Monday, December 26, 2011

Final Week of 2011 & Happy New Year!

1 - Reminder: Millard & Company will be closed today (Monday, December 26) and this Friday, December 30. We will be open all next week; our main focus will be producing year-end client reports.

2 - Investor jitters seem to be settling down just a bit. While there's still plenty of uncertainty ahead, including a bruising presidential campaign, it's good to see a brief spell of relative calm in the markets -- even if it turns out to be very brief indeed.

3 - New Year's Day has become my favorite holiday. New Year's is about reflection, renewal, and optimism -- each of which is in woefully short supply in the frenetic 21st Century. What's more, because it follows hard on the heels of the massive hype of Christmas, New Year's is largely untainted by the over-commercialization that detracts from so many of our other important holidays.

We can't know what craziness the world will throw at us next year. But we can control our attitude -- and thereby prevent the craziness from taking control of our lives.

Have a wonderful final week of 2011; here's to a stellar 2012!


Juliet at the White House

In late September, Juliet attended the TD Ameritrade Operations Conference in Washington, DC. While there, she had the opportunity to spend some quality time with Bonnie Armstrong, our special projects colleague who lives in the DC area. The afternoon before the sessions began, they did some sightseeing, and Bonnie snapped this photo of Juliet in front of the White House.

Monday, December 19, 2011

Holiday Message from Andy

1 - Despite all the drama in the stock market this year, it really has moved very little. Since the first of this year, the Dow Jones Industrial Average is ahead by 2.5% while the broader S&P 500 is down 3.68%. Many potential pitfalls remain, of course, so we're skewing most clients' portfolios toward the risk-averse end of the spectrum.

2 - Our office will be closed this Friday and next Monday for Christmas.

3 - From all of us at Millard & Company -- Juliet, Michele, Bonnie, Sharon, and me -- we wish you a holiday filled with peace, joy and love.

Have a blessed week and a Merry Christmas!


Monday, December 12, 2011

Celebrating Holiday Season Together

1 - Financial markets spent last week in a bit of a holding pattern as investors awaited the outcome of the European Union summit in Brussels. While most leaders of the 27 EU members reached a tepid accord (Great Britain demurred), they really did not appear to accomplish the big splash that investors had been hoping for.

2 - Economists are now talking openly about (1) the likelihood that Europe is already in a new recession, and (2) the possibility that the eurozone -- the 17 EU members who all use the common currency -- could come apart. The Wall Street Journal reported last week that member nations are tuning up their printing presses -- just in case they need to start churning out currencies of their own.

3 - We're gearing up for the end of the year: making sure all clients with annual required minimum distributions (RMDs) have taken them by the end of this month, clearing up lingering cost basis issues, and making sure client portfolios are properly positioned to ring in 2012. It is a busy time, but you know us: we're having fun doing what we do.

Have a wonderful week -- and please do your Christmas shopping locally!


In case you missed it, On December 1 we hosted a holiday event for clients and their guests. We enjoyed a sumptuous dinner by Pat Strother, delectable cheesecake bars by Juliet, and Frank Capra's timeless film It's a Wonderful Life. Michele did a great job planning and setting up. For the privacy of our clients, our videographer Erik Olsen took care not to show faces (other than us worker bees). Enjoy this one-minute video recap.

Monday, December 5, 2011

Replaying The Global Economy's Effects on Investors

1 - Talk about volatility. Despite the best week for U.S. stocks in almost three years, we are still slightly behind where we were just two weeks ago. This week promises to be just as rocky, as the leaders of the 27 nations constituting the European Union meet Friday to consider binding themselves into a closer political union. If they can do it, it could be an extremely promising signal to financial markets. If they can't, well....

2 - Last night, Bloomberg ran an excellent article outlining the important issues surrounding this week's meetings in Europe. If you have an interest in understanding the situation, I commend it to your attention. Click here to read it. In addition, last week's video commentary is just as applicable this week as it was then, so we're running it again below.

3 - Last Thursday evening, about 55 clients and guests set aside their worries and kicked off the holiday season in the Depot Room. We enjoyed hot cider, a fabulous Pat Strother-catered dinner, Juliet's homemade cheesecake bars, and and It's a Wonderful Life on the big screen. I was taken aback by the large number of attendees who said they had never seen the movie before; of course, they all loved it. Even for those of us who had seen it many times, its theme -- the notion that real wealth lies in doing good for others -- resounded once again. There's something about watching a classic film the way it was intended to be seen -- on the silver screen in a darkened room and surrounded by an appreciative audience -- that makes for a special experience. For those clients who have been unable to attend one of our "dinner and a movie" events, I hope you can make the next one.

Be thankful for our wonderful community. Have a terrific week -- and remember: do your Christmas shopping locally!


We ran this video with last week's update, but it applies just as much this week as it did then. And since quite a few readers didn't watch it, we're running it again. It takes a very brief look at (1) the U.S. and European economic picture; (2) its potential implications for investors; and (3) what we're doing about it at Millard & Company.

Monday, November 28, 2011

The Global Economy's Effects on Investors

1 - The U.S. stock market has lost ground every day for the last seven sessions; according to, those seven days have drained 7.8% from the S&P 500. The latest causes for pessimism continue to come from  politicians on both sides of the Atlantic. The situation in this country won't be settled until next November's national elections -- and may not be settled even then. As ugly as it is here in the states, it is much more complicated in Europe, where the leaders of about a dozen countries -- countries with competing interests and grouchy electorates -- must somehow come together on a unified cure to a rapidly growing infection. Bottom line: we don't have a clue as to where all this is going. Hold on to your hat.

2 - To view a 3-minute video about the economic picture and how we're dealing with it at Millard & Company, click here.

3 - Remember that this coming Thursday (December 1) is our client holiday Dinner and a Movie event. As of this writing, we have received RSVPs from about 50 clients and guests, and we're looking forward to a fun and festive evening. If you haven't signed up yet, click here to do so.

I hope your Thanksgiving was a good one. Have a great week -- and do your Christmas shopping locally!


Tuesday, November 22, 2011

Thanksgiving Message from Andy Millard

1 - Good news: it looks like the federal government will indeed be able to cut $1.2 trillion from the deficit over the next ten years. Bad news: the reduction almost certainly will not come as a result of the Congressional "supercommittee," but rather as a result of the so-called sequester, a process of automatic across-the-board cuts set to occur in the event of the committee's failure to reach an accord. Indeed, the group's twelve members haven't even gathered at the same table for many days, and members signaled last night that they had failed in their mission. What may be even worse is the very real possibility that Congress could rescind the sequester mechanism and its accompanying deficit reduction. What seems clear is that this problem will once again be kicked down the road, to be settled by next year's presidential and Congressional elections. In the meantime, don't expect the financial markets to be happy about the apparently permanent gridlock.

2 - The combination of deepening European woes and the fading hopes of our country's deficit-reduction committee sent global financial markets gyrating downward last week, and the news doesn't look any better this week. But although last week's losses might well be extended as a result, such an outcome is not a foregone conclusion. If there's one thing I've learned in 17 years of watching this stuff, it's that you usually shouldn't assume an automatic cause-and-effect.

3 - We are especially thankful this year at Millard & Company. We've had an outstanding year in our new home, and as the holidays approach, we count our many blessings. Thankfulness is even more potent when it is applied to the future. We recognize the daunting challenges that surround us in this world. But we choose to see an ever brightening road ahead -- for ourselves, our families, our friends and our clients -- and we will work to make that vision a reality. Some may call it wishful thinking; I call it faith.

Shortly before Thanksgiving last year, my Dad (the Great Bob Millard) and I were having one of our periodic computer lessons where I attempt (almost always in vain) to answer his questions -- questions such as: "Why is my email broken?" and "Where is the Internet?" The video below was my attempt to show him one of the wonders of his home computer: the ability to produce videos. It turned into a spontaneous expression of Thanksgiving for both of us. I sent it last year at this time, and the response was so enthusiastic that I thought I'd share it with you again. Happy Thanksgiving!

Have a wonderful Thanksgiving!


Tuesday, November 15, 2011

How About a Roller Coaster Ride?

1 - The stock market finished last week strong -- the Dow Jones Industrial Average gained over two percent on Friday. But as has been the case for several months, the real story is daily, stomach-turning volatility based on continuing uncertainty in Europe. The recent habit of stocks to soar or plunge based on a single day's news, only to reverse direction following the next headline, is troubling to say the least. It's starkly obvious that investors know nothing beyond the present moment, so for a while at least, the present moment will dictate the movement of the markets. Clearly, caution continues to be the order of the day.

2 - The latest eurozone country to cause concern is Italy -- and this time we're talking about a major economy, the eighth-largest in the world. World markets reacted favorably to Prime Minister Silvio Berlusconi's resignation and replacement by economist Mario Monti, but that country's troubles are far from over. Read "Uncertainty Over Italy" below for a thumbnail description of the situation and its potential ramifications.

3 - Reservations for our upcoming Client Dinner and a Movie event are coming in fast. We already have about 35 RSVPs, and we're looking for more. You know that we're going to watch It's a Wonderful Life, but here's the twist: we're going to see the colorized version. Like many people, I generally enjoy seeing vintage movies in their original black and white, but I really think you'll enjoy the high-def colorized version. The colors are vivid and natural, and with a film as familiar as this one, the addition of color allows you to experience it in a whole new way. Come with an open mind, and prepare to be amazed. Click here to RSVP if you haven't already done so.

4 - Check out the video below; the topic is change, and it will leave your head spinning.

Have a glorious week!


Tuesday, November 8, 2011

Madoff's other Victims

1 - Last Thursday morning, I attended a breakfast briefing in Atlanta with Tony Crescenzi Tony Crescenzi, executive vice president of PIMCO and author of the newly-released book Beyond the Keynesian Endpoint Beyond the Keynesian Endpoint. He discussed the European Union economic agreement that had been reached the day before. In the deal, Europe agreed to guarantee the debt issued by European banks, sort of like the FDIC does in our country. But while he praised the spirit and depth of the agreement, he pointed out that it is as yet disturbingly short on details. Crescenzi went on to describe the three major areas of concern for investors: (1) Europe, (2) the possibility of a renewed recession, and (3) the US deficit negotiations. Thursday's agreement went a long way toward alleviating the first worry, and the rising stock market and other indicators have somewhat reduced the second -- although both continue to be real threats. The third is a wild card, with the deadline for an agreement falling on November 23 -- the day before Thanksgiving.

2 - Last night's edition of the CBS news broadcast 60 Minutes opened with an extensive story about Bernard Madoff's wife and remaining son Andrew (the other son, Mark, hanged himself a year after his father's crimes were discovered). If you believe them (which I did, for what it's worth), the biggest Ponzi schemer in history deceived them just as completely as he did everyone else. The interviews were haunting, difficult to watch -- one might even say devastating -- and Sharon and I sat in stunned silence for several minutes afterward. Not only did Madoff ruin his own life and those of his many clients, he also caused one son to commit suicide and shattered the existence of his formerly loyal wife and remaining son. While many viewers understandably will have little sympathy for them, considering their many years of wealth and luxury at the expense of innocent investors, I couldn't help but feel the pain of such an unthinkable betrayal. And the saddest part is this: Madoff left hundreds -- perhaps thousands -- of other, equally shattered victims in the wake of his crimes.

3 - Here's why some people are so pessimistic about our national policymakers' ability to come together on a budget-cutting solution. USA Today reports in a recent article that members of the Congressional deficit reduction committee can't even agree on a proposal to replace the $1 bill with a $1 coin. The switch, which has been considered for years and would save taxpayers $5.6 billion, is the subject of competing lobbying efforts from mining and vending companies (on the side of the coins) and paper and ink producers (in favor of the bills). This issue may be the proverbial canary in the coal mine: if members can't agree on it, how will they come together on the really big ones?

4 - If you love kids, come to downtown Tryon this afternoon at 4:00. There will be hundreds of costumed children (and their parents) collecting goodies from local businesses. If you call Millard & Company after 4:00, don't be surprised if you are asked to leave a message -- we'll probably be with the kids!

Check out our website,, for the video on Madoff's other Victims that will leave your head spinning. Have an outstanding week!


Tuesday, October 25, 2011

A Perspective on Global Risk Factors

1 - Another slight gain in the stock market last week has done little to improve the general feeling of unease regarding both the global economy and the financial markets. There are so many unsettling factors at work that it's difficult to be optimistic, at least for the near term. But it's important to remember that it is during just such times that the stock market historically has had some of its most impressive rallies.

2 - To get a perspective on one of those global risk factors -- the situation in Europe -- I invite you to view the brief video by visiting Millard & Company Home Page (if you can get past the sight of my currently stitched-up face). Below is this week's economic news, is an article describing some of the concerns surrounding the domestic stock market:

Has Wall Street Learned From 2008?

Some market bears think very little has changed. They could be right.

Memories of 2008 are still fresh: The credit crisis; the collapse of Lehman Brothers and Washington Mutual; the federal takeover of Fannie and Freddie; the market downturn. There's little doubt Wall Street would like to erase it all from its conscience, and maybe it has.

Part of the anger of the Occupy Wall Street movement comes from the perception that nothing has changed. While the Dodd-Frank Act (designed to make the financial system more accountable and transparent) is now taking effect, the Volcker Rule (intended to stop banks from trading for their own accounts) may be watered down or put off. Beyond that, the U.S. economic recovery from the Great Recession has sputtered and made people question the recent bullish sentiment.

Stocks have rebounded strongly since 2009, but there are still many factors to worry about; this may lead to a little contrarian thinking.

This bull market may be a diversion from a longer term bear market. For most of 2011, the S&P 500 has been above 1,200 (a great rebound from the March 2009 low of 676). What was behind that? The short answer: a weak dollar. We haven't exactly had a boom economy in that timeframe.1,2

Some analysts look at Wall Street right now and see a rerun of the 1970s, when you had momentous rallies masking a bear market that went from 1967-82. In addition, researchers at the Federal Reserve Bank of San Francisco are concerned about the possibility of a generational sell off; a potential market "headwind" for 10 or 20 years stemming from greying Baby Boomers getting out of stocks as they get closer to retirement, countered only partly by overseas investment.3,4

What has changed on Wall Street since 2008? Perhaps not much. The general perception that the CEOs of the big investment banks and mortgage companies whose thoughtlessness contributed to the Great Recession met with no real consequence seems to be taking hold, as evidenced by the Occupy Wall Street movement.

By the way, remember the furor directed at risky derivatives trading? In September 2011, the Comptroller of the Currency had recorded an 11% year-over-year increase in derivatives investment in the banking industry. Banks now hold almost $250 trillion of the contracts.5

A truly severe punishment of Wall Street would come at a dear price for Washington. Some of the biggest names from Wall Street (and the real estate sector) have also been major lobbyists and campaign contributors. According to the nonpartisan Center for Responsive Politics, the National Association of Realtors has contributed more than $40 million to federal-level political campaigns since 1989; Goldman Sachs has contributed almost $36 million since then, and Citigroup nearly $29 million. The financial, insurance and real estate industries have collectively spent over $4.6 billion in lobbying efforts since 1998.6,7

What is happening with the recovery? Not much. Whileunemployment is above 9%, underemployment is the real story - in September, 16.5% of Americans worked less than 40 hours a week. No wonder homes sit on the market and consumer spending increases mostly in response to rising food and energy prices. Wages even retreated 0.2% in September and incomes fell 0.1% - the first monthly decrease in income since October 2009. Assorted 2012 forecasts see slow or slowing growth in various European and Asian nations.8,9

Is there a bright side for Wall Street? Actually, there could be. The European Union is making decisive moves to address its debt crisis. Indicators still show that our economy is growing, not contracting; September was the best month for U.S. retail sales since March. Many analysts think that the Dodd-Frank regulations will discernibly impact the Wall Street mindset. Lastly, the strength and duration of seemingly every major bull market has been questioned by the bears; history might record that a secular bull market began in 2009, after all.10

Only time will tell. Over the years, the stock market has faced some great challenges - and risen to meet them again and again. This time around, the hope is that Wall Street's behavior (and behavioral assumptions) won't sabotage the rally.

3 - Please note in the "Upcoming Events" that we have two new events on the schedule. The first is a special client dinner-and-a- movie night scheduled for Thursday, December 1, when we will watch the great holiday classic It's a Wonderful Life. (You can sign up for this celebration by clicking here.) The second is the rescheduled panel discussion on New Realities: The Global Economy, which will take place in mid-January.

4 - One week from today is Tryon's annual Halloween Stroll beginning at 4:00pm. Most of the downtown businesses close early in order to host hundreds of costumed children and their parents during the annual trick-or-treat ritual. I am privileged to again emcee the costume contest, which is always a hoot (6:00 in the Tryon Movie Theater). If you'd like to have some fun and help Juliet and me distribute candy at any time between 4:00 and 6:00, feel free to stop by the Depot. (We're racking our brains to come up with semi-healthy treats to give away; if you have any suggestions, let us know soon!)

Enjoy this beautiful fall week!


Tuesday, October 18, 2011

A Way To Re-Set Your Perspective

1 - The stock market (or at least the Dow and NASDAQ) recovered enough last week to put it back in positive territory for the year. We have some tricky ground to cover between now and year-end, so we shouldn't start counting chickens just yet.

2 - Speaking of the stock market, you may notice that the 10-year total return average of the S&P 500 is only 1.23%. That's what pundits are talking about when they bemoan the "lost decade." Ten years is a long time to go with measly returns. That is why we're always seeking sources of investment returns not tied to stocks. In keeping with that quest, we are adding another asset class: Market Neutral Strategies. Although the name may be unfamiliar to you, it is a strategy I have employed successfully for over a decade. I was under the impression that it had become unavailable, but it turns out we can still access it, so it will be showing up in client portfolios over the next few reporting cycles.

3 - While there are quite a few economists who believe we may be headed for a second recession, the data doesn't completely support that assertion. Read the article below for a few bits of good news.

Double-Dip Recession? Don't Be Too Sure.

Key indicators point to an economy (slowly) on the mend.

This year, assorted economists and journalists have contended that the U.S. is on the edge of a new recession. Yet recent indicators hint that the economy is doing a bit better than some analysts think.

U.S. retail sales were up 1.1% in September. This is the kind of monthly number that you might expect during a typical recession recovery, and it surpassed the +0.7% consensus forecast of economists polled by Bloomberg News. Additionally, the Commerce Department revised August retail spending (formerly flat) to +0.3%. The year-over-year numbers in the September report really impress: we see annual gains of 7.9% for overall retail sales, 10.1% for online retailers, 6.9% for the restaurant and nightlife component, 7.6% for clothing shops and 6.5% for home and garden stores.1,2,3

As Credit Suisse economist Jonathan Basile told, "The fear of recession recedes when you see a retail sales report like this." Basile said he was revising Credit Suisse's 3Q 2011 GDP forecast for the U.S. north from +2.5% to +2.9%.4

GDP did improve in the second quarter. Real GDP was +0.4% in the first quarter of 2011, but the third and final real GDP estimate for the second quarter from the Bureau of Economic Analysis was +1.3%.5

"As of today, the recovery is still underway," Berkshire Hathaway CEO Warren Buffett commented at an October 4 Fortune Magazine conference. "Our railroad carried 200,000 carloads last week," he said, referring to the Burlington Northern Santa Fe company. "That's the highest total in three years. And that's stuff moving around the country, supplying merchants and doing all kinds of things."6

Other signs of growth & stability can be seen. Here in October 2011, many corporations appear to be in better shape: U.S. non-financial firms have $15 trillion of potentially liquid cash or investments on hand compared to $13.7 trillion a year ago. American residential investment spending is up by $9 billion since a low-water mark last spring; existing home sales rose 7.7% in August and the backlog of homes for sale fell to an 8.5-month supply from the previous 9.5-month inventory. The Institute for Supply Management's twin purchasing manager indexes still show ongoing sector expansion; the service sector has grown for 22 months.7,8,9

The continued vitality in consumer spending and other encouraging factors points to a recovery. It may seem unimpressive or frustrating, but it doesn't indicate a recession. 

Have a wondrous week!

~ Andy

My wife Sharon and I recently visited Yosemite, Kings Canyon and Sequoia National Parks in California where we took these photos. Such timeless majesty tends to place the moment's financial news in its proper perspective.  
One of the many breathtaking vistas in Yosemite Valley.

A Giant Sequoia, 30 feet wide, as tall as a 14-story building
and over 3,000 years old.

A sliver of the 360-degree view from Moro Rock.