Monthly Commentary

Or is it?

What is it and why should I care?


Share this post


Often times, clients, other advisors, friends, colleagues ask me what keeps me up at night.  First, it’s the fact that as your advisor I see it as my responsibility to help you do your best to pursue your financial goals.  Second is wondering, what am I missing?  What is out there that I am just not seeing? There isn’t much market negativity out there right now.  But here are the things that have the hair on the back of my neck stand up.

    • $12.7 trillion of total consumer debt (credit card, auto, student according to Federal Reserve Bank of NY)
      • Can be a drag on economic growth
      • Brought forward future demand for goods
    • Second highest 10 year average Price/Earnings ratio in U.S. history1
    • Highest, by far median Price/Revenue ratio in U.S. market history… but it’s been that way since mid 20152
    • Very low volatility…which usually occurs before high volatility
      • 3% Intra-year Dow decline so far is the smallest in 104 years (complacency)
      • Dow has risen for 11 straight months-longest streak since 1970
      • 81% of millennials surveyed by AMG consider themselves extremely or very knowledgeable about their finances. (most started investing after 2009)


1 via                 2 Ned Davis Research



I am working on some new educational pieces. I'm sure you have seen financial services materials that have titles such as 4 Ways to do XYZ, 7 easy ways to reduce XYZ, 5 easy ways to increase XYZ. That is marketing lingo that works. Many people will read books, articles and watch videos that offer “easy” ways to fix something. Unfortunately, nothing in the investment world is easy. It’s one of the hardest things you may ever try to do….because most humans aren’t wired to do it. We are wired to seek pleasure and avoid pain. This can cause us to be too emotional regarding our investment portfolios. It can cause us to make poor short-term decisions by seeking to avoid short-term pain or seek short-term pleasure at the detriment to our long term goals. But, if we are honest with ourselves and understand our limitations we can seek to control them.

In my opinion, one of the best ways to control your emotions is to have an investment strategy that you understand, believe in and can articulate. If it is a rules based strategy… even better. Over the past couple years I have become enamored with so-called evidence-based investing. In fact, I will be at a one day conference in NYC this month on that every topic. Basically, the premise is to challenge conventional thinking. There are many investing axioms that have come of age with little to no research to back up the assumptions. It is the often turned into a marketing platform and fed to the general investment public. But…are they true. Evidence-based investing uses the incredible amount of “big data” available to look back at market history over multiple time frames and economic regimes and develop conclusions. There is less focus on “gut instinct” and qualitative data such as what an analyst or CEO thinks or does and more focus on conclusions from actual data sets.

I have heard many of the following overused phrases over the years and have probably been guilty of saying some of the. Examples of widely held beliefs that may not be true include:

  • You should have a portfolio percentage of stocks equal to 100 minus your age.
  • It takes money to make money.
  • Investing is basically just gambling.
  • This is the most violent time in human history.
  • My home is my best investment.
  • Younger investors should have 100% of their money in the stock market.
  • It’s not timing the market, it’s time in the market.
  • Active strategies can’t beat the market.
  • Low volatility doesn’t mean low risk.
  • You never want to catch a falling knife.
  • The market is too overvalued to invest.
  • Government gridlock is bad for the stock market.

Investing is hard because it is a game where the rules (the investing environment) are constantly changing. What was the answer over the last sixth months may not be the correct answer in the coming six months….or is it? Using past data in efficient ways can help us glean a potential edge by identifying what may or may not be more likely to happen.

I’ll have more to report next month after the conference.


  • Rather than trying to “beat the market”, focus on beating inflation and the rate on cash.  Plan for safety and liquidity while seeking positive returns.


  • Equity valuations are very rich but masked due to the distortion of the Treasury curve. Volatility is returning to the markets and I think long/short managers are best positioned to capture this volatility by owning companies with strong businesses, barriers to entry, and good valuations and selling short weaker companies with high debt loads that have risen sharply with the broad market rally. I think this strategy of hedged equity may have the potential to produce attractive risk-adjusted returns if and when investors begin to question the valuations of companies. Stock investing involves risk including loss of principal. No strategy ensures success or protects against a loss. Long positions may decline as short positions rise, thereby accelerating potential losses to the investor.


  • Monsoon country investments. Attempting to take advantage of demographic, educational and investment possibilities in the countries surrounding the old spice routes of the Indian Ocean. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.


  • A potential U.S. infrastructure upgrade cycle may be around the corner. Moving from our current grade of D+ to B would require an investment of $3.6 trillion by 2020.


  • Supply problems remain high across the energy asset class. While there isn’t a current shortage of energy on the planet, it is taking more and more energy and capital to discover, drill, transport and refine it. Long term Demand should continue to grow globally, particularly in China, India, and other developing countries.


  • Potential food shortages due to inclement weather and higher demand from the emerging Asian middle class could result in a boon to agricultural land and potash fertilizer companies. International and emerging market investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.


  • The rise of E-Commerce has coincided with an increased desire for efficient warehouse distribution real estate. As e-commerce moves toward even faster delivery, positioning of distribution becomes even more important.


  • Precious metals mining companies have been extremely beaten down over the past four years. Mining is an industry that spans hundreds of years. Companies that mine for commodities are often highly cyclical, meaning they have sustained moves both up and down. When investing in the mining space it is important to be a contrarian. Ideally, you would want to accumulate miners when sentiment is poor around them and sell them when sentiment is positive. Historically this has been a good strategy.


No strategy ensures success or protects against a loss.

If you haven’t followed me on LinkedIn make sure to connect with me. Since the beginning of the year, I have been a contributor to many major investment publications and it has been great getting to know some of the writers.


Check out my appearances by clicking here




Colin B. Exelby
Celestial Wealth Management



Important Disclosures
  • The information herein was obtained from various sources and we do not guarantee their accuracy.
  • Neither the information nor any opinion constitutes an offer or an invitation to make an offer, to buy or sell any securities or other financial instruments.
  • All opinions, projections and estimates constitute the judgment of us as on the date on the report and are subject to change without notice.
  • This report is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person.
  • Investors should seek financial advice regarding the appropriateness of investing in financial instruments and implementing investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized.
  • Any decision to purchase or subscribe for securities in any offering must be based solely on existing public information on such security or the information in the prospectus or other offering document issued in connection with such offering, and not on this report. This report should not be regarded by recipients as a substitute for the exercise of their own judgment and readers are encouraged to seek independent, third-party research on any companies covered in or impacted by this report.
  • Securities and other financial instruments discussed in this report are not insured by the Federal Deposit Insurance Corporation and are not deposits or other obligations of any insured depository institution.
  • Investments in general and, derivatives, in particular, involve numerous risks, including, among others, market risk, counter-party default risk and liquidity risk.
  • No security, financial instrument or derivative is suitable for all investors.
  • In some cases, securities and other financial instruments may be difficult to value or sell and reliable information about the value or risks related to the security or financial instrument may be difficult to obtain.
  • Investors should note that income from such securities and other financial instruments, if any, may fluctuate and that price or value of such securities and instruments may rise or fall and, in some cases, investors may lose their entire principal investment.
  • Past performance is not necessarily a guide to future performance.
  • Levels and basis for taxation may change. Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice or to be used by anyone to provide tax advice. Investors are urged to seek tax advice based on their particular circumstances from an independent tax professional.
  • This report may contain links to third-party websites. Celestial Wealth Management. is not responsible for the content of any thirdparty website or any linked content contained in a third-party website. Content contained on such third-party websites is not part of this report and is not incorporated by reference into this report. The inclusion of a link in this report does not imply any endorsement by or any affiliation with Celestial Wealth Mgmt.
  • The fast pricing swings in commodities and currencies may result in significant volatility in an investor's holdings.
  • There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio.  Diversification does not protect against market risk.
  • Because of their narrow focus, sector investing will be subject to greater volatility than investing more broadly across many sectors and companies.
  • The prices of small and mid-cap stocks are generally more volatile than large cap stocks.
  • Examples are hypothetical and not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing.
  • Alternative investments may not be suitable for all investors and involve special risks such as leveraging the investment, potential adverse market forces, regulatory changes and potentially illiquidity. The strategies employed in the management of alternative investments may accelerate the velocity of potential losses.
  • Treasury inflation-protected securities (TIPS) help eliminate inflation risk to your portfolio as the principal is adjusted semiannually for inflation based on the Consumer Price Index – while providing a real rate of return guaranteed by the U.S. Government.
  • Treasury Inflation-Protected Securities, or TIPS, are subject to market risk and significant interest rate risk as their longer duration makes them more sensitive to price declines associated with higher interest rates.