Street Talk

Street Talk: Embrace the volatility

Name game.

May 20, 2016
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As Dennis Johnson sees it, the volatility in the financial markets is going to be around for a while. The trick is to see that volatility coming, and resist the urge to overcorrect.

That was the message Johnson, chief investment officer for Comerica Asset Management Group, wanted to get across at the 2016 Comerica Bank Economic and Investment Outlook on Wednesday.

He, along with Comerica Bank chief economist Robert Dye, presented the outlook at Pinnacle Center in Hudsonville.

“We don’t want you to be afraid of market volatility — in fact, quite the contrary,” Johnson said. “We want to use market volatility and take advantage of it to benefit our clients over the long term.”

Johnson noted these periods of market volatility can either create opportunities for investors or have no impact whatsoever, depending on the long-term goals each client has in mind.

He also stressed the importance of risk management through portfolio diversification, rebalancing portfolios and choosing the right combination of active and passive investment strategies.

When it comes to diversifying that portfolio, Johnson advised a middle-of-the-road risk investor should have about 55 percent of their portfolio in stocks and 45 percent in alternative investments. He further explained about half of that 55 percent should be invested in U.S. equities, with the other half split among developed, international and emerging markets.

Dye, who recently was awarded the 2015 Lawrence R. Klein Award for having the most accurate macroeconomic forecasts, spoke extensively about the impact of the energy sector on the national economy. He noted the steady increase in demand for petroleum in the past two years and how, at the same time, production of oil is decreasing, so a hike in gas prices is likely on the way.

Dye said right now a barrel of oil costs about $47, up from $26 to $27 per barrel in February but not far off from his year-end prediction of $50 per barrel.

“I do think, though, that even though the markets are going to tighten up, the days of $90 to $100 barrels of oil on a sustained basis are behind us,” Dye said.

After their presentations, Dye and Johnson answered questions from the audience. They were asked about the potential impact the results of 2016 presidential election could have on the nation’s economy. In short, their answer was: not much.

Johnson said the assumption that the party makeup of both houses of Congress will remain largely intact plays into this prediction, as does the financial markets’ historically good performance during a Republican Congress, regardless of the sitting president’s party affiliation.

“History would imply that this year, the election year, the stock market will be up — and it should also imply that next year, Year 1 after the election, stock markets should continue to move higher,” Johnson said.

Gardens grow

Frederik Meijer Gardens & Sculpture Park announced this month it has hired an architectural firm from New York to begin looking at expansion opportunities to better accommodate visitors.

Tod Williams Billie Tsien Architects|Partners was selected from more than 60 firms after a yearlong international search. The firm is known for its “masterful design” of the Barnes Foundation in Philadelphia and, most recently, the Andlinger Center for Energy and the Environment at Princeton University.

David Hooker, president and CEO of Meijer Gardens, said when it was first envisioned, he and Fred Meijer had no idea how many visitors it would attract.

“Fred Meijer often said, ‘We really didn’t know what we were doing when we got started, but it turned out all right,’” Hooker said. “What he really meant was, Meijer Gardens has grown in steps for the past 21 years, and it’s grown beyond anyone’s expectations.”

Meijer Gardens welcomes hundreds of thousands of guests from around the world each year, and the numbers continue to grow. In January, it reported its highest numbers yet: 775,000 guests visited in 2015. In 2014, the park saw 650,000 visitors.

“Our facilities are wonderful, but they weren’t designed to accommodate the three-quarters-of-a-million people that came to visit us last year,” Hooker said. “Tod and Billie have been hired to look at our facilities and expand, where appropriate, to better accommodate our guests and to continue to further our mission.”

Hooker said he could not predict the outcome of the pair’s work but said it will be focused on interior spaces and likely will include an expansion of the admissions area.

“We are at an early stage with them right now so there are not a ton of specifics, but one of the areas is where we welcome guests: It needs to be larger,” he said.

Once the design is complete — it will probably take more than a year — Hooker said there will be a fundraiser for the final expansion plans.

Special delivery

Through rain, sleet, hail and very little sunshine, Grand Rapids letter carriers collected more than 100,000 pounds of food during the Stamp Out Hunger Food Drive May 14.

The 108,265 pounds of food far exceeded the 70,000-pound goal and nearly doubled last year's collection of 60,000 pounds of food, with more donations expected to trickle in.

The donated food was given to Feeding America West Michigan.

“When it’s all said and done, we could very easily be looking at double what we took in last year,” Feeding America West Michigan CEO Ken Estelle said. “I don’t ever remember seeing such a big jump from one year to another.”

Residents donated by leaving bags of food by their mailbox in time for their normal Saturday delivery, which mail carriers then collected. Last year, Stamp Out Hunger drives nationwide helped provide nearly 71 million pounds of food for hunger relief efforts across the country.

Feeding America West Michigan will distribute the food through its network of hunger-relief agencies in West Michigan and the Upper Peninsula.

Beer buddies

Seth Rivard and Jeff Sheehan have something to celebrate.

The owners of Rockford Brewing Co. found out the Rockford Brewing Co. in Illinois has changed its name.

After a bit of a legal tussle last year, the Illinois owners, Dustin Koch, Reed Sjostrom and Chris Manuel, have changed the name of their brewery to Prairie Street Brewing Co.

The trio of owners received a message from the Michigan guys.

“We had no idea there was another Rockford Brewing Company,” Koch said in a release. “I mean, here we were in this historic building that had been named ‘Rockford Brewing Company’ back in 1900. The last thing on our minds was, ‘Hey, ya think there are any other Rockford Brewing Company's out there?’”

Rivard had visited the Illinois brewery, and the owners had agreed to coexist — until the Illinois brewery filed for a trademark. That didn’t sit well with the Michigan brewers, and a cease-and-desist letter was sent.

Rivard took to Facebook to clear up the C&D portion of the release, saying the letter would not have been sent if the Illinois company didn’t file for trademark. He said it may not have been a hostile trademark move, but protective action had to be taken.

The Illinois brewery has changed its name to align with other aspects of the brewing history in its city. Meanwhile, the Rockford, Michigan, brewery seems happy.

“This is great news for both companies,” Rivard said in his post. 

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