Wednesday, December 27, 2006

The week between Christmas and New Year's is usually pretty slow in the "money" business. Most of the financial planning chores have been done and the investment markets suffer slightly from a lack of attention as all the so-called professional traders take some time off to attend to family matters. We're using the time to get organized for the usual year-end reporting flurry and auditing to make sure that our communications to clients are as accurate as possible.

It looks like 2006 is going into the books as a pretty darn good year for our clients. We were able to minimize losses earlier in the year when the stock and bond markets were both performing poorly and then we were able to recognize the unfolding recovery as it began to take shape early in the fall. We think the outlook for 2007 is murky, at best, so we will be watching closely in the next few weeks for any signs that could make a trend more evident.

Meantime, we wish everyone the happiest of holiday seasons and thank our clients for their continued confidence in our service.

Friday, July 21, 2006

It's been hot, hot, hot in the Atlanta area lately. This week it was "hot" on Wall Street as well, with the stock market showing it's largest one-day gain in recent memory on Wednesday when Fed Chairman Bernanke testified before Congress. Some pleasant corporate earnings news added fuel to the fire on that day as well, but the euphoria seems to have been short-lived. Even with the prospects of interest rates leveling off in the near term, however, geopolitical concerns, continued high energy prices, a hint of inflation (albeit modest) and mixed earnings reports have since taken the steam out of the earlier jubilation.

We believe that these concerns will dominate the stock market this summer and have positioned our clients' portfolios to take advantage of the stock market's seeming inability to mount and sustain any upward momentum.

Wednesday, June 14, 2006

I've been sitting here in front of the computer screen today watching the stock and bond markets perform their volatile dance as the day wore on, pleased with myself for having acquired a fairly heavy money market position for my clients a few weeks ago. At that time we also made a relatively small investment in a mutual fund that INVERSELY tracks the performance of the Standard & Poor 500 index.  That's right, the value of this mutual fund increases as the stock market heads south. There are "inverse" bond market mutual funds also and we've had a position in one of those for several months now.

While the stock market has (to date) given up all the gains it made earlier in the year and the bond market has continued its decline on rising interest rates, our clients' portfolios have seen modest profits because of our ability to peg these trends and get in tune with them. While it isn't possible to hit a home run every time, it's nice to get one every once-in-a-while.

Friday, June 2, 2006

Sorry for the lapse between News messages. I'll try to be a little more prolific with this page in the future.

Since my last message in Early April, the stock and bond markets have displayed some degree of volatility with a downward trend; as I anticipated at that time. Although many recent economic reports have shown continued underlying strength in the U.S. economy, persistent fears of inflation and a continuing "hostile" attitude of the Federal Reserve Board seem to have outweighed what optimism there is among stock market investors. In times like these it has proven to be most prudent to limit the exposure of a conservative portfolio to the whims of almost daily reports and events that whipsaw the financial markets.

Rates of return paid by Money Market instruments have risen appropriately in the past few months, so that increased use of these investments is a more appropriate way to insulate a portfolio from the unwanted aspects of volatility in the stock and bond markets. Therefore, we're using Money Market mutual fund shares in higher proportions for most portfolios while we wait for a clearer picture on the other markets to emerge. So far this quarter that philosophy has produced pleasing results.

Wednesday, April 12, 2006

As we begin the second quarter of this year it is pleasant to look back on the previous three months to note the satisfying profits recorded in our clients' investment accounts. Even though the Federal Reserve Board continued relentlessly on its interest rate raising path, the stock markets were focused on pleasing corporate profit reports and positive economic news. Sometimes, however, this kind of exuberance can be overdone in the near term and we believe that is what has happened over the past few weeks.

We believe that worldwide economic conditions are still good but there are some danger signs which stock market investors are beginning to see.  Inflation, or at least the fear of it, has begun to creep into financial conversations recently and it cannot be ignored when one looks at the current price of fuel and other commodities necessary to power the engine of business growth. Interest rates at relatively high rates are becoming a competing factor for stock market investors as the return on the less volatile fixed income assets comes closer to  expectations for the more risky alternatives.

For these and other reasons we have recently adopted a more conservative posture in the diversification of our clients' assets. We believe that a "dip" in the upward momentum for the stock market (if it occurs) will be short lived and that opportunities for profit will present themselves again this year, when we will once again be prepared to take advantage of them.

Wednesday, March 1, 2006

The U.S. Stock Market currently continues to be focused on economic revelations to forecast business activity in the near term. While earnings reports from most companies continue to be moderately upbeat, investors continue to be cautious about what the coming months might bring. As long as geopolitical situations continue to cast shadows on the stability of energy prices, these factors will probably lead to an additional layer of volatility for equity values. Although we believe the trend for stocks will continue to be upward for the foreseeable future, we have reduced the exposure of most of our portfolios in this area as a precaution against excessive volatility and political unrest.

We still foresee a continuation of the rise in interest rates that began last year. If business activity continues to strengthen, rates on longer term securities will rise - although this could well be tempered by a slowing in the demand for home mortgages. Short term rates are still being driven up by the policies of the Federal Reserve Board to avert inflation.

As is our practice, we reduce portfolio exposure during times of uncertainty and increase it as the direction of the market and the “status of the world” becomes clearer.  Please give a call for more information or questions.

Thursday, February 2, 2006

With the new year underway has come evidence that the U.S. and global economy seems to be continuing the moderate growth we began to see late last year. This has given stock market investors enough confidence to engage in some moderately more active buying, which has increased those values pleasingly. We do not believe that this economic strength will lead to record-breaking increases in equity values but it does diminish the dangers to stock values normally associated with geo-political turmoil and other external pressures.

We see additional troubles for equity values in the stellar price of crude oil and the continuing environment of rising interest rates.  Both of these issues weigh heavily on the stock market and will induce a decline at some point if they are not abated. Currently, however, excellent corporate earnings reports, employment gains, etc. are overshadowing those troubles.

We foresee a continuation of the rise in interest rates that began last year, but we don't believe the increase will be excessive nor steep. "Upward Pressure" might be a more appropriate characterization for what we see ahead for interest rates.

As is our practice, we reduce portfolio exposure during times of uncertainty and increase it as the direction of the market and the “status of the world” becomes clearer.  Please give a call for more information or questions.