Charter Trust - Global Market Update

When the dog bites, when the bee stings, when I’m feeling sad, I simply remember my favorite things, and then I don’t feel so bad! Photo: Anita Troy. Source: Morguefile When Julie Andrews sings about bright copper kettles and whiskers on kittens, she’s trying to calm her charges during a violent thunderstorm. When the market gets turbulent and frightening, I turn to my favorite indicators of financial performance. I’ve noted before how—sooner or later—stock market performance has to come back to fundamentals. There has to be a way to evaluate how well a company is performing, whether it’s providing insurance or selling tractors. Most analysts use financial ratios. But there are literally hundreds of these, evaluating credit quality, efficiency, growth, even management’s language in their quarterly conference calls. Which ratios should we choose? I like to look at financial disclosures as a tripod, the three legs being the income statement, the balance sheet, and the statement of cash flows. The most basic analysis looks at earnings per share and (perhaps) sales as an indicator of how a firm is doing. But management sometimes manages those numbers. An investor once told of visiting a corporate loading dock on September 30th at lunch time. He asked the shipping manager how the quarter had gone. The manager looked at his watch and said he couldn’t tell, the quarter was only half over. Principal Financial Statements. Source: Douglas Tengdin  But it’s hard to manipulate the entire financial picture. So I look at ratios that evaluate how these three principal disclosures interact. The most basic relationship is that between income and the balance sheet.  This indicates how efficiently management is utilizing the assets that are under its control—how effective they are at turning an investor’s cash into earnings. So I use Return on Invested Capital—net earnings divided by the book value of equity and the market value of debt. I like to include debt in this analysis, because that doesn’t incent management to borrow money just to boost their return on equity. Second, I evaluate the ratio of cash from operations—part of the Statement of Cash Flows—to net income. This gives me, in broad terms, an indication of how much of the corporation’s earnings are based on cash receipts, versus accruals of one sort or another. Warren Buffett has said that cash is to a business as oxygen is to an individual. This relationship can give us a sense whether a company might need CPR soon. Finally, I examine the ratio of cash delivered to shareholders—both through dividends and net share buybacks—to the market value of equity. This ratio is the Shareholder Yield. This gives analysts a sense of how committed management is to returning cash to the company’s owners. We may be uncertain about many things that companies may disclose, but one thing we can be sure of is how much they pay us to hold their stock. And stock buybacks are important, as they can be a more tax-efficient way to return money to shareholders. Each of these numbers is independent of a company’s size. A mega-cap like GE with billions in capital is on the same footing as a 1000-person firm like Box. But taken together, they measure how efficiently a company is at generating cash from their businesses and how willing they are to send some of it to it to their investors.  These indicators aren’t perfect. They are biased towards established companies that are in the process of paying shareholders—rather than taking in money and using it to grow, or even just redeploying their own internally-generated resources. And it’s important to look at footnotes as well, especially when accounting standards are changing. But when things go wrong, it’s comforting to know that a company’s management team is committed to distributing cash to me quarter after quarter. When a firm can do this from its own efficient operations, this can become an anchor of value in a storm of market turbulence.

Is investing an art or a science? Woodcut by Louis John Rhead. Source: Wikepedia In 1653 Izaak Walton published “The Compleat Angler,” a short book on fishing. In this little treatise he compares angling to mathematics – something that can never be fully learned. There’s always a new approach or a new location or some novel piece of equipment. “But he that hopes to be a good angler,” Walton continues, “must not only bring an inquiring, searching, observing wit, but he must bring a large measure of hope and patience.” He describes fishing as the perfect combination of contemplation and action. It’s the same with investing. Investors need inquiring minds, hopeful dispositions, and patience. It can take some time for an investment approach to work out. At the same time, we have to be diligent to make sure that the main idea behind our investment thesis hasn’t changed. We can’t afford to be whipsawed by every new fad or fashion that appears—but we can’t ignore how things change over time. Good investing is both art and science. It’s a science as it applies to investments, but an art as applied to the investor. Each investor is unique, with unique objectives and limitations. Applying the right investment in the right circumstance at the right time is something that—as Walton would say—is satisfying in the result, but also in its application. Investing, like fishing, is a reward to itself. Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

What do you need to start fishing? Photo: Natureworks. Source: Morguefile Not much: just a hook, a line, and a body of water. And the desire to catch a fish. I remember my 5-year old cousin wiggling her drop-line away from the sunnies approaching her hook, saying “No no fishy, you’re too small.” She was so cute that the adults in the boat barely noticed we were drifting dangerously close to a dam. As our desires grow, our gear gets more complex. There are different types of rods, reels, and line; boats and boots; electric motors and cruising motors. You may want to consider hiring a guide. All the equipment can seem pretty intimidating. But it’s there so we can catch the kind of fish we want to. At its heart, though, fishing is simple: get the fish to bite on a hook and pull it in. If you have enough time, you can sit by your favorite fishing hole for hours with nothing but a stick, a line, a bobber, and a baited hook. It’s that way with investing. If you’re just beginning and don’t have much saved, a basic indexed mutual fund should do. Some only require $1000 as an initial investment. As we accumulate more money, other factors become more important—fees, tax-efficiency, liquidity, tailoring the portfolio to fit our needs. There are lots of reason why a collective fund may be less than ideal. But it doesn’t take much to get going. As with fishing, the important thing is to start. A trip of a thousand miles begins with a single step. Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

Are you good, or just lucky? Photo: BegoBego. Source: Morguefile Everyone who goes fishing has met them: folks who do everything wrong but still pull in fish after fish. They’re loud, their lines get fouled, they don’t have the right tackle, they go out at the wrong time—but they come back with a boat full of trophies. It’s tempting to say, “It works for them,” and change your own approach. But that would be a mistake. You can’t judge anglers by the size of a single catch. Luck plays an important role in fishing, and in everything we do—especially investing. Suppose someone builds a ski area in Phoenix, Arizona. That winter a freak weather pattern develops and they receive 100 inches of snow. The resort turns a tidy profit. Does that mean building a ski area in Phoenix was a good idea? No. The quality of a decision can’t be determined by the outcome—at least in the short term. This is apparent when you consider the mathematics of investing. A skillful manager can add one or two percent to a portfolio over time, after fees, relative to the market. But the market typically goes up or down 10 or 20 or 30 percent. Short-term market movements can overwhelm an investor’s skill. These market swings can mask what’s really going on.   Annual total return of the S&P 500, 1926-2014. Source: Bloomberg People pay attention to investment results, but they should really ask themselves what caused the results. Lucky investors predict the future and build portfolios around their prediction. Skilled investors prepare for many different scenarios, and think of the future in terms of probability. They focus on what they can know, rather than on what they can’t know.  Fishing is unpredictable. The fish can be anywhere—especially trophies. And anyone can get lucky. But it’s been my experience that the luckiest boats (and investors)—who return successfully time after time—are the ones that are the most prepared. Luck is what happens when preparation meets opportunity.   Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

“The majority is never right.” – Henrik Ibsen, An Enemy of the People Photo: Francis Hannaway. Source: Wikipedia Have you ever been to a fishing tournament? At the starting time, dozens of boats roar off to their favorite fishing holes, which quickly become crowded. There are usually two winners: the one that pulls in the most weight and the one that catches the largest individual fish. In the US, there are over 30,000 fishing derbies every year. Watching a tournament can be fun. You learn where the best holes are, what the pros use for bait, and other tips. But it’s also instructive to see who wins. The biggest fish usually doesn’t come from the mass of boats gathered in the most popular spots. They come from folks who get away from everyone else, who may try something unconventional. Investing is similar. Investing with the crowd rarely delivers exceptional performance. Put another way, conventional thinking yields conventional returns. There’s a universe of other people out there who are all evaluating the same set of investment opportunities. Following what most people are doing will give results similar to most people. But it’s not enough just to be different. Just because no one else is playing tennis on the freeway doesn’t mean it’s a good idea! Put another way, there’s no upside in taking a contrary view to the solution of 2 + 2. You can’t just to bet against the crowd. Successful investors need to know why the mob is mistaken. Only positions taken with the confidence of a strong decision-making process can be held—and even increased—when they look like mistakes rather than winners, and losses accrue rather than gains. Markets—and companies—can remain over- or underpriced for years. Eventually, good ideas pan out. But you have to be able to hang on until they do. Leadership is lonely. But it’s absolutely necessary if you want to achieve superior results. Jean Paul Sartre famously writes that “Hell is other people.” For investors—and anglers—sometimes you just have to ignore other people. Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

Finding valuable investments is a lot like finding a good place to fish. Photo: Volker Lekes. Source: Pixabay In both cases, you need to keep working at it. On its face, fishing is pretty simple: cast your lure out where the fish are biting and reel them in. In the same way, value investing is simple as well: find companies selling at a discount to their intrinsic value and buy them. A company selling below its intrinsic value offers investors a margin of safety. But finding them is never so simple. With fishing, you have to consider the time of day, the wind, whether it has rained recently, and what kind of season it’s been this year—hot and stormy, or cool and placid. All of these affect where the fish like to hang out, and what lure they might be attracted to. Value investing gets complicated, too. Intrinsic value is just the present value of all the money a company will deliver in the future. The concept seems pretty basic; the practice is a lot more subtle. Is the cash flow stable or volatile? Stable cash flow is worth more. How much debt does the company have on its balance sheet? Debt increases risk. How fast—and for how long--can they grow earnings? And how much experience does this management team have in producing a steady, growing earnings stream? Source: Charles Brandes, Brandes on Value  Both fishing and investing require great patience: casting your lure out over and over again; examining company after company, year after year. But both offer great rewards, not just in what they produce, but in the process itself. You learn new things all the time! In the 17th century Izaak Walton wrote that fishing is so pleasant that it is a reward to itself. It brings a “calmness of spirit”. Finding investment value is similar. Just get there before other anglers—and other investors—scare away all the fish! Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

Is investing like fishing? Photo: Trond Larsen. Source: Pixabay  There are a lot of similarities. Both involve searching for something you can’t immediately see. Both require lots of patience. And both give you a deep sense of satisfaction when you’re successful. I grew up fishing. From before I could walk my parents would take me out in a launch. Some of our best family memories come from week-long fishing trips on the Canadian border—going out early in the morning, eating a shore lunch at noon, then fishing some more in the afternoon, fileting and freezing what we brought in. At the end of the week we would drive home with a freezer full of fish, and would re-live that trip all winter as we gradually consumed our store. A lot of what makes for success on the water is also helpful when you invest. The first item is preparation. A productive fishing trip starts well before you head out—getting the right equipment, understanding where you’re going, and what you’re fishing for. Fishing for bass is a lot different than fishing for lake trout. Good anglers spend countless hours poring over maps, lures, and other equipment. In the same way, investors need to prepare. What do you want from your investments? Are you looking for growth or income or a little bit of both? Are you more interested in safety or performance? And do you want to do it yourself, or are you interested in a working with a guide? Success—in fishing, or with investing—doesn’t just happen. It has to be planned. And it starts by understanding what you want. Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

Why are some nations richer than others? Image Source: Growth Economics Blog Different countries have different levels of wealth. This truism has inspired all kinds of discussion and analysis over the years, from Adam Smith’s The Wealth of Nations to Jared Diamond’s Guns, Germs, and Steel. One factor is geography. Some places have more resources: fertile soil, natural ports, precious metals. But it’s not enough to have stuff. A society has to use it effectively. North America has always been blessed with temperate weather, convenient rivers for transportation, and abundant sources of energy. These weren’t really appreciated, however, until Europeans began to arrive in the 16th century. Sometimes a great idea or new technology transforms an economic backwater into an industrial powerhouse. Ready access to sources of coal, limestone, and iron ore enabled Pittsburgh to grow into America’s 8th largest city by the early 20th century. But critical to that growth was Andrew Carnegie’s vision to build and run the world’s most advanced steel mill. Nations can grow wealthy because of their resources, but they need the rule of law, property rights, and the intellectual capital to develop their resources. As we consider where to invest, how to invest, and who to invest with, it’s important to remember: it’s not just what you have—it’s what you do with what you have—that matters.   Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

What’s up with negative interest rates? Image Source: CNN Temperatures aren’t the only thing below zero these days. Around the world bond yields have gone negative. It started a few years ago in the US, when ultra-short Treasury Bills would go negative right around quarter-end. That was understandable as a combination of the Fed’s Zero Interest Rate Policy and institutions needing Treasuries for collateral on swap contracts. But a few months ago short rates in Europe went deeply negative—Denmark, Germany, and especially Switzerland. What’s going on? 2-year Government Bond Yields as of 2/4/15 (in blue): Source: Bloomberg First, the basics: a negative yield means investors will lose money in the local currency if they purchase a bond and hold it to maturity. Why would anyone do this? The key is understanding investors’ intentions. Bonds are denominated in a local currency. If that currency appreciates, investors gain relative to other currencies. The negative yields in Euro-area bonds represent an option on that country leaving the Euro—or, in the case of Switzerland and Denmark, abandoning a currency peg—before the bond matures. Source: Wall Street Journal There’s also the issue of what else you can do with your money. When the European Central Bank announced that it would start charging banks on their reserve balances, the banks started plowing money into short-term bonds. After all, -.1% for French OATs isn’t so bad when your alternative is -.2% at the ECB. And banks have to hold reserves somewhere. By this reasoning, the central bank’s negative rate is a natural floor for bond yields, apart from the currency option. This has had an impact in the US. Over $3.6 trillion in global government bonds now pay a negative yield. Two-year US Treasury yields at 0.5% are a bargain compared to -.2% for German Bunds. And with our economy doing better, there is potential for dollar appreciation. The implications of negative bond yields are significant. If the risk-free rate is negative, there are immense incentives to borrow and invest. The return necessary for a project to be profitable is a lot lower. We should expect more leverage in the system and more volatility as marginal proposals get funded. After all, marginal projects tend to fail at a faster rate—that’s why they’re marginal. Negative rates also raise the risk of a significant disruption to the banking system. This should end when growth resumes and central banks move rates back to normal. But there’s no telling when that will be, especially with the threat of a breakup looming over the Euro. For now, we’re living in a Bizarro World where governments are paid to borrow and investors buy bonds that lose money. I don’t expect negative yields to last; negative yields are irrational in the long run. Still, it’s dangerous to bet against them. Markets can remain irrational longer than investors can stay solvent.   Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

Small is beautiful. Image Source: Judyta Frodyma That’s what I thought when I looked at a chart of long term stock market returns. Small cap stocks have grown significantly more than large-cap stocks over the long haul. But they do so at the cost of higher volatility. And that makes sense. Small companies have more potential for growth than large firms, but they don’t have the big bank accounts or sophisticated risk management systems that big companies do, either. Source: Karsten Investments Over time, the benefits to investors can really add up, if they can handle the added volatility. Because of this, the “size effect” has been discussed by academics since the early 1980s. If it’s so hard to beat the market, why do small companies outperform so consistently? Why don’t institutional investors take advantage of these higher returns and make them go away? Some claim that the size effect is mainly a matter of liquidity. Small stocks are less liquid than their big brethren. When institutional orders come in to buy, the investor gets poor execution and doesn’t get the benefit of the small size and higher growth potential. By this analysis, the size effect is a mirage: when you actually try to touch it, it disappears. But there are reasons to believe that size matters. Good quality small companies can grow up to become world-changing disruptors. Even boring small companies can return a lot of cash to their owners. That’s the whole idea behind venture capital and angel investing. Get in on the ground floor, and ride the elevator up. But venture investing is hard work: you have shuck a lot of oysters to find the pearls. Source: Fijipearls.com The same logic applies to publicly-traded small cap stocks. If you look for quality—good management, strong financials, growing markets—small really is beautiful. In other words, once you sort them out, small cap stocks really shine. Small stocks can be a valuable part of a diversified portfolio. Especially if you’re small yourself.   Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

Why are balance sheets important? Image Source: Clipartbest.com Balance sheets give a snapshot of a company’s finances. They list and value all their financial assets and liabilities. As such, they’re subject to abuse by any firm that wants to present a distorted picture of how it’s doing to investors or creditors. These financial shenanigans usually appear on the income statement. After all, most investors focus on earnings, so that’s where the most pressure is play games. The company might record revenues a little early, or push current expenses out to a later period. So that’s also where many auditors focus their attention. But financial statements all tie together. One of my early exercises in financial statement analysis was to derive a periodic cash flow report from an income statement and a couple of balance sheets. Image Source: Lexis/Nexis A balance sheet has a normal layout. The simplest items go on top; the more complex issues are lower on the list. Cash is king—usually the first item listed. One simple way companies can obscure their financial picture is by mixing up this convention. There’s nothing fraudulent about this. But it can confuse or distract the casual observer. There’s nothing illegal about this. But it can make things confusing. Then there’s valuation. Inflating an asset’s value is an old trick. One way to do this is by changing the way an asset is priced. It’s hard to misprice cash, although firms have done it. But more obscure assets are easier to manipulate. So investors should watch out for radical changes in these items, or any sudden and surprising adjustment. Also, check the footnotes for any changes in accounting methods. Finally, there are reserves. If a company issues a warranty, that’s a liability on the balance sheet. They might have to fix or replace the item in the future. In 2007 Dell Computers got in trouble when they had to restate several years’ worth of earnings. They had boosted their bottom line by reserving too little for warranties. Astute investors noticed that these liabilities didn’t keep pace with sales, inflating profits. Some European companies have been notorious for creating fictional reserves during good times they can draw upon when times get tough. Such smoothing presents a false front as to how the business is faring. Financials should be fair; balance sheets need to balance. Sometimes the best way to check on a company’s health is to give its balance sheet a little shove.   Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

What is a balance sheet? Image Source: Digital Juice A balance sheet is a financial statement that lists all your assets and liabilities—what you own and what you owe. It’s a fundamental part of finance. It’s an accounting ledger that lists, on one side, what you are doing with your money, and on the other side, where the money came from. It’s a snapshot at a point in time. Everyone and everything that deals with money has a balance sheet: families, businesses, governments—even central banks. There’s the list of assets or liabilities, and there’s also the value put on them. For simple things—cash, homes, offices—the value is fairly easy to determine. But for complicated items—raw land, education, a corporate brand or logo—the value is more fuzzy. Still, the notion that assets and liabilities always balance—with the difference being net worth—is important. Source: Positive Money People get mixed up is when they rigidly import principles from one sphere into the other. For example, in personal finance it’s good to avoid debt, especially for depreciating assets. After all, that money needs to be paid back, and those debts can tie you down. But in corporate finance, it can be irresponsible to avoid debt. A firm that finances a mature business with just equity isn’t serving its shareholders well. By its nature, equity costs more than debt. An asset with stable but modest cash-flows may still be a worthwhile investment if it’s funded by an inexpensive loan from a secure lender. Balance sheets matter. They determine how diversified a company’s finances are, and how flexible they can be in the future. They can also clue us in to some of the games people play with their bookkeeping. Learning how to interpret a balance sheet is as useful as learning how to read literature, or reading the clouds in order to understand the weather. Investing is like sports—endless preparation followed by intense competition. And understanding financial statements is like running—a fundamental skill that we need in order to win.   Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

Is Russia on the brink? Image Source: Jeremy Nichol Ever since oil prices collapsed folks have wondered when Russia would follow. After all, falling oil prices have led to a fall in the Ruble. In 1998, the Ruble’s collapse caused a financial crisis. Isn’tanother one just around the corner? Well, this isn’t your father’s Russia. Back then Russia was running twin fiscal and current account deficits. They had to borrow just to keep their economy going. When the Ruble fell, their debt became unsustainably expensive. Default and economic collapse were all but inevitable. Value of Ruble in Dollars. Source: Bloomberg By contrast, until recently Russia has run a budget surplus. Their public debt is less than 20% of their economy—and most of that is denominated in Rubles. They’ve also been running a trade surplus, so they have substantial foreign reserves. Since Putin came to power in 2000—just as oil started rising—most Russians credit him with fifteen years of economic expansion, following decades of stagnation and decline. The current use of economic sanctions to pressure Putin to give up his military adventurism is a dangerous game. As their economy stalls, he could use additional foreign escapades to distract the public from problems at home. Russia is like a homeless man with a machine gun. They’re not a major power. But it would be a mistake to ignore them.   Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

How well did Apple do last quarter? Image Source: FinePrintNYC.com Yesterday Apple reported they earned $18 billion on $75 billion in sales. Earnings were up 50% from a year ago, and sales up 30%. They sold almost 75 million iPhones—34,000 every hour, every day, all quarter long. There clearly was a lot of pent-up demand for a larger phone. Well done Tim Cook. Apple is now one of the largest enterprises on the planet. Their cash alone is worth more than 99% of the stocks in the US. Tim Cook’s background is in Operations, and that’s a good thing. The logistics of designing, building, and selling so many intricate devices is daunting. There are so many moving parts! Source: Wall Street Journal And that’s what has many worried. They’ve become so big it’s hard to think what they’ll do for an encore—or how they can continue to move the needle. At some point, the law of large numbers kicks in and growth has to slow. But Apple isn’t just rolling dice. They’re building and selling billions of products that change the way the world works. The fundamentals of finance haven’t changed, though, and it’s still smart to diversify. But for now, it seems the four major food groups are protein, carbs, fats, and Apple.   Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net

How do storms affect the economy? Image Source: LINewsRadio.com With a major nor’easter bearing down on New York and New England, a lot of people wonder just how much weather can change the economic outlook. Last winter was a great case-study. As 2013 ended, many looked for economic growth to pick up in the new year. Instead, the combination of record cold temperatures with an especially stormy winter led caused economy to contract at an annual rate of over 2% in the first quarter. But it came roaring back in in the second and third quarters last year, rising 4.6% and 5%, respectively. It never pays to bet against the American consumer, even when we’re snowed in and shivering. Storms may shut us in temporarily, but they won’t keep us down for long. Consumption delayed is not consumption denied. And of course with so much for sale on-line, we don’t even have to travel to a hardware store to get a snow shovel. Amazon will deliver one. There can still be some disruption from power outages and travel bans, which makes me wonder why we don’t bury our power lines, like the Nordic countries. They have some experience with nasty weather. In general, though, stormy weather to the economy is like driving in heavy snow: it makes things slide around, but it doesn’t mess up the gears.  Douglas R. Tengdin, CFA Chief Investment Officer Phone: 603-224-1350 Leave a comment if you have any questions—I read them all! Follow me on Twitter @GlobalMarketUpd www.chartertrust.com • www.moneybasicsradio.com www.globalmarketupdate.net