In Perspectives

When we meet with our clients to discuss their portfolio positioning and performance, an important part of the conversation is a review of current economic conditions.  We emphasize this review because, although we all know from firsthand experience that the stock market can be swung by headlines, emotions, and other factors on a short-term basis, economic growth is the primary driver of long-term stock market growth. The task of interpreting the signals sent by the economy is always challenging, and recent data on the health of the American consumer have been sending confusing signals.

When we step back and look at the big picture over the seven years that have passed since the Great Recession, we can plainly see that a great deal of progress has been made.  The labor market has been the clearest symbol of broadly improving conditions as the unemployment has fallen from a peak of 10% to 5%, and underemployment has dropped from 17% to 10%.

Meanwhile, individual household finances have become considerably healthier than they were prior to the crisis.  Debt has been reduced significantly and household savings have increased, all the while inflation has remained in check.  And yet as the economic recovery continues to mature, investors seem to be exceptionally cautious as though they are waiting for the other shoe to drop.  This has translated to heightened market volatility over the past year as investor sentiment shifted quickly and sometimes dramatically in response to the news of the day.

A recent example of this behavior occurred as a series of disappointing earnings reports from retailers led by department stores such as Macy’s and Nordstrom fed speculation that the U.S. consumer is weakening.  Consumer behavior is critical to the domestic economy and comprises the vast majority of our GDP growth on an annual basis, so a significant slowdown in consumer spending can be cause for real concern.  As a result of these dreary earnings reports, the entire retail sector sold off and pulled stock market indexes into the red.

Just days later, however, the retail sales report released by the U.S. Census Bureau for the month of April quickly contradicted the implication that consumption is slowing.  The report showed that Americans are in fact spending at accelerated rates – they’re just not spending at traditional department stores like they used to.  Rather, they are spending money at home improvement stores, at restaurants and bars, at the car dealership, and (not surprisingly) at online retailers.

The key takeaway from this example is that in this era of constant news, it is critical for responsible investors to exercise discipline in their approach and try not to be swayed by shifting sentiment.  A single piece of information may prove to be valuable, but it’s just a data point until the passage of time proves it to be a trend.  Investors that react hastily to short-term sentiment will find themselves disappointed with long-term results.

Legacy Trust and Your Right to Financial Privacy

At Legacy Trust we have established policies and practices that respect the financial privacy of all individuals who use our trust company. We believe it is critical to comply with the laws and regulations designed to secure your financial privacy. Your relationship with us as our client is very important to us, and we want you to understand our policies and practices about handling your information.

This Policy applies to you – This Policy applies to our relationships with individual clients who inquire about or obtain products or services from us for personal, family and household purposes.

Strict security measures – We take the security of information very seriously. We have established security standards and procedures to prevent access to client information. We maintain physical, electronic and procedural safeguards to guard client information.

Limited employee access – We have established procedures to limit employee access to information to only those employees with a business reason for accessing such information. We educate our employees about the importance of confidentiality and client privacy. We take appropriate disciplinary measures to enforce employee responsibilities regarding client information.

Why we collect information – We collect information about you to:

  • accurately identify you;
  • protect and administer your records, accounts and funds;
  • help us design or improve our products and services;
  • understand your financial needs;
  • save you time when you apply for new products and services; offer you quality products and services; and comply with certain laws and regulations;

We collect information – We collect and maintain your personal information so that we can provide investment management and other services to you. The types and categories of information that we collect and maintain about you include:

  • Information we receive from you to open an account or provide investment advice or other services to you (such as your home address, social security number, telephone, financial information and investment objectives).
  • Information that we generate to service your account or from our transactions with you (such as account statements and other financial information).
  • Information on your transactions with nonaffiliated third parties.

We have established procedures so that the financial information we collect is accurate, current and complete. We are committed to work with you to promptly correct any inaccurate information.

Our selective sharing of information – In order for us to provide investment management and other services to you, we do disclose your personal information in very limited instances, which include:

  • Disclosures to nonaffiliated companies as permitted by law, including those who help us service your account (such as providing account information to brokers and custodians).
  • Other limited disclosures as permitted by law, for example, required reports to government entities.

We do not share your information with third parties for marketing purposes. We do not sell your information.

Former clients – If you end your relationship with us, we will continue to adhere to the privacy policies and practices described in this notice.

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USA PATRIOT Act

Important Information About Procedures For Opening A New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

We apologize for any inconvenience this may cause; however, federal law prohibits us from waiving these requirements.

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