Posts Tagged ‘Stocks’
Tuesday, April 2nd, 2013
Why Buffett is bullish on stocks: A Q1 letter to clients
by Dan Richards, ClientInsights.ca
Monday, April 01, 2013
Since 2008, I have posted templates to serve as a starting point for advisors looking to send clients an overview of the year that just ended and the outlook for the period ahead.Advisors have told me they’ve received a great response to these letters and the templates rank among my most popular articles – that’s especially the case given today’s uncertainty.
This letter has three components:
1. An update on performance
2. Perspectives on today’s macro challenges from Warren Buffett’s most recent letter to investors
3. Your recommendations for the period aheadUse as much or as little of the content as is appropriate for your approach. And a reminder that if you’re going to use this letter, customize it to reflect your own language and approach.
The first quarter in review: Why Warren Buffett is bullish on stocks
As we enter the second quarter of 2013, I’m writing to summarize markets developments since the start of the year and to share my thoughts on positioning portfolios for the period ahead. First though, a quick recap of the first quarter of 2013.
At the end of March, U.S. stock markets crossed the all-time high reached in October of 2007. This was due to an exceptionally strong performance to start the year following the agreement by U.S. Congress in early January to avoid the “fiscal cliff” that would have required dramatic reductions in spending and risked throwing the U.S. back into recession.
Three things worth noting about first quarter performance:
1. Driven by a strong start in January, global markets were up by almost 9% in the first quarter, led by gains in the United States of over 10%. One word of caution: Last year global markets were up by 12% in the first three months before giving back almost all of those gains in the second quarter, in large measure due to concerns about Europe.
2. On the topic of Europe, in spite of recent headlines about the bank crisis in Cyprus and continuing issues in Greece, the European market was up by 7% (in local currency) in the first three months of 2013. While Cyprus and Greece got the headlines, the large bulk of Europe’s economic performance will continue to be driven by the larger countries.
3. Canada continued to underperform the United States and global markets. Since the beginning of 2010, the Canadian market is up by about 15%; in that same time the United States is up by roughly 50%.Here’s how first quarter performance looked:
|Monthly Returns — Local Currency||Canada||U.S.||Europe||Emerging Markets||World Markets|
Returns to month end, all in local currency, including dividends
Warren Buffett’s view: Stocks still offer value
Warren Buffett is generally considered the greatest investor of all time. From 1966 when he began running Berkshire Hathaway to the end of 2012, the overall U.S. stock market (including dividends) has returned an average of 9.4% annually. That means that $1000 invested in the US market in 1966 was worth just over $74,000 at the end of 2012. During that same time, the book value of Berkshire Hathaway increased by almost 20% per year, twice the U.S. market return. The result: That same $1000 invested in Berkshire Hathaway’s book value would have grown to over $5 million. That’s why Warren Buffett’s views are worth heeding. And that’s also why his annual letter to investors is awaited each year with such anticipation. Three key messages in this year’s letter:
1. Invest in “wonderful” businesses
Buffett is known for saying that he’d rather buy “a wonderful business at a fair price than a fair business at a wonderful price.”
He’s written in depth about the competitive insulation that makes for a great business. (In another well-known turn of phrase, he’s said that he wants to buy businesses “so wonderful that an idiot could run them, because some day an idiot will.”In this year’s letter, Buffett touched on Berkshire Hathaway’s investment in American Express (of which he owns just under 14%) as well as Coca-Cola, IBM and Wells Fargo, his other three big holdings in which he owns between 6% and 9%. In all four cases, he increased his stake in 2012; he quotes the Mae West line that “too much of a good thing is wonderful.”
2. Look past today’s uncertainty
Buffett addressed the uncertainty that preoccupies many members of the media and which has dampened the willingness of American business to invest. He points out that uncertainty has been a constant in the United States since 1776; the only variable is whether people ignore the uncertainty (which typically happens in boom times) or fixate on it.Buffett continues to express confidence in the resiliency of American business, just as he did in his famous New York Times article in the fall of 2008 titled “Buy American I Am” that appeared close to stock market bottoms during the uncertainty in the aftermath of the global financial crisis.
3. Stay in the game
In this year’s letter, Buffett addressed the temptation to, in his words “try to dance in and out (of the stock market) based upon the turn of tarot cards, the prediction of so-called experts or the ebb and flow of business activity.”
He went on to say that since the long-term outcome of investing in stocks is so overwhelmingly favourable “the risks of being out of the game are huge compared to the risks of being in it.”In an interview that followed the release of his letter, Buffett reiterated his view that given that at some point interest rates will inevitably rise, stocks of quality businesses continue to offer good value relative to bonds, even in the face of the run-up in equity prices since last summer. He also repeated his skepticism about owning bonds saying that today “the dumbest investment is a government bond.”Click here to read Warren Buffett’s letter to investors.And click here to watch a nine-minute excerpt of the television interview that followed the release of his letter:
What this means for your portfolio
In my email at the end of last year, I outlined some guiding principles in my approach to building client portfolios, three of which I repeat here.
I’d be pleased to discuss these guidelines at our next meeting.
1. Time to rebalance:
Adhering to your planIn light of stock valuations and the risk in bonds, early last year we recommended that clients increase equity weights to the upper end of their range. Given strong stock performance since the mid-point of last year, that has worked out well and we continue to advise that clients hold their maximum equity weight.
But strong performance by stocks means that today some clients are above the top of their equity allocation. In those cases, we have been recommending reducing equity weighting to bring portfolios back within their guidelines. Regardless of what happens to markets in the short term, barring a significant change in your circumstances, you should stick to your investment parameters.
2. Diversifying portfolios
When building equity portfolios, I’ve always advocated strong diversification outside Canada. This helped my clients through most of the 1990s, then hurt them in the decade after 2000, then helped them again in the past three years.Going forward, I have no idea whether the Canadian market will do better or worse than global markets, but I do know that we represent fewer than 5% of investing opportunities around the world. In addition, because of our resource focus Canada’s market will tend to be more volatile over time than those of the U.S. and yes, even Europe. For those reasons, I continue to recommend geographic diversification of stock portfolios.
3. Focus on dividends and cash flow
The final principle relates to the role of cash flow from investments. Amid the uncertainty surrounding economic growth and equity returns, I continue to place priority on the cash yield from investments. While the headlines talked about US markets hitting new highs in March, investors who reinvested their dividends saw their account values exceed the 2007 peak significantly earlier.
Dividends on stocks in selective sectors continue to make these stocks attractive. When it comes to equities, we do have to be increasingly discerning, however; in some traditional high-dividend sectors stocks that pay steady income are expensive by historical standards and show signs of stretched valuations.I hope you found this overview helpful. Should you have questions about anything in this note or about any other issue, please feel free to give me or one of the members of my team a call.And as always, thank you for the opportunity to serve as your financial advisor.
Copyright © ClientInsights.ca
Tags: All Time High, Caution, Challenges, Congress, Dramatic Reductions, First Quarter, First Three Months, Global Markets, Investors, Performance 2, Perspectives, Portfolios, Quarter Performance, Recession, Reminder, Second Quarter, Stock Markets, Stocks, Uncertainty, Warren Buffett
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Tuesday, July 3rd, 2012
Each quarter since 2008, I have posted a template for a letter to serve as a starting point for advisors looking to send clients an overview of the past 90 days and the outlook for the period ahead. Advisors have told me that they’ve received a great response to these quarterly letters and the templates rank among my most popular articles – that’s especially the case in uncertain times such as we see today.
This quarter’s letter has four parts:
1. An update on performance
2. An assessment of where we are today
3. Perspectives from legendary investors Dan Fuss and Bob Farrell, each with 50 years of experience on Wall Street, as well as asset allocation advice from Benjamin Graham
4. Implications for investors and an outline of your recommendations for the period ahead
Use as much or as little of the content as is appropriate for your approach. I’ve identified two portions of the letter that could be omitted to shorten it. Just a reminder that if you’re going to use this letter, be sure to take the time to customize it and put it into your own words, so that it truly does represent your point of view. On a final note, my special thanks to Tacita Capital’s Michael Nairne for his help in crafting this letter.
The first half in review: Wisdom from three veterans of 50 years on Wall Street
As we enter July, I’m writing to provide perspective on what happened in the first half of 2012 and to share my thoughts on how to position portfolios for the period ahead. To help do that, I have tapped into three longstanding veterans of Wall Street, one who made his career in stocks, the other in bonds, the third Warren Buffett’s teacher at Columbia who I’ve referred to in past emails.
Before we get into their views, here’s an overview of what’s happened so far this year:
The first half of 2012 was a tale of two quarters; the first quarter represented the strongest start for the U.S. stock market since 1998, with Japan turning in its best first quarter gains in 24 years. This was largely driven by a reduction of fears about Europe, as well as stronger economic data in the U.S.
The second quarter gave many of those gains back:
- Markets were driven by escalating concerns about the future of the European currency union and slowing global growth, accompanied by discouraging data on employment and renewed focus on the capitalization of Europe and some American banks.
- We’ve also seen a slowdown in China and India, putting downward pressure on the prices of oil and other commodities and stocks in general.
- There were signs of the European situation stabilizing; after being off 7% in May, markets around the world did recover with a 4% gain in June.
Here’s a summary of market performance in the first half of 2012, all in local currency. This understates returns from investing in the US, as the strong American dollar has boosted returns. With its resource exposure, Canada has continued last year’s pattern of being a global laggard.
The dilemma for investors: Dangerous stocks, unattractive bond yields
On the surface, investors today face a range of unattractive choices. While stocks appear fairly valued by most measures, the second quarter saw volatility well above historical norms. Holding stocks has always been risky if your timeframe is short but geopolitical uncertainty and market swings make owning stocks feel especially dangerous today.
Note: To shorten this letter, you could omit the next two paragraphs in italics.
There is considerable debate about whether stocks are expensive, cheap or fairly valued. Some observers express doubts about the sustainability of today’s record corporate profit margins and the enduring impact of debt problems and slow growth around the world. US stocks also show up on the pricey side using models such as the valuation approach advocated by Yale’s Robert Shiller, comparing stock prices to average earnings over the past 10 years, adjusted for inflation.
On the other side, a fair number of reputable analysts view stocks as historically cheap, pointing to attractive ratios of stock prices to book values and measures like multiples of earnings and cash flows. Indeed, using Robert Shiller’s multiple of average ten year earnings, Europe is inexpensive by historical standards. My view: for long term investors, stocks globally today provide fair value.
Bonds pose different risks; we’re seeing historically low interest rates, as central banks around the world keep interest rates down to stoke economic growth. Given current inflation, in normal times we would expect to see interest rates about two percent higher than today, but of course these aren’t normal times, and of course holding cash to eliminate risk from stocks and bonds virtually guarantees depreciation of purchasing power. For many investors, cash gives them no chance of achieving the returns they need to achieve their long-term goals.
Clearly, every client is different and every portfolio is different. That said, even given short-term uncertainty in stocks, I am recommending that clients move to the upper end of the equity allocation in their investment policy. That decision is supported by perspectives from two respected investment veterans with long experience on Wall Street, Dan Fuss and Bob Farrell.
Dan Fuss: Replace market risk with company risk
Dan Fuss is Vice Chairman of Boston-based Loomis, Sayles & Co, with over fifty years of fixed income experience, he is one of the most highly regarded bond managers of all time. Still actively running money in his mid-seventies, the bond fund he manages has over $20 billion in assets and over the past 20 years is a top performer in its category.
In an April interview with Investment News, Fuss made an unusual recommendation for a bond manager – to sell bonds and buy stocks. The reason relates to the risk of rising interest rates . “We’re in the foothills of a gradual rise in interest rates,” he said “Once they start to rise, you’re probably looking at a 20– or 30-year secular trend of rising interest rates.” He went on to say that when the unemployment rate falls to between 6% and 7%, it’s likely that Ben Bernanke and the Federal Reserve Board will alter the policy that has been keeping the interest rate on the 10-year Treasury bill artificially low. “Once that happens, you need to get out of the market risk that’s in fixed-income and into the company-specific risk you can find in stocks,” Fuss said.
Bob Farrell: 10 Market Rules to Remember
In the 1950s, Bob Farrell attended the same Masters program at Columbia as Warren Buffett, studying under Benjamin Graham, considered the father of value investing. In 1957 Farrell joined Merrill Lynch as an analyst and stepped down as Merrill’s Chief Investment Strategist in 1992, although he continued to provide his perspectives through articles and media interviews.
In 1992, Farrell penned 10 rules on investing. Two of those ten are particularly pertinent today and give me encouragement about stock returns in the mid and long term period ahead.
If you are looking to shorten the letter, you could omit Rule 1 below in italics on reversion to the mean in and just refer to the second rule. If you do that, in the last sentence above change “Two of those ten are particularly pertinent today and give me encouragement … ” to “One of those ten is particularly pertinent today and gives me encouragement….”
Rule 1: Markets return to the mean over time
“Returning to the mean” is another way of saying that over time, performance on stocks will revert to historical averages. The long-term annual return in the US stock market going back to 1926 is 9.8% before inflation and 6.6% after inflation, what’s called the real return. Whenever you have an extended period in which returns exceed the long term average, chances are a period of underperformance will follow, and the opposite applies as well; a long period of underperformance will be followed by a period of above average returns.
The 1990s saw average real returns of 14.9% annually, the best decade on record. Then reversion to the mean kicked in and the following ten years saw an average annual loss after inflation of 3.4%. Add the two decades together and you get a real return that’s 1% below the long-term average. In essence, it’s taken the last decade to rectify the valuation excesses of the previous 10 years – but with that behind us, history (and Bob Farrell’s rule on reversion) suggest that long-term real returns going forward should be closer to the 6.5% average.
Rule 5: The public buys the most at the top and least at the bottom
Since the financial crisis, total assets in U.S. fixed-income funds have more than doubled to over $2 trillion, up from $1 trillion at the start of 2008. At the same time, we’ve seen record outflows from US equity funds. To me, this is further indication that provided you have a timeframe of five plus years and can tolerate the kind of volatility we’ve seen of late, investing in a broadly diversified stock portfolio is likely to serve you well.
Here’s a complete list of Bob Farrell’s 10 Market Rules to Remember.
What this means for your portfolio
In my email at the end of the first quarter, I outlined some guiding principles in my approach to building client portfolios which I repeat here:
1. For retired clients, I believe in maintaining secure, liquid funds to cover three years of expenses. Having that buffer means that we reduce the risk of having to sell holdings at depressed levels; this also lessens the stress and anxiety for us both.
2. The second principle relates to the allocation between stocks and bonds and comes from my third Wall Street veteran, Benjamin Graham, the Columbia professor I mentioned earlier under whom Bob Farrell and Warren Buffett studied. In a recently discovered 1963 talk, Graham gave this advice:
“In my nearly fifty years of experience on Wall Street, I’ve found that I know less and less about what the stock market is going to do but I know more and more about what investors ought to do … my suggestion is that the minimum amount (of the investor’s) portfolio held in common stocks should be 25% and the maximum should be 75%. Consequently the maximum amount held in bonds would be 75% and the minimum 25% … any variations should be clearly based on value considerations.”
3. Third, regardless of what happens to markets in the short term, we should adhere to the agreed to investment parameters, barring a significant change in circumstances
Some of you may recall my advice in early 2009, as we faced what appeared to be an end of the world scenario and some stocks hit lows they hadn’t seen in 20 years. At that time, I urged clients to maintain a core level of equity exposure. Given strong stock performance in the first quarter. I got questions from some clients about increasing equity weight above the maximum boundary in portfolios, and in light of concerns about Europe, recently I’ve had questions about selling stocks.
While I am always happy to discuss this on a case by case basis, I advise against deviating from the range that we established going into 2012. Note that given stock valuations and the risk in bonds, for some clients we have recently increased equity weights to the upper end of their range. Of course market reversals from current levels are always possible; however, taking a long term view, at current levels there is a strong case for stocks over bonds.
4. When building equity portfolios, I’ve always advocated strong diversification outside Canada. This helped my clients when Canada underperformed in the 1990s and hurt them in the 2000s, when it outperformed. Going forward, I have no idea whether Canada will do better or worse than global markets, but do know that we represent less than 5% of investing opportunities around the world and need to stay geographically diversified as a result. For anyone concerned about volatility, our concentration in resources means that investing globally should also lessen extreme swings in portfolio values.
5. The final principle relates to the role of cash flow from investments. In an uncertain environment for immediate economic growth and equity returns, we continue to place priority on the cash yield from investments. In my view, the returns on some REITs, investment grade corporate bonds, the better rated high yield bonds, and dividend stocks in selective sectors continue to make these attractive relative to the available alternatives.
Should you have questions on anything I’ve covered in this note or on any other issue, please feel free to give me or one of the members of my team a call. As always, thank you for the opportunity to serve as your financial advisor.
Tags: Asset Allocation Advice, Benjamin Graham, Bob Farrell, Bonds, Dan Fuss, First Quarter, Legendary Investors, Perspectives, Point Of View, Portfolios, Quarterly Letters, Quarters, Reminder, Special Thanks, Stocks, U S Stock Market, Uncertain Times, Wall Street, Warren Buffett, Wisdom
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Wednesday, April 4th, 2012
by Stephen Wershing, The Client Driven Practice
Is the next market downturn your biggest vulnerability? It shouldn’t be. Many advisors lose clients when the market declines. The most successful add clients. Is the next bear a threat to your practice? If it is, how will you eliminate it?
Jack Stack is recognized as an outstanding business strategist. I have great respect for his work, and, not to take anything away from his accomplishments or The Great Game of Business, his secret is not as simple as having a great vision. It may be that he does not even excel at the “vision thing.” He managed to steer his company through a very challenging period, and subsequently spin off 63 other successful companies, by focusing on its biggest vulnerability. As the firm gradually reduced the threat, he turned his attention to the next biggest. Systematically mitigating or eliminating the biggest threat to the business made him one of the most successful leaders in business.
Successful advisors provide clients valuable guidance and services beyond investment returns. If the advice you offer does not go much beyond portfolio performance, it needs to now. You cannot control the direction of the market, and it would be foolish to leave the future of your practice to the fickle direction of stocks. Besides, if your primary value is investment returns, how will you distinguish yourself from the thousands of advisors who do exactly the same thing?
When we ask clients “What is the most valuable thing your advisor brings to the relationship?” we practically never hear “earns a good return on investment.” Like good customer service and trust, it is assumed you will manage their portfolio competently. What they value, remember you for, and ultimately refer you for, is something more. Find out what that is, and build your strategic plan around it.
Refine your value proposition and build on what keeps your best clients with you. Learn new skills that enhance what differentiates you from other advisors and strengthens your real value to clients. And do it before another market downturn jeopardizes your relationships!
Copyright © Stephen Wershing, The Client Driven Practice
Tags: Business Strategist, Direction, Driven Practice, Good Customer Service, Great Game, Great Vision, Guidance, Investment Returns, Jack Stack, Market Downturn, Portfolio Performance, Relationship, Return On Investment, Stocks, Strategic Plan, Successful Companies, Value Proposition, Vision Thing, Vulnerability
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Wednesday, February 3rd, 2010
Even with the recovery in the last nine months of 2009, many clients are still anxious about owning stocks.
If you’re running into nervous clients, you might want to refer to a recent interview with Jeremy Siegel, the Wharton academic who’s the leading authority on long term asset class returns.
A link to the full interview is below. Among the key points Siegel makes:
- Stocks today are fairly valued based on current earnings – and over the next year will likely offer better returns than bonds and cash
- Why stocks are likely to be significantly higher by 2012
- Inflation is not going to be a concern in the near to mid term
- The reason US deficit spending isn’t the biggest cause for concern going forward
- Why the last ten years have been so miserable for stocks – and the reason that investors can expect after inflation returns of 6 to 7% on stocks going forward
Here’s the full article: http://knowledge.wharton.upenn.edu/article.cfm?articleid=2411
And for clients who’d like to watch Jeremy Siegel talk about his views, below are five short video interviews he did last September that you can email to clients.
Stocks for the long run and long term returns http://www.clientinsights.ca/video/stocks-for-the-long-run-and-long-term-returns/type:investor
The growth trap and the role of dividends http://www.clientinsights.ca/video/the-growth-trap-and-the-role-of-dividends/type:investor
Looking back on the past ten years in markets – what went wrong http://www.clientinsights.ca/video/looking-back-on-the-past-ten-years-in-markets-what-went-wrong/type:investor
Today’s valuation levels and market outlook http://www.clientinsights.ca/video/today-s-valuation-levels-and-market-outlook/type:investor
The case for international investing http://www.clientinsights.ca/video/the-case-for-international-investing/type:investor
Tags: Asset Class, Bonds, Deficit Spending, Dividends, Earnings, Expert Evidence, Fears, Inflation, Jeremy Siegel, Last September, Last Ten Years, Leading Authority, Market Outlook, Nine Months, Stocks, Term Asset, Upenn, Valuation Levels, Video Interviews, Wharton
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Wednesday, October 28th, 2009
Last fall I began posting quarter end letters that advisors could adapt for their own use. Many advisors have told me that they have received an outstanding response to the letters they sent as a result.
There are five qualities to an effective client letter.
A good client letter needs to be:
- Backed up by facts
- Clear and easy to read
- Tailored to each advisor’s personality and views
Below is a template that you can use as a starting point for your own third quarter client letter – summarizing where we’ve been, where we are today and the outlook for the period ahead. Remember, this letter is only designed as a starting point – be sure to take the time to inject it with your own point of view and personality.
September 18, 2009
To my clients
As I write this letter, it’s two weeks from the end of the third quarter in what continues to be a most eventful year for stock markets and the economy.
It’s also one year since the weekend that shook the foundations of Wall Street and of the global financial system – when Lehman Brothers collapsed, Merrill Lynch vanished as an independent entity and AIG was taken over by the U.S. government.
In light of that, I thought it might be worthwhile to briefly summarize where we’ve been this year, where we are today and the prospects for the period ahead – and also to highlight some lessons from last year’s financial collapse.
Where we’ve been
Six months ago, in early March, it truly did feel like the world might be coming to an end – talk of a return to a Great Depression like economy dominated radio, television and newspaper. Understandably, fear was rampant – and stocks responded to these nightmarish scenarios by hitting the lowest levels in years, with financials especially hard hit.
Although no one knew it at the time, that turned out to be the bottom. Since then, we’ve seen the economy move back from the precipice – there is a growing consensus that we’ll return to economic growth in the second half of this year. The Economist recently ran a cover story discussing the extent to which the economic recovery was led by Asia.
As a result, we’ve had a strong recovery in markets – from their bottom in the beginning of March, stock markets are up 50%, retracing a good portion of the losses since last fall.
The second quarter of this year, from March to June, was especially strong – since 1956 the Canadian market has only had three quarters that rose more than this one.
In the meantime, here are six lessons from the last twelve months:
- We were reminded of just how volatile stocks can be.
- And of the importance of true diversification.
- Many investors discovered that they’re less comfortable with risk and volatility in their portfolio than they had believed.
- Investors were also reminded of the need to focus on what they can control – understanding cash needs and thinking through how much risk they can live with to fund those needs.
- In some cases, investors began rethinking retirement plans as a result.
- Finally, we were reminded that in today’s world, we need to expect the unexpected.
Where we are today
A year ago, the market was characterized by rampant optimism. The Canadian market had hit a new high in June of 2008 and any concerns were set aside as minor annoyances.
By contrast, six months ago the market was overwhelmed by absolute pessimism – there was no sign of hope anywhere.
Today, the market is somewhere between those two extremes and many investors can be characterized as extremely nervous.
As a general rule, I think a certain level of healthy anxiety is positive – what gets investors in trouble is an excess of either optimism or pessimism. While today’s mood may be erring on the side of being a bit too pessimistic, I think being cautious in the current market makes sense … provided that prudent caution doesn’t cross the line into panicked inertia.
The good news is that there are still excellent opportunities for investors who are prepared for short term volatility. I spend a lot of time listening to the best market minds and to managers who have lived through multiple cycles. I am reassured that most say that they are still finding very good value – not to the extent that they did earlier this year, but still well ahead of what they would have seen a year ago.
The outlook going forward
In August, Business Week ran a cover story called “The case for optimism.”
The premise was simple: Beyond the issues facing the global economy, there are many underlying positives that give cause for optimism if we look out two and three years and beyond.
There are things happening under the surface that will drive economic growth … and with that economic growth will come growth in stock prices. Examples include the positive impact of technology, the recovering US housing market, the revitalization of economies and the incredible energy from the developing world’s educated youth and emerging middle class
Click here to access all the Business Week stories on The Case for OPTIMISM :
And here to view a three minute video with interviews with CEOs of Dow Corning, Eastman Kodak and Intuit.
Let me close by talking about market volatility.
In 1907, U.S. financier J. Pierpoint Morgan singlehandedly averted a banking panic among U.S. investors.
Later in life, someone asked him his best guess on the direction of markets. His answer: “They will go up and they will go down.”
One hundred years later, that’s still the best answer to someone looking for a short term market forecast. No one can predict market movements in the immediate period ahead – all we can do is understand clearly how much short term volatility we can live with, adjust our portfolios accordingly and stay focused on the horizon as we deal with the rough waters. No one likes volatility … but for most of us it’s the necessary price to arrive at our ultimate destination.
Direction of portfolios
This needs to be customized to each advisor
In the meantime, my team and I are constantly looking for opportunities to realign portfolios to give our clients the best tradeoff between risk and return. Given the current uncertainty and volatility, we are continuing to focus on higher quality companies in both stock and bond portfolios and are maintaining a healthy fixed income weighting, with particular emphasis on quality corporate issues.
Over the past while, I’ve talked to most clients about their portfolios. If I missed you for some reason or you would like to discuss your investments in more detail, I am always delighted to have that conversation.
Thank you for the continued opportunity to work together – remember, my team and I are always here should you have any questions or wish to talk about anything related to your portfolio or your finances.
Name of advisor
Tags: Aig, Consensus, Financial Collapse, Foundations, Global Financial System, Great Depression, Independent Entity, Lehman Brothers, Merrill Lynch, Personality, Point Of View, Precipice, Prospects, Radio Television, Scenarios, September 18, Six Months, Stock Markets, Stocks, Substantive, Wall Street
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