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3Q18 Quarterly Letter

Let’s get right to the point of Curran’s 3rd quarter investment letter. Stop worrying about bear markets and corrections. No one knows when the market will decline. We do know stock markets have provided the best returns over time and it is what long term investors must never forget.

Third quarter returns were:

Let’s say you were 100% invested in stocks represented by the S&P 500 in October 2007. You would have experienced a decline of 51.9%. Most do not need to be reminded, but here is what all need to understand. Those same investors who held on have earned a total return of 8.11% annualized over the following 11 years in spite of a decline of nearly 52%! The long term average is about 10%.

Many investors say I cannot afford to risk too much volatility. That is often the case among retirees. It is the reason we have asset allocations. We set your asset allocation in advance of market declines.

There are tactical allocators who say they adjust to anticipate market advances and declines. Our view is: It is market timing. You know our opinion is not positive about market timing. Warren Buffett says “Market timers make fortune tellers look good”.

Most of you have asset allocations that reflect less than 100% equity. The reason is market declines can and do impact emotions and emotions affect the way we behave. When markets decline, investors often behave badly. They sell. We often say when the markets offer stocks at a discount we should be buying and not selling.

So your asset allocation reflects an opinion for what we believe is your tolerance for risk. I often say it is better to own a smaller percentage of your investments in stocks so we can confidently hold when markets decline.

Asset allocations also reflect how you must be invested to achieve financial security through your retirement years. When you invest in anything yielding less than 3%, you earn no real growth after inflation. After taxes are considered a return of at least 4% must be earned to break even. Asset allocations must allow for cash flow needs when we retire.

Facts help us to understand what we should always expect from investments in stocks.

Since World War II, there have been 13 bull markets and 13 bear markets. The bear markets have average declines of 31.8%. The bull markets have increased an average of 152.4%.

A big investment advantage someone like me has is wisdom that comes by way of living and working in the same industry over a working lifetime. Of course we are speaking about the investment business.

For the record I have no intention to stop working. I only intend to increase my investment wisdom by continuing to work in a business I passionately love. My career began in 1969. It allows me to make the following claim. My career spans six decades. I intend to proclaim seven decades on January 1, 2020.

The biggest and best lesson I learned is never worry about the onset of a bear market. I am not sure when I finally realized how dysfunctional it caused me to be in terms of investment returns. My best guess is it happened sometime in the aftermath of the inflation spiral that ended in the early 1980’s. All wisdom requires time to develop. It is a complex process having little to do with all things popular. It requires unconventional thinking. I doubt it can be found in social media or television. It seems to be rarely found in the business of investing.

I try not to worry. In some ways I would like to see a bear market. It will clear out weak holders and get a temporary decline out of the way so we can go on to new higher highs. 

Our outlook remains very positive for stocks and very negative for fixed income.

We invite you to call us [Kevin or Tom] to discuss in more detail.

Sincerely,




Thomas J. Curran             Kevin T. Curran, CFA
Chief Executive Officer     CIO & Portfolio Manager 

Annual Offer of Brochure/Form ADV Part 2:
Each year, registered investment advisory firms are required to file Form ADV with the SEC, disclosing required information regarding the people and practices of the firm. Investment advisors are also required to offer annually to clients an updated copy of its Brochure/Form ADV Part 2.  Upon request we will promptly forward, at no charge, our most recent Brochure/Form ADV Part 2 filing. Requests for this information may be directed to Kelly Sanford at (518) 391-4237 or at info@curranllc.com.

This material was prepared by or obtained from sources that CIM believes to be reliable, but CIM does not guarantee its accuracy. The securities identified do not represent all of the securities purchased, sold or recommended and the reader should not assume that any listed security was or will be profitable. Market indices referenced are unmanaged and representative of large and small domestic and international stocks and bonds, each with unique risks. Information about them is provided to illustrate market trends and does not represent the performance of any specific investment. You cannot invest directly in an index. Past performance cannot guarantee future results.