Past performance is no guarantee of future results. Trend signals are proprietary research of Fortunatus Investments, LLC, a Registered Investment Advisor with the Securities and Exchange Commission (SEC). Reference to registration does not imply any particular level of qualification or skill. Prior to June 2014, Fortunatus Investments was a wholly owned subsidiary of Executive Wealth Management, LLC and they continue to share common ownership and control. Data source for returns is FactSet Research Systems Inc. This chart is not intended to provide investment advice and should not be considered as a recommendation. One cannot invest directly in an index. Executive Wealth Management does not guarantee the accuracy of this data.
Quote of the Week
Perception is reality is a slogan we often hear right after someone tells us something we could never perceive as real. However, in a very real sense, for the financial world at least, Expectation is reality. Securities are valued on their expected future cash flows, and analysts’ expectations on corporate earnings are aggregated and scrutinized at the start of many investment processes. Every quarter, public companies release their financial data with the media keeping track of who beat or missed expectations. Deviations from these forecasted numbers can lead to major stock price movements and management shake-ups.
Predictions don’t have this type of power in other walks of life. If the weatherman predicts a sunny day, and all we get is rain, then we get upset at the weatherman. No one yells at the sun, “Hey, you big ball of incandescent plasma, they said you would shine so bright your sunbeams would freckle the forest floor, but you hid behind the clouds all day. Get your act together!”
The importance of these great expectations can be seen in a lawsuit brought earlier this month by the Securities and Exchange Commission (SEC) against AT&T. The government claims that in March 2016 AT&T management was concerned that their revenue was going to fall short of analysts’ estimates for the quarter due to a slowdown in smartphone sales. In order to avoid a second straight quarter of missed expectations, the SEC alleges that AT&T violated Regulation FD by disclosing material nonpublic information about the company to select analysts in the hope that forecasts would be lowered. Documented emails from the CEO and CFO of the company show how managing the quarterly revenue estimates was as important to management as improving the actual quarterly revenue.
One legal way for companies to nudge expectations is by issuing a preannouncement or guidance for financial data in advance of reporting their actual quarterly results. According to data provider FactSet, the number of companies issuing positive guidance, that is guidance better than the average analyst estimate, for earnings per share (EPS) in the first quarter of 2021 (Q1 2021) is the highest it has been in over five years (see the chart below). Maybe there will be a little bit more sun this quarter than the forecasters predict.
On Monday, March 22, 2021, the Equity Dividend model adjusted its allocation to the Healthcare sector. A new company was added that concentrates on health care and insurance services.
On Thursday, March 25, 2021, the Asset Allocation models saw an adjustment in their fixed income exposure. The duration of their bond holdings was lengthened with the purchase of a fund focused on fixed income securities issued by the U.S. Treasury with maturities between 3 and 10 years.
Executive Wealth Management is proud to announce a very important addition to our team – Ken McMullen as EWM’s new Director of Marketing. In this position, Ken will manage an array of EWM initiatives and programs, including advertising, public relations, branding, social media campaigns, events, and sponsorships. His goal is to maintain the integrity of EWM’s story and ensure that all messaging is consistent in reinforcing the company’s mission, vision, and values.
Ken has over 20 years of brand marketing, communications, and business development experience, working with both the corporate and non-profit sectors. He holds a Master’s Degree in Communications and is professionally accredited in public relations by the Public Relations Society of America.
When not in the office, Ken enjoys learning about the latest developments in politics and the Marvel Universe from his son Max.
Recently while inputting the total market value of the “On A Lighter Note” brand, this writer needed to use the cent symbol (¢). However, it was nowhere to be found on my keyboard. Apparently, ¢ had been removed from most keyboards in the late 1980’s following the example of the first IBM PC. It was replaced by the caret (^), a proofreading mark named after a vegetable, while the official ASCII computer character code banished ¢ to the typographic backwaters alongside Wingdings and those upside-down U’s.
This event was just the beginning of an on-going societal penny purge. Canada got rid of the copper coin in 2013, and many people have called for the U.S. to do likewise. But have we thought this through?
Now, “a penny for your thoughts?” and “let me add my two cents” are two gentle ways to initiate feedback and examination. The penny is our common currency of constructive criticism. How will future penniless commentators start critiques? “Put a bitcoin on the blockchain so you can gain custody of my non-fungible token of a grumpy cat emoji.” I don’t know what that sentence means, and I don’t want to know. I fear very soon that we all will inhabit a world that will make no cents.
Executive Wealth Management (EWM) is a Registered Investment Advisor with the Securities and Exchange Commission. Reference to registration does not imply any particular level of qualification or skill. Investment Advisor Representatives of Executive Wealth Management, LLC offer Investment Advice and Financial Planning Services to customers located within the United States. Brokerage products and services offered through Private Client Services Member FINRA/SIPC. Private Client Services and Executive Wealth Management are unaffiliated entities. EWM does not offer tax or legal advice. Please do not transmit orders or instructions regarding your accounts by email. For your protection, EWM does not accept nor act on such instructions. Please speak directly with your representative if you need to give instructions related to your account. If there have been any changes to your personal or financial situation, please contact your Private Wealth Advisor.
Returns are calculated as indicated below with reinvested dividends not considered except for the Barclays U.S. Aggregate Bond Index. Data source for returns is FactSet Research Systems Inc. The London Gold PM Fix Price is used to calculate returns for gold
1 Week = closing price on March 19, 2021 to closing price on March 26, 2021
1 Month = closing price on February 26, 2021 to closing price on March 26, 2021
3 Month = closing price on December 24, 2020 to closing price on March 26, 2021
YTD = closing price on December 31, 2020 to closing price on March 26, 2021
All information and opinions expressed in this document were obtained from sources believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to its accuracy or completeness. All information and opinions as well as any prices indicated are current only as of the date of this report, and are subject to change without notice. Material provided is for information purposes only and should not be used or construed as an offer to sell, or solicitation of an offer to buy nor recommend any security. Any commentaries, articles of other opinions herein are intended to be general in nature and for current interest. Some of the material may be supplied by companies not affiliated with EWM and is not guaranteed for accuracy, timeliness, completeness or usefulness and EWM is not liable or responsible for any content advertising products or services.