J. Andy IngramWealth & Capital Mgt. Advisory

3307 Overhill TrailRoanoke, VA 24018

540.765.2750

aingram@capital-invest.com

January 2015

Two Thousand and Fifteen is officially here!!! (It feels less dramatic typed out) I hope all of you had a great Holiday Season and have begun the New Year with clarity and focus.

Regardless, let’s take a moment to review the final quarter of last year and 2014 as a whole. The modest rise in inflation that was present in the first half of the year continued to subside in the fourth quarter with deflation once again taking center stage throughout the global economy. This dynamic was strongly characterized by the continued collapse in oil along with downward pressure on both precious metals and commodities at large. Government bonds of longer maturities also carried on their 2014 advance as investors positioned for the resurgence of global deflation and ultimately realized that the FED’s exit of quantitative easing does not diminish the demand for U.S fixed income in a sluggish global economy. As anticipated in last quarter’s letter, U.S. stocks experienced increased volatility but proved resilient on the back of continued pledges of support by global central banks and a relatively strong domestic economy as compared to much of the world. Simply put, the fourth quarter of 2014 can be summarized as having been bad for commodities/anything connected to energy and comparably good for U.S. stocks/high quality, long term government bonds.

Having put 2014 in the record books, it is important to look back and consider just how far U.S. stocks have advanced since the bottom of the global financial crisis due to both a strengthening domestic economy and tremendous support from the Federal Reserve. Although new highs in U.S. equities dominated headlines last year, lets not forget the second half weakness in commodities and markets outside the U.S. are a reminder that deflation and a weak global economy still provide potential headwinds to this aging bull market.

Moving forward together in 2015, it would be convenient to use the strength of U.S. stocks over the past few years to justify the widely held attitude that everything is great. However, as your trusted advisory firm, we feel a strong responsibility to dig deeper into the complexities of the current economic environment and not simply join forces with the masses in claiming that the investment environment is terrific…until it suddenly isn’t. As a partner in your financial journey, we will continue to utilize a robust internal research process in an attempt to limit unnecessary risk and build portfolios that fit your unique, personal situation. It is all too common in the latter stages of bull markets that investors find themselves exposed to more risk than initially intended and it is our primary objective at this stage in the economic cycle to not let that happen. In the

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2 1Q15 Newsletter

interconnected, fast paced, global world we live; market dynamics can change quickly as risk often happens slowly then…BOOM…all at once. With that being said, we feel that the primary risks to portfolio’s moving forward are:

A continued acceleration of deflationary pressure on the global economy that central banks are not able to effectively combat with easy money policies.

Continued global economic weakness and or a marginal slowdown in the U.S. economy causing investors to feel that stocks are overvalued in the immediate term.

A poorly timed/excessive tightening of monetary policy by the Federal Reserve. An escalation of geo-political tension and/or an unknown event.

Although no one has a crystal ball to consistently predict the future, it is increasingly likely that the recent increase in volatility will persist going forward. This does not warrant panic or turning our backs on long term investing, but simply places additional importance on strategic diversification and professional risk management. While we are reluctant to make a specific forecast about the year ahead, instead choosing to evaluate the market & economic landscape as it unfolds, our internal analysis indicates that in the absence of the above mentioned events:

The U.S economy will continue to strengthen and support earnings and equity valuations. Quantitative easing by central banks outside the U.S will help push up various global

markets that are relatively undervalued in comparison to the United States. Precious metals and Commodities will continue to experience weakness in the near term

unless supply/demand dynamics change and/or inflation expectations reaccelerate.

Having outlined what we see as the primary risk factors to portfolios moving forward as well as a more favorable; we would like to take the time to remind you that with diligence and independence we stand beside you as your financial journey unfolds. Vowing to never be “that firm” who simply lays out an investment thesis and sticks with it indefinitely, our continuous internal research and accountability will remain the foundation of our relationship with you moving forward.

We would like to sincerely thank you for your trust and extend a promise that our commitment to provide the best possible experience down your financial journey of life will stand strong in any and every economic environment.

“Commitment is an act, not a word”

-Jean-Paul Sartre-