March 21, 2014

James Magaziner
LPL Financial Advisor

Fort Hill Financial, LLC

305 Madison Avenue
Fort Washington, PA 19034
610-505-2347
[email protected]

www.jamesmagaziner.com

Website

My Practice

Biography

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Investment Management

Financial Planning

Taking Something Off the Table

Fort Hill Financial clients may have noticed sell confirms in their mailbox. I have been taking profits by reducing equity exposure 10% to 20% or more in client accounts over the past two weeks.

Here are the reasons why I have been reducing equity exposure:

(1) Stock prices are close to all time highs which suggests they

are not factoring in a lot of bad news(2). Therefore, I believe it is a good idea to take some profit when the going is good. As I say on my website, www.forthillfinancial.com , "one of my main goals is to try to determine when markets are becoming overvalued and to take appropriate action when that occurs. I do not want clients to experience gains in their accounts only to have it disappear when there is a correction or major pullback."

(2) Despite Russian President Vladimir Putin saying he doesn't

plan to further split up Ukraine(1) , the risk of further incursions into eastern Ukraine and other former Soviet block countries has significantly increased. After-all, only two weeks ago Putin said Moscow had no plans to annex Crimea(4) . The possibility

of economic sanctions being enacted by both Russia and the West is rising and the risk of escalating geopolitical tensions is undermining investor confidence. As such, should the situation in the Ukraine deteriorate, stocks could be vulnerable in the near term (2).

(3) FedEx is joining carmakers, retailers and restaurant chains

including McDonalds Corp. in reporting weaker results for the first quarter because of inclement weather(3). This implies that when companies report earnings for the first quarter, 2014 in April and May later this year, we may see some of the disappointment filter through to equity prices.

(4) Federal Reserve Bank Chairwoman Janet Yellen said in a news conference on Wednesday, March 19th that the central bank could raise rates "something on the order of six months"

after it winds down its bond-buying program. That could mean a rate increase as early as April of 2015 instead of later in 2015 as many had expected(7). This could take some support away from equities.

(5) China's growth in fixed asset investment, industrial production and retail sales has been slowing. This has fed through to signs of corporate distress including defaults.

This can have a spill over effect in developed markets(5).

A market correction can occur swiftly so I am taking some profits at these higher levels. If there is a meaningful pullback in the markets I can buy back in to a cheaper equity environment

and potentially position my clients for a more durable recovery as the year progresses(6). If the market moves higher in the near term clients still have significant exposure to equities and they will likely benefit. I am still a believer that there is more upside for further cyclical advance in equities(6) as we see our way through the near term issues outlined above.

The economic forecasts set forth in the presentation may not develop as predicted.

Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

Stock investing involves risk including loss of principal.

No strategy assures success or protects against loss.

Sources:

(1) "Putin Says Russia Doesn't Want Ukraine Split After Crimea", Bloomberg News, March 18, 2014

(2) "Weekly Investment Commentary", BlackRock, March 17, 2014

(3) "FedEx Cuts Full Year Forecast as Winter Storms Add Costs", Bloomberg News, March 19, 2014

(4) "Defiant Russia Claims Crimea as Violence Flairs in Region", The Wall Street Journal, Page 1, March 19, 2014

(5) "The World is Looking Unfriendly for Equities", The Wall Street Journal.com, Moneybeat, March 14, 2014

(6) "Weekly Investment Commentary", Nuveen Asset Management, March 17, 2014

(7) "Manufacturing Data Fuel U.S. Stock Rally", The Wall Street Journal, page C8, March 21, 2014