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"TRUST, SERVICE, PERFORMANCE"
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QUARTERLY NEWSLETTER 2010 Q-4
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Trent Capital Management, Inc.
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In today's economic environment, investors want and need advisors they can trust. Trent Capital's professionals are focused on the best interests of our clients. Trent harbors no self-interest that creates conflict within the investment decision process. Our structure eliminates bias, restriction and negative influence in the pursuit of achieving each client's objectives in a prudent process.
Note & Quote
"The S&P 500 has produced a positive total return in the 4th quarter in 16 of the last 20 years including a +6.0% gain last year."
(BTN Research)
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"You make most of your money in a bear market, you just don't realize it at the time."
Shelby Cullom Davis
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 | From Our Investment Team
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While corporate earnings continue to be very strong, equity valuations remain low. For example, the S&P 500 price-to-earnings (P/E) multiple is a modest 14 times forward earnings. More than one year into the economic recovery, high unemployment, soft housing prices, and high levels of consumer debt continue to dampen personal consumption in the United States. Weak ten-year equity market returns, continued volatility, and an uncertain macroeconomic outlook have all played a role in investors' recent flight to bonds. As a result, 10-year U.S. Treasuries yielded 2.5% at quarter end, which is very low relative to historical levels. In comparison, the S&P 500 dividend yield of 2.0% is the closest it has been to the 10-year Treasury yield in 50 years. Coupled with rising earnings, healthy free cash flow, and strong balance sheets, the market's low valuation today makes the long-term prospects for investing in select equities attractive.
Current valuations provide an attractive entry point for equity investors. And several factors augur well for the earnings prospects of companies in the Fund. Balance sheets are flush with cash. Management teams have trimmed cost structures. Companies continue to invest in research and development. Earnings from companies in the S&P 500 are expected to approach or surpass prior pre-recession peak earnings next year. Global trade is healthy, and the continued spread of technology to the billions of people in the developing world should lead to long-term gains in productivity and output. When we combine these factors and the market's current low valuation, the range of outcomes over the longer term appears compelling.
Realizing successful investment returns requires patience and continued diligence in assessing the growth prospects of current and potential investment opportunities in relation to valuation. Our confidence in Trent's investment approach rests to a large degree on what we view as favorable prospects for the businesses we own. Our portfolios are essentially a group of business models we have researched and view as attractive vehicles for compounding capital over the long term based upon their management quality, business durability and competitive advantages when coupled with relatively attractive valuations. They also represent a broad array of industries and business activities, creating a portfolio that is prudently diversified in our view. We remain committed to our time-tested investment approach that has been an effective method of building and preserving capital through many different types of economic environments.
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| Know the Difference: Broker vs. Registered Investment Advisor
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Unlike most of those "advisors" [i.e. banks, brokerages, mutual fund families, insurance firms] operating within the investment arena who are entrusted with the publics investment assets, Trent Capital Management is a Registered Investment Advisor [RIA]...commonly called a "money manager". This registration, and how one under an RIA qualification is required to operate, is quite different from a broker [stock or insurance], a Registered Representative, an Account Executive, a Wealth Manager, a Certified Financial Planner, etc. who are employed by or affiliated with a Broker Dealer. Choices made by those who entrust their investment funds to some advisor should know that these types of entities operating under the auspices of a broker-dealer are NOT Fiduciaries, even though engaged in high-visibility and expensive advertising to portray themselves as full-service financial advisors.
A stock broker [and other broker-dealer affiliates or employees] owes fiduciary duties only to its contractual agreement with his/her broker-dealer - not its investment clients. An RIA owes Fiduciary duties only to its investment clients, because it does not have a broker dealer. The distinction is a critical [and legal] differentiation when deciding which to use for one's investment counseling and services.
By law, one must be a broker-dealer to receive commissions for transactions, i.e. the purchase and sale of product. Trent Capital is compensated by its clients via a management fee, not from commissions on investments made or products sold. These conditions [i.e. receiving other than fee income for services, i.e. selling product] create incentives that come into direct conflict with an investor's best interests. These conflicts can - and usually do - compromise net investment performance by restricting or influencing specific investment choices. Behavior or decisions resulting from those pressures dictated via some corporate executive isolated in his ivory tower away from client needs, virtually always creates negative compromises that negate acting in the clients best interest. Trent Capital is paid only by our clients, not from those investments we make for them. We sit on the same side of the table with our clients....ALWAYS!
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| 2011 IRS Qualified Retirement Plan Contribution Limits
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401-(k) Plan Limits for Plan Year
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2011
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2010
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401-(k) Elective Deferrals
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$16,500
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$16,500
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Catch-Up Contribution Limit
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$5,500
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$5,500
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Annual Defined Cont. Limit
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$49,000
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$49,000
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Annual Compensation Limit
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$245,000
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$245,000
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Highly Compensated Employees
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$110,000
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$110,000
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Non-401-(k) Related Limits
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2011
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2010
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403(b)/457 Elective Deferrals
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$16,500
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$16,500
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SIMPLE Employee Deferrals
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$11,500
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$11,500
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SIMPLE Catch-Up Deferral
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$2,500
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$2,500
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SEP Minimum Compensation
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$550
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$550
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SEP Annual Comp. Limit
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$245,000
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$245,000
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Social Security Wage Base
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$106,800
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$106,800
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| Research Your Broker/Advisor
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Federal or state securities laws require brokers, investment advisers, and their firms to be licensed or registered, and to make important information public. But it's up to you to find that information and use it to protect your investment dollars. The good news is that this information is easy to get, and one phone call or web search may save you from sending your money to a con artist or disreputable firm. Before you invest or pay for any investment advice, make sure your brokers, investment advisers and investment adviser representatives have not had run-ins with regulators or other investors.
BrokerCheck is a free tool to help investors research the professional backgrounds of current and former FINRA-registered brokerage firms and brokers. It should be the first resource investors turn to when choosing whether to do business or continue to do business with a particular broker or brokerage firm.
Through BrokerCheck, investors can:
- Search for both brokers and brokerage firms
- Obtain online delivery of a background report
- View explanatory information to help them better understand the content, context and source of the information provided
- See links to additional resources and tools
http://brokercheck.finra.org/Support/TermsAndConditions.aspx
You can search for an investment adviser firm on this website and view that firm's Form ADV. Investment advisers file Form ADV to register with the SEC and/or the states. Form ADV contains information about an investment adviser and its business operations. Form ADV also contains disclosure about certain disciplinary events involving the adviser and its key personnel.
You can also search for an individual investment adviser representative and view that individual's professional background and conduct including current registrations, employment history, and disclosures about certain disciplinary events involving the individual. The information about investment adviser representatives that appears on this website is collected from individual investment adviser representatives, investment adviser firm(s), and/or securities regulator(s) as part of the securities industry's registration and licensing process.
http://www.adviserinfo.sec.gov/%28S%28oien3bnt2thuwnfsfwy0mvme%29%29/IAPD/Content/Search/iapd_Search.aspx
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For a review of your current investment programs from our team of professionals, please give us a call at 336-282-9302
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