As a firm we have been talking about the Williams Companies for some time now (click to read our blog post from 3/11). Our reason for liking the Williams Companies has always been that they are undervalued. A portfolio manager from Forward Global Infrastructure Fund (Aaron Visse) had this to say about Williams; "there is a disconnect between public and private value". An article this weekend was published talking about Williams and the inherent value that can potentially be released.
FINRA (Financial Industry Regulatory Authority) has continued to focus on nontraded Real Estate Investment Trusts (REITs). Within the last few weeks the regulatory industry issued an alert to investors regarding these nontraded REITs. The main drawbacks to these investments are the high fees that are associated with the product and the lack of liquidity. Working with clients who have purchased the nontraded REITs prior to joining ARS Wealth Advisors, we have experienced first hand how hard it is to get money out of these investments once they have been purchased.
Investors are lured into these products by promises of high yields. While the investments promise attractive yields, what many investors fail to realize is that their money will be locked up for an extended period of time and that these distributions can be suspended or halted altogether. According to FINRA many REITs lock up investors money for "eight years or more".
During market volatility we have all heard the advice to "buy on market dips". While this logic seems to instinctively make sense as everyone wants to buy low and sell high, actually putting it into practice is much harder to do. Here is an article that looks at the topic of buying on market dips and makes the argument that buying on dips is a less than "sure way to raise your investment returns."
Over this past month we have experienced historically low yields on the 10-year U.S. Treasury Notes. When looking at yields for the 10-year Treasury Notes over the last 50 years (Jan. 1962 through August 31st, 2011), yields on these notes had never closed the trading day below 2% . Since the start of September, 2011 these 10-year notes have closed the trading day with a yield below 2% on 8 separate occasions (info from the Treasury Dept.).
A question that has been raised recently by our clients in many different forms, is regarding our thoughts on gold as an investment. Is gold underpriced and currently still a bargain? Is this a gold bubble and is it about to burst? Our answer is we don't know and neither does anyone else due to the fact that there is no reliable way to determine its worth. Gold doesn't pay a dividend, it has no earnings growth, and it generates no cash flows. Below is an article that outlines some of the challenges faced when investing in gold and makes a case for investing in gold mining stocks as a way to have exposure to the precious metal.