Covington Investment Advisors, Inc. Blog

_{Covington recently presented their observations on the market and economy at our annual shooting event held at Pike Run Country Club. Please find our presentation commentary below.}

Economic Update

Looking at the business cycle framework, global expansion remains solid but many major economies have progressed toward more advanced stages of the business cycle where growth is moderating, credit tightens, and earnings start to come under pressure. Emerging markets face headwinds from China's industrial slowdown, looming trade uncertainties, and global monetary tightening. Europe has experienced the most significant slowdown among developed regions...

           October is recognized as National Cyber Security Awareness Month, and I’m happy to promote some best practices to help you stay safe online. At Covington, we are vigilant in addressing cyber security risks at all times. It is an ongoing topic of concern for us, our clients, and our regulators. We hope you find this topic informative and helpful in protecting yourself online.

            You’ve heard it before—regularly change your passwords. Who has time for that? Do you also use the same or similar password for multiple login accounts? To be honest, I’m guilty of some of this practice. Ultimately, I am not keeping my private data secure, and what’s worse is that I only use my one personal e-mail address for everything. Sound familiar to you?

            Receiving sensitive information to your one e-mail address is all too common for many. I have my personal correspondence, vacation information (flights, hotels, car rentals), my financial statements, my house purchase, my health information, my tax filings, etc. going into my personal e-mail address. If someone were to gain access to my personal e-mail account, they would be able to know my life story, including where I like to shop, where I do business, and my personal finances. I don’t delete some of those important emails because they serve as my back-up. Come to think about it, when was the last time I changed my e-mail account password? Well, I did when they sent out a general e-mail stating that my account may have been hacked. Otherwise, never, because I can easily access my e-mail on my phone app with a push of a button without having to login. In order to change my password, I would need to go to the website and then have to remember my password to access my account. (Note to self: That is no excuse, Sarah!)..

The S&P 500 telecommunication sector is getting a new look. For years, the telecom sector has been one of the smallest sectors in the S&P and dominated by two names; Verizon and AT&T. This fall, the telecom sector will be replaced with a new sector labeled as the ‘Communication Services Sector’. As the name implies, the new sector will be more geared towards the way that media is now delivered to customers such as streaming and downloads. Morgan Stanley Capital International, typically abbreviated MSCI, summarized the new sector on their website:

“The last several years have seen an evolution in the way we communicate and access entertainment content and other information. This evolution is a result of integration between telecommunications, media, and internet companies. Companies have further moved in this direction by consolidating through mergers and acquisitions and many now offer bundled services such as cable, internet services, and telephone services. Some of these companies also create interactive entertainment content and aggregate information that is delivered through multiple platforms such as cable and internet, as well as accessed on cellular phones.”

The new sector will be comprised of names pulled from the Information Technology, Consumer Discretionary, and the old Telecom sector. In addition to AT&T and Verizon, the top 10 holdings in the new Communication Services Index will include three of the four FANG stocks – Facebook, Inc. (FB), Netflix, Inc. (NFLX) and Google parent Alphabet Inc. (GOOGL). The other notable holdings include Disney (DIS), Activision Blizzard (ATVI), Comcast (CMCSA), and Charter Communications (CHTR). "The index has 26 constituents with a total market cap of $2.35 trillion, average market cap of $92.5 billion and median market cap of $34.9 billion as of May 16, 2018," said S&P...

I am pleased to announce that we have hired Mr. Nick Allen to work as an intern this summer.  He will be assigned a number of projects for the company including various analyses, research projects and technology studies.

Nick is a finance major at Indiana University of Pennsylvania (IUP) and is on track to graduate in December of this year.  His courses of study include finance, investment, economics and management.  Nick also serves as the Sector Leader of the Consumer Staples Section of the Student Managed Investment Portfolio organization at the college.  This student organization is quite successful as it currently has $1.7 million in assets under management and has outperformed the S&P 500 over the last five quarters.  

In addition to his financial studies and experiences, Nick has worked in the computer labs for the IUP Libraries.  In this capacity he assists library employees and patrons with computer hardware and software issues and provided assistance through the IT Help Desk...

Fifteen years ago today Covington Investment Advisors was incorporated.  The success we have had with and for our clients has allowed us to grow, hire more talent, continually enhance our technology, purchase our building, contribute to our communities’ societal needs, and expand our overall processes to customize your financial plans providing best in class investment management services and results.

I do not hesitate to say we have formulated the best in class advisory firm as we are not a broker-dealer, nor are we affiliated with one.  As an independent advisor, we have an open architectural structure to find the best financial solutions for you.  We cut out all the unnecessary middlemen and their fees and we refuse any form of commissions.  We are an advisory fee-based only firm.  We do not sell products; we provide customized financial plans structured and managed on a separate account basis driven to address your individual investment and family needs.  As a federally registered investment advisor with the Securities Exchange Commission (SEC) we are a corporate fiduciary held to a higher standard of care.  The growth of the firm speaks to our results over the past fifteen years. All one hundred six family relationships we now manage are the result of referrals based on our performance--referrals made because we took care of our clients one at a time carefully facilitating each individual financial, succession and generational estate plan while generating attractive investment results through various market environments.

So, thank you for your confidence in our services.  Thank you for believing in our small private business model.  Going forward please know that we intend to maintain the same commitment to use our net income each year for technology, hiring more people, continuing educational programs and, starting this summer, hiring interns from our local business schools to groom the next generation of advisors as well as new construction to expand the office for additional employee work stations...

^{_{On April 28, 2018, Covington Investment Advisors sponsored the Westmoreland Symphony Orchestra (WSO) Concert titled “Fauré Requiem”.}}

At Covington, not only do we strive to meet our clients’ financial goals, we also focus on making a difference in our community.  Fostering creativity in our schools is the key to continued growth and success for children and Covington is passionate about helping our children. Recognizing the diminishing arts programs in our schools and the many societal challenges that we face, we have felt compelled to do something about that. And so, we have been underwriting music and art programs in our community through our business and family foundations, some of which are facilitated through the Westmoreland Symphony Orchestra...

Volatility is Back

The past couple days have tested investors’ appetite for risk with a spike in market volatility which we haven’t seen since June 2016. The Chicago Board Options Exchange Volatility Index (VIX), a measure of market downside volatility, has spiked gaining 28.51% on Friday, February 2^nd and 115.60% on Monday February 5^th. Making the headlines are what’s on the other side of volatility; VelocityShares Daily Inverse VIX ETN (XIV) and the ProShares Short VIX ETF (SVXY), trading strategies that bet on rising but calm markets. Both trading strategies lost more than 80% of their value as volatility surged. These headlines create an opportunity for us to once again highlight the differences between these shorter-term trading products versus what Covington does, which is to invest long-term in proven enterprises. Our strategy has created attractive returns for our clients by owning good companies over long periods of time. A recent article on CNBCoffers a stern warning against these trading products as “destroying the best capital market in the world”...

Covington Investment Advisors, Inc. is pleased to announce that Sarah E. Rovedatti has joined our firm as Chief Compliance Officer. Sarah has over nine years’ experience working in the financial services industry holding various positions in client service and compliance. She is a graduate of Lycoming College with a B.A. in Business Administration and earned her MBA at Villanova University. ..