should be out. US Bonds are pausing but should be supported by Fed buying and a stronger US Dollar. Longer term bonds stand to benefit the most if 2013 sees volatility return to stocks.
Globally, most economies are struggling, with Eurozone, US and Chinese GDP still slow and now weakening. Investors should expect to see lots of news about "reviving our export sector", which will be code for "weakening our currency". That looks to be a major market development as 2013 gets going, and we'll report back to you next month with the latest. Thanks for reading our Journal.
2013 Stratford Advisors, Inc. All Rights Reserved.

This publication is intended solely for information purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or sell or trade in any securities herein named. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. In no event should the content of this market letter be construed as an express or implied promise, guarantee or implication by or from Stratford Advisors, Inc., or any of its officers, directors, employees, affiliates or other agents that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. All investments are subject to risk which should be considered prior to making any investment decisions. The firm may hold for its clients, Principals or employees, positions in any securities mentioned herein, and may buy or sell such securities at any time without prior notice.



© 2019 • Stratford Advisors • Investment & Invested in your Future