To Our Investment Clients:


Below is the investment performance commentary written by the Archer portfolio managers summarizing the investment market activity for the 1st Quarter of 2015. Our investment clients will see the results of the commentary reflected in their accounts.

 

Below are the 1st quarter model portfolio and Archer Funds performance results. If you would like a copy of the Quarterly Morningstar Report that was issued for March 31, 2015, please call Jordana at extension 120.
 

    Model Portfolios

YTD

    Aggressive  2.87%
    Moderate Aggressive  2.44%
    Moderate  1.77%
    Income & Growth  0.95%
    Conservative  0.73%

 

 

   

Archer Funds

YTD

    Archer Balanced Fund   2.41%
    Archer Income Fund   1.21%
    Archer Stock Fund   6.30%


If you would like to discuss your individual account or if your situation has changed or would like more information, feel free to call me at (301) 657-8080 or email me at paul@esullivan.net.


If you are not presently investing with us, you can take advantage of our offer of a complimentary review of your current investment portfolios. Along with our comments, your accounts would be reviewed by the portfolio managers at Archer Investment Corporation. Please call us if you would like to take advantage of this offer.
 

Very truly yours,

 

Sullivan & Company, CPAs

 


 



4709 Montgomery Lane | Bethesda, MD 20814

Phone (301) 657-8080 | Fax (301) 657-9055
Website:
www.esullivan.net | E-mail: paul@esullivan.net
 

The opinions contained herein are not intended to be investment advice or a solicitation to buy or sell any securities. Information obtained from sources deemed to be reliable, but accuracy or completeness is not guaranteed. Past performance is not a guarantee of future results. Performance figures contained herin do not represent actual client portfolios or results. Actual results may significantly differ from the model portfolio returns presented. Archer Investment Corporation manages the Archer Funds. You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Funds before investing. The investment return and principle value of an investment in the Funds will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the prospectus by calling 800-581-1780.
 
 

 


 

9000 Keystone Crossing #630
Indianapolis, IN 46240
www.thearcherfunds.com


               Archer 2015 2nd Quarter Update and Outlook:

     2015 is shaping up to be much as we anticipated. The market has risen and fallen to do much about nothing. At the end of the first quarter we saw the S&P 500 rise about 2.5% (Using ticker SPY as a proxy for the S&P 500). The rise of 2.5% is not insignificant however in terms of trends. Although forecasts for earnings in the first and second quarter of 2015 were below that of the prior quarter, they have not disappointed as much as originally anticipated. This is going to bode well for the market. If this theme stays intact, we could see returns of near 8% for the full year 2015.

     In our annual update we discussed low oil prices and interest rates being the main catalyst in 2015. We continue to believe this windfall of cash for the average consumer is still on cue with increasing retail sales and overall family expenditures. Since our last writing, Europe has embarked on its own style of Quantitative Easing (QE). Just when we thought rates would have a larger opportunity to rise, Europe is likely going to keep rates in check for the time being, as the German 10 yr. is near zero in interest rate terms. Why would an investor invest in that kind of "non-return" when they can get near 2% in the U.S. 10 Year? They wouldn’t right? This is why we continue to believe stocks are the best place for money right now.

     Let’s take a look at some charts from J.P. Morgan and see if we are still fairly valued:

     

     The charts tell me over time that the Forward P/E ratio albeit a bit higher than the norm at 16.9x is in check since the Earnings yield is much greater than the Moody’s Baa yield of 4.5% (bottom right of chart above). The question remains what will happen if and when interest rates rise? I think the answer lies in the health of corporate balance sheets or assets as well as the health of the average consumer. Corporate Balance Sheets are very healthy as cash and cash equivalents are extremely high. This cash hoarding on the books of corporations is going to continue to rise as the low interest rates and lower oil also positively impact corporations balance sheets just as they do for consumers.



     Another area which I have been intrigued with over time and continues to peak my interest is the supply of stock. We have written about this in the past and continue to believe this could be one of the fundamental drivers of stock prices in years to come. The fact that more and more companies have "excess" cash and what they are doing with that cash is important. The next chart shows why this is important. We have more and more cash chasing fewer and fewer shares.

     

     Not only are corporate balance sheets improving, but consumer balance sheets are also improving. Household Debt Service Ratio has been falling. The main reason is low interest rates. The secondary reason in 2015 is lower prices at the pump. In the following chart you can see Household Debt Service Ratio has fallen consistently to levels below where they were in the 1950’s. The chart shows estimates of debt service ratios from JP Morgan. This means if the average household is making $4000 per month, only about $400 is going to service debt like car payments, etc.

     

     As we stated in our annual update, we think the roadmap albeit a bit more volatile in 2015 stays on course, but in a more muted fashion than the past. I highly doubt we see mid double digit returns in 2015. I think this year belongs to the consumer as they continue to get their own financial house in order just as the corporations have done over the past few years with lower rates.

     Remember to invest in a manner you are content with and focus on long-term investing. Although we speak about short-term gyrations in the market, it is difficult to trade the market with any kind of long-term accuracy if you are focused only on the short-term.
 

Regards,

The Archer Team


Troy C. Patton CPA/ABV
Steven C. Demas
John W. Rosebrough CFA
 

 

 

The opinions contained herein are not intended to be investment advice or a solicitation to buy or sell any securities. Information obtained from sources deemed to be reliable, but accuracy or completeness is not guaranteed. Past performance is not a guarantee of future results. Performance figures contained herein do not represent actual client portfolios or results. You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund's prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund's prospectus by calling 800-238-7701 or by downloading one online at www.thearcherfunds.com.

The Fund's past performance does not guarantee future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling 800-238-7701

The Archer Funds are distributed by Arbor Court Capital, LLC, 2000 Auburn Drive, Suite 300, Beachwood, Ohio, 44122, Member FINRA.

Copyright © 2015, Archer Funds, All rights reserved.

 

 
 

Sullivan & Company | Certified Public Accountants | 4709 Montgomery Lane #201 | Bethesda, MD, 20814 | 301-657-8080