News

January 3, 2012

380 Elm Street

After plunging early in December, stocks rose on a "Santa Claus rally" the week before Christmas to close the month higher. Stock markets often reward toward the end of December, thus the name of the rally. U.S. stocks netted slight gains for the month and the year; bonds rose, while small cap and international stocks trended down. Our average portfolio, defensively positioned, compares well to the S&P 500: the index was up 0.17% for the year and 0.85% in December; our average was 0.30% for the year and 0.55% in December.

Many economic indicators continue to show a recovering domestic economy. Payrolls, housing starts, and retail and auto sales are trending up, while initial jobless claims have decreased somewhat over the year. The unknown factor is still the crisis in Europe, and how economic weakness there will play out here. We continue to anticipate major problems in the Euro countries and a blow to our economy and stock markets as a result. For now, we continue our defensive position and plan to move portfolios back into stocks when prices are low, following a crisis. Meanwhile low volatility and steady bond returns keep our portfolios competitive.

The new year opens suddenly cold. We have been spoiled with mild weather. Enough snow to blanket the ground would be good wind protection for perennial plants; more than that would be wasted - and require shoveling. Too much snow, too little, we are hard to please, and nature cares not for our whims. We must adapt to survive, and life is joyful only if we go along willingly.

December 2, 2011

380 Elm Street

A very volatile November closed with a rally, bringing the DOW to break even, and the S&P 1% shy, for the month. One year returns: the Dow is up 5.8% and the S&P up 1.8%. Bonds closed the month generally negative, losing ground in the final stock rally. Our portfolios, positioned to reduce volatility and guarded against excessive stock exposure, ended November -0.6% and one year returns average 1.1%.

The U.S. economy has begun to creep forward over the past few months, after coming to a standstill earlier this year. European weakness continues to plague us, and we can expect to weather a major impact in 2012 from the anticipated troubles there. Our client portfolios are positioned to survive this effect with minimal impact and we prepare to increase stock exposure when growth potential is clearer.

December holidays fill the darkest days of the year with light and joy. Many of our young men and women still daily risk their lives in combat, nearly beyond the edges of our thoughts, to preserve our peace at home. Our preoccupation dwells on local struggles: health, economy, missed prosperity in markets. Gathering our loved ones, opening to strangers, forgiving old injuries, welcoming the unknown future - celebrating these holidays brings our minds and hearts to the work of peace on earth. What greater joy?

November 2, 2011

380 Elm Street

October stock markets rose to bring year-to-date returns back toward positive. The major stock indices rose 9.5-10% for the month and range from -.3 to +3% year-to-date. Our conservatively positioned portfolios rose just 2.5% for the month and are up 0.4% year-to-date. While enjoying greatly reduced volatility from reduced stock exposure, this means our portfolios lag the upside markets but returns even out when down markets are included in the view.

The crisis in Europe continues to build with little sense that a resolution is at hand. Without the leadership this situation requires, the problems continue to confound the vague offerings of their financial summits. Stock markets have responded to short term promises of good intentions, without holding out for real resolutions. Thus the turbulence in the market continues, as crises and rhetoric cycle around the very real debt issues mounting in Eurozone countries. Spain and Italy, much more significant economies than Greece, are now closer to the edge. We can expect the effect to reach to U.S. stock prices, bringing them further down. We continue to monitor this closely, and maintain our conservative position until signs indicate we approach real growth potential for stocks.

Tender herbs surrender to the first snowfall. Summer salads, which include fresh basil and pineapple sage, are gone for another season. Amid the widespread destruction of fallen trees and branches and crippling power outages, the garden moved silently into winter mode. The winter hardy birds are joyful at the feeders. Welcome the next season and the changes it brings.

October 4, 2011

380 Elm Street

September markets roiled to close at new lows. The major indices closed the month down 6-7%. Our average portfolio returns are down 2% for September. All values have dropped below the start of the year. This news is hard to accept and is only tolerable when you know that the market will come back and return losses as it grows on again. The markets may continue to go lower for a while. This is part of how they work. We remove the excessive risk from portfolios, but must keep some, or we would not receive the benefit of the growth, that may return at any time.

The issues causing European financial instability have surfaced once again. It is hard to imagine the conditions that allow a tiny economy like Greece to destabilize the world. But Greece can destabilize the Euro-group countries, because other countries are on the path that Greece has taken, and the Euro system is not designed to withstand the current stress. The changes required to stabilize the Euro would reduce the independence of the participating countries. The solution will not come easily. The market turbulence comes from the high level of uncertainty. This may all be over sooner than we now expect.

The saga of the garden groundhog ended shortly after hurricane Irene blew through. The baited traps, so determinedly avoided, became irresistible. Perhaps the storm confused the poor creature. Meanwhile the parsley and basil have grown a flourish of new leaves, and next year's poppies have strong new crowns.

September 2, 2011

380 Elm Street

The month of August saw recovery of some of the early days' plummet in stock prices. Market indices ended the month down, from -4 (DOW) to -6% (S&P 500). This brings markets nearly back to this year's beginning. Our defensively positioned portfolios averaged -1.4% for August and also slightly up from the beginning of the year.

Considering what is coming next for the stock market, the situation in the Euro zone is looking more precarious. The "fix" that is needed does not have popular support in the key countries that must enable the solution. The burden would be greatest on those who have lived more frugally, and they, understandably, resent having to carry those who have lived beyond their means. This has not received much press attention lately, but could have a large impact on our economy in the coming months. It is another storm to weather, before better days will follow. Meanwhile, our defensive investment positioning continues to minimize the volatile stock market effect for our clients.

Storms can provide some temporary excitement and sometimes change our lives. The big ones leave a lasting impact, pushing back our sense of security, and adjusting our sense of what is really important. A young family, who lost to Irene felling trees, their house and car and vehicle needed for livelihood, is grateful. They still have each other, unharmed. An attitude like that is a force to match nature. Recover they will, and forever taking less for granted.

August 3, 2011

380 Elm Street

Snagged by thorny partisan dealings in Congress, over raising the U.S. debt ceiling, early July stock market gains slid in the last week, to close the month down. Stock prices continue to slide, after the essential Bill raising the debt-ceiling was signed into law. Investors' rosy glasses are off, at least for the moment, seeing the fragile state of the U.S. economy weakened further under the stress of the past month. The concern now is that our domestic economy may slip back into recession. The Dow lost 2.4% in July. Our portfolios averaged a loss of 0.23% for the month.

Many knowledgeable bond investors suggest the rating adjustment of U.S. Treasury bonds is appropriate, even overdue. A lower rating may mean that Treasuries would pay higher interest, even though they are as safe as they were before the rating was changed. A mass sale of Treasuries after a ratings drop is not anticipated. We continue to follow the issues around this for you.

There seems no end to the nature in the garden this summer. The chipmunk has been replaced by a groundhog - a less charming and more troublesome critter. Again it has been a few years since one last invaded. This one is definitely a phobic, startled and frantic when discovered, he/she has become an edgy visitor. I wish no harm but cannot watch my labors decimated. Boundaries are essential in relationships.

July 6, 2011

380 Elm Street

Sprinting to the finish, June stock prices nearly erased their earlier losses. For the month, the major stock indexes dropped an average -1.5% and averaged a negative 2nd quarter. Losses in our portfolios averaged -0.45% in June and the 2nd quarter averaged positive. July is usually a positive month for stocks.

The problems in Greece, or Greece and Ireland and Portugal, are not threatening the world economy. Their economies represent a small fraction of even Europe. The connection is through banking. U.S. banks have basically connected our fate to Europe through their dealings with European banks. A recession in Europe would mean a recession here. With short term thinking, every tremor causes a stock market collapse; every short term solution brings it back. Until the market truly corrects, we must anticipate that the correction waits out there. Meanwhile we limit exposure to the stock market and seek moderate growth with limited risk. Our long term plans include tapping into strong emerging economies.

After many years of a cat-patrolled yard, a chipmunk has reappeared. Thoroughly engaging, with racing stripes and tail aloft, it scampers everywhere - up the pear tree, out a branch and back, down the trunk and across the lawn to the grape arbor, all in urgency. Traces of nibbled acorn and green pear on the deck suggest an unobserved pause to dine. Many years ago one got into the air conditioning box in my car. A pair of cats, who spent some time outside, especially in nice weather, prevented that happening again, over their long lives. For now, I will enjoy chipmunk antics and hope for the best.

June 1, 2011

380 Elm Street

May took away much of April's market gains. Renewed concern over Europe's debt crisis lowered stock indexes over the month, while bonds added to their gains. REITs and International stocks have fared better since March than the average domestic stock. The major domestic stock indexes were down 1.5 to 2% for the month. Our average portfolio was down 0.06% for the month. Economic uncertainty will continue to roil stocks, perhaps into the correction we have anticipated.

Suddenly it is summer. Memorial Day weekend brought the last of the house plants to summer camp on the back deck. The first mosquitoes, but also the first dragonfly appeared. A tiny hummingbird was busy in the columbine - time to fill and hang their feeder. This is when to take coffee outside, en plein aire, and drink in the early morning scents and sights that open the day.

May 1, 2011

380 Elm Street

Despite another mid-month dip, April stocks climbed to end the month with significant gains. The DOW may yet reach the 13,000 mark before correcting. Gains ranged 2.4 - 3.4% in the major stock indices in April, and 1.1% on average in our limited stock exposure portfolios. Note that a 1% gain in a month compares to a 12% gain in a year.

Many voices add to the chorus of caution for investors. Although gaining, stocks continue to show turbulence. Our strategy is to preserve capital now, a time of heightened volatility, with a plan to recover losses by increasing market exposure when stocks are more appropriately priced.

The major factor for the future of investment portfolios is the bipartisan cooperation of Congress in taking meaningful steps to reduce the ballooning national debt. This means focusing on what is good for the country, not what will get a congressperson re-elected. It will take some education of the American public, not scare tactics and misleading information. We all want what is good, but have no consensus of how to share the burden equally. That is the challenge of these times.

The news of the day overshadows thoughts on the spring garden. There is definitely relief everywhere, if not for everyone, with the closure of the hunt for bin Laden. Unsettling anxiety returns as terrorism, and possible retaliation, remain. Our small piece of the world is likely as safe as it ever was. Only the weather is no respecter of place. It wreaks destruction and wrenching loss without distinction. The garden offers an oasis of peace.

April 1, 2011

380 Elm Street

Despite a rattling mid month, stocks rallied to close March higher. The latest world crisis, Japan's struggle with earthquake, tsunami, and nuclear power plant meltdown, shook markets but they rebounded quickly. Investors continue to shrug off the escalating uprisings in the oil rich Middle East and the increasing debt crisis in Europe. The anticipated correction in inflated stock prices remains.

Some investing patience may be encouraged with the reminder that the S&P 500 is again flat over the past ten years. Our average portfolio is up 60% over the same time period. Our current position is focused on retaining the growth we have, until markets correct and it makes sense to buy in again.

A dawn chorus of birdsong defies the long chill to celebrate spring's arrival. Buds are swelling and bulbs bursting blooms in the frigid air. Irrepressible, nature follows the movement of the seasons, despite low temperatures that snag us. The earth is open and there is no stopping the momentum now.

March 2, 2011

380 Elm Street

Another banner month for stocks led February markets higher for the third month in a row. At 3% average returns for the month, large company stocks had their best February performance since 1998. Our portfolios, largely buffered from stocks and still holding large bond positions, rose 0.65% on average. Our portfolios are poised for a correction in stocks that may occur any time now.

With our portfolios still heavily weighted in bonds, some discussion of their current vulnerability is appropriate. The anticipated interest rate increase by the Federal Reserve continues to be pushed into the future. In recent testimony to Congress, Bernanke stated that the Feds are waiting for a self-sustaining economic recovery and labor markets improving, with inflation stable and approaching 2%. Their forecast suggests that by early next year the economy will have added a few more quarters of growth, and unemployment will have continued to drop, allowing the Fed's to finally increase interest rates..

The uprisings in north Africa and the Persian Gulf have caused concern over their effect on markets and investments. The situation is complex and without trying to simplify it, the immediate effect on stock markets does not seem cause for alarm at this time. The spike in oil prices may temporarily lead to more of consumers' cash going to fuel, and less to other goods and services, dampening the economic recovery. Saudi Arabia and Kuwait have stepped up oil production to replace the reduced supply from north Africa. Of course we continue to monitor all these situations closely, and will keep you apprised of changes that may affect your investment performance.

Snow banks meld into lawns, shrinking markedly each day. Anticipation sweetens the discovery of each new sign of winter weakening. Each year spring comes differently, yet spring always comes.

February 3, 2011

380 Elm Street

Stock markets produced another bumper crop of returns in January. The DOW and S&P indexes were up about 2.5% for the month and 20-22% over the past 12 months. Our bond and cash heavy portfolios averaged about 0.22% for the month, and 5.9% over the past 12 months. Over longer time frames, the comparison reverses: both indexes are -5% over the past 3 years, our average portfolio is 8.6%; over 5 years the indexes are up 1-10%, our average portfolio is up 22%.

The market correction we have anticipated for nearly a year seems close now. We will shift the investment balance back to stocks after the stock prices drop. No one minds more than I that our portfolios have not participated more fully in the stock market returns over the past year. The risk of more losses has been immanent, despite the recent mood of investors growing buoyant and fearless. As soon as indicators justify, we will begin adding stock positions back into portfolios. Meanwhile, when stocks take a tumble, your portfolio will be preparing for a buy.

The economy is strengthening although very slowly, especially for one that fell harder than in any recent recession. Steep employment loss continues to improve far too slowly to support any recovery. This is new territory for the economy to find its way back. We track its progress, watching for signs of how the recovery will come.

The garden is now a white canvas for seed catalogues to paint on. Images of bright blooms smile from colorful pages while windows stare blankly back. Imagination is powerful tool; imagination and memory take us out of the moment, to a sweeter time and place. February offers fertile ground for growing our capacity to transport ourselves, to any place we desire.

January 3, 2011

380 Elm Street

Despite high volatility, a strong December stock market closed 2010 values about 9% higher than they began last January. With the low volatility and low stock exposure, our average portfolio return for 2010 was about 5.5%. With heavy exposure to bonds, our portfolios delivered more slow and steady returns over the year. This is not a permanent asset allocation preference, and we anticipate an opportunity to return to greater stock exposure in 2011.

Economic reports generally agree that the economy will continue a slow recovery and that high unemployment will continue for some time. Stock markets are a different story. Stock prices often anticipate a recovery in the economy. I tend to agree with those suggesting that stock prices have risen too fast and are due for a correction soon. We plan to begin to buy in when prices drop and participate more fully in the anticipated ongoing growth in the stock market.

With the changes in the tax laws in December, estate planning as well as income taxes have a temporary reprieve. A more permanent resolution would greatly simplify planning, but seems unlikely anytime soon. The current situation offers some improvements.

The shortest and darkest days have past for another year. January days mark the gradual return of morning sun patterns, peering early, long and low-angled through the house. The wild birds have been stoking their body furnaces with seed in the unusually cold December. There was even a flock of robins gobbling holly berries at the end of the month. We have to wonder if they know what they are doing, so far north now.

December 2, 2010

380 Elm Street

Stock markets dropped in November as concerns over European credit returned. Domestic market indices were down about 1% for the month. A sharp rebound has started off December markets, with reports of domestic and international economies improving, if only moderately. The volatility in the market in 2010 has caused concern and how this plays out will determine whether we move back into stock exposure sooner, or later. Meanwhile portfolios maintain limited stock exposure, and experience limited volatility.

The creditworthiness of Ireland, Portugal, and Spain may seem isolated and even irrelevant to our concerns. The exposure of other European and U.S. banks to the bad debt in these countries expands the problem around the globe. It is a powerful reminder of the danger of our own national debt, accumulated over the past decade of annual deficit spending, for two wars and bailouts, with lower tax revenue. Only strong fiscal measures now will reverse the damage and build prosperity back into our future.

The winter holidays hold a particular grip in our memories. Traditions rekindle the glow of past moments. Memories lighten the darkest time of year. The gifts we received or gave that were especially thoughtful and appreciated are mindfully reopened every year. We share a common bond in these memories. We all treasure them, these gifts from the heart.

November 2, 2010

380 Elm Street

October continued September's climb in stocks and bonds. Stocks have not suffered this fall from the uncertainty usually preceding elections. The promise of more stimulus from the Federal Reserve when they meet this week, as well as anticipated Republican wins on election day, is already built into stock prices as the month closed. The stock indices rose just over 3% for the month.

As distasteful as is the prospect of falling stock prices, a correction sooner rather than later is preferred. The markets have moved with indecision, essentially sideways, since April. A definitive move in either direction could indicate a new trend. We continue to monitor the markets and economy, in order to offer your investments the best participation in the markets' potential, and minimize its risks.

The snowbirds have returned. A neighbor of 30+ years ago used the appearance of slate-colored juncos (snowbirds) for a signal of the season change. I quickly restored the back yard feeders to full banquet service. The flutter of feathers all day long is delightful distraction as the trees bare. Each season must hold its own joy. Winter treasure has wings.

October 5, 2010

380 Elm Street

Stocks performed brilliantly, delivering the best monthly gains for a September since 1939. We may watch stocks rise or fall for the next few months. Our view continues, that any gains are temporary. If we find indications that contradict this view, we will begin to implement the changes we have reviewed with you, regarding future stock fund purchases. We do not expect this now.

Currently we have recommended significant holdings in short term bond funds. This allows clients to reap better returns than money market interest, while waiting for a time to increase stock exposure. These bond positions are temporary, and we will sell out of them when we anticipate situations that will cause them to lose market value. One significant threat to bonds will be when the Federal Reserve plans to raise interest rates. This is not likely to happen soon, as raising interest rates would weaken the economy. It will happen eventually. We may have reason to sell the bonds before this happens, depending on other circumstances. For instance, if the stock market drops significantly, we may sell some bonds to purchase planned stock mutual funds. Although no actions are anticipated at this time, we discuss these preparations with you at our meetings. Meanwhile, your portfolio is prepared for an anticipated drop in stocks.

The October garden is lit by giant candles. Jerusalem artichokes grow all summer into ten foot stocks, from edible tubers that winter over underground. The name is an enigma, being unrelated to Jerusalem or artichokes; they are relatives of sunflowers. The spray of golden flowers is most welcome in the fall, nodding high over the fence, as they face the sun's post-equinox track across October's bright blue skies.

September 3, 2010

380 Elm Street

August closed the summer stock market near where it began after Memorial Day. The best July record (Dow 7.1%) in several years set up the worst August stock performance (Dow - 4.5%) in several years. The volatility in stock prices continues from day to day, signaling unsteadiness in the market. We interpret this sign with many others, that we should remain prepared for a significant, and perhaps prolonged drop in stock prices. Cash and bond positions now dominate our portfolios, with just 20-30% selected exposure to stocks.

One year stock index returns now average about 6%, with year-to-date stock returns averaging -6%. The three year average stock return is -10%. Our portfolio average dropped (-0.5%) in August, with one-year, year-to-date, and 3-year returns of 5.2%, 1.4%, and -4.8% respectively. Yes, the shift in portfolio weightings is buffering against the down stocks, while keeping some opening for participation in a stock market recovery. You may count me among those who understand that the markets will return, and return well, and when we least expect it.

The fruits and flowers of autumn arrive early this year. A long, golden fall season seems in store. Holly berries are reddening already, and a small, limber squirrel has snipped bunches of cedar berries from all over an old cedar tree. Shimmying out to the thin, outer tips, the acrobat was able to snip all but the terminal clusters of berries. He/she left the fruit on the ground, and I did not particularly appreciate the pruning job. Perhaps the tree is pleased. In nature, things are often not as we see them.

August 3, 2010

380 Elm Street

July stock markets weathered continuing volatility to deliver the best one-month returns in a year. Stock indices now average close to positive year to date. Bonds remain at record high prices. Our portfolio average is 2% year to date, not exciting, but low volatility and not negative. We anticipate significant stock market downside ahead and hold current defensive investment positions against that.

Weakness in the recovery of the economy is clearer as the months proceed. The recession is now measured to be deeper than previously estimated and signs of real recovery lag. Unlike the market, where performance is investor driven, the economy will recover only when jobs recover, loans for small businesses are again available, and the backlog of empty homes moves into ownership. This will happen in time. Americans are resilient and progress will come when we least expect it. We will not soon forget these times, but they will end. The sooner the better, I’m with you.

The fullness of summer bears fruit, flower, and beach weather. This has been a summer for the waterfront: ocean, lake, or pool works to good advantage in the steamy heat. Early mornings are the only time to spend in the garden. A/C is the balm for the day, permitting productivity in the enclosed jungle of indoors. By night, sea breezes fill our dream sails, and take us to exotic places.

July 2, 2010

380 Elm Street

Closing the second quarter, June ended by adding losses to those of May. The quarter saw the return of high volatility in stock markets, marking the change in trend from growth to loss in stock prices. The DOW is down 10% for the quarter and the S&P 500 is down 12%. Our average portfolio is down 1.8% for the quarter.

This suggests we have the beginning of the down market we have been anticipating for many months. We can expect the volatility to continue over the rest of the summer. For now, bonds - treasuries in particular - provide a safe haven against falling stocks and stagnant money market returns. Holding selected exposure to stocks in portfolios means we will participate somewhat in the down turn, but will be in position to participate in an unexpected initial rally – and the initial rallies seem always unexpected. Setting portfolios to minimize downside exposure and yet to participate in the upside of stock growth is the challenge we undertake. We continue to make recommendations to you based on these efforts, and with our expectation for continued success for your investments.

On the business side, we have begun actively seeking an additional advisor. Hopefully this will be someone working in our office; definitely it will be one whose orientation to clients blends well with our own, and who would serve as a backup for you in case something happened to me. Be assured that I will screen thoroughly in the selection process. I have no intention of retiring for years as I really enjoy working with you. We need to provide you with a plan for your investments – and a “Plan B”.

If Memorial Day kicks off summer, then the 4th of July must kick off vacation season. The best of times slip away quickly and the days bound by summer holidays evaporate like the dew, leaving traces only in vivid memories. The challenge is not to miss a minute. Defying physics, memories endure: they never wear out with use. Also, they are reinforced with sharing. It’s the only way to make summer last.

June 2, 2010

380 Elm Street

The long anticipated market drop seems to have begun in May. This market dropped faster than in 2008 – the fastest for May, in fact, since 1940. The DOW Industrials index was down 7.9% for the month. On average, our portfolios, holding minimal stock exposure, were down 1.9% for the month.

The recent volatility signals more trouble may be on the way. Although the market dropped 10% from the April high, and therefore has technically “corrected,” respected analysts warn this drop is the beginning. We have anticipated this for some months and trimmed portfolio exposure to stocks, capturing gains and investing in bonds as well as money market reserves. Be assured that we will continue to protect your investments with the best information we can access and our ongoing attention. Of course no exposure to the stock market can escape losses when the market is down. Our goal is to minimize these losses, yet maintain exposure that will offer growth when stocks recover.

Early summer’s long evenings invite lingering outside. Bird calls usher the dwindling daylight into dark. Shadows stretch from the low-slung sun until colors reduce to shades of indigo, then grey. The heat and harshness of the day yield gradually to the softer pulse of night. The old cat seeks an empty lap. For a while thoughts escape the cares of time.

May 11, 2010

380 Elm Street

April managed modest stock gains despite the volatility over the month. The extreme volatility in the market last week re-emphasizes the precarious position of current high stock prices. It is not out of order to take these events as warning shots, and hold our cover from the stock market for now.

With news media eager to give us the good news we seek, of a recovering economy and a stock market moving to new highs, it is easy to be lulled into comfort. We get real life reminders that the economy still struggles with job loss and low home prices. The Fed restates that they will not be raising interest rates for a long while, as that would crush the crippled economy. Stocks remain way overpriced for the economy that supports them. We move closer to a correction; portfolios are braced and ready.

Time close to the pulse of nature, exploring isolated islands where nature has been preserved from human intervention - that was my vacation - much equatorial sun and sand and water, at once stimulating and restful; images to remember a lifetime; pictures and stories to share. It is important to get away and good to be home again.

April 7, 2010

380 Elm Street

The month of March delivered yet more gains to stocks and bonds. Portfolio values bumped up once again. It has been a winning 12 months in stocks and bonds, and a long way from the discouraging place we inhabited a year ago. Our portfolios are braced for a correction in stock prices and will maintain only selected exposure to stocks for the time being.

The indicators of threatening trouble persist. No time can be determined but a timeframe of the next 12 weeks has been credibly suggested. The longer the market continues this upward trend, the harder the fall we can expect. The market needs to correct back to recognize the economy that still cannot support stock growth, especially the high flying prices of stocks today. We are holding conservative positions in portfolios, in anticipation of this correction. The effect of a market drop will be minimized in our positions.

Warmth and color - nature's balm after two nor'easter deluges wreaked their havoc. Lawns and trees lavish their lush response. Long evenings seduce us into summer. For now, it is easy to expand the present. Tomorrow is completely unknown, except that it too is temporary.

March 5, 2010

380 Elm Street

After a turbulent February, the markets closed the month higher, rallying after a mid-month dip. Indices remain below year end values, though gaining back some of January losses. Our portfolios now minimize stock exposure, and average return since the year end holds positive, from bond positions.

The long anticipated (by us) drop in stock prices has yet to materialize. Stocks continue to hold inflated values for an economy that staggers to stay on its feet, let alone support stock growth. When the tables turn, our portfolios will be braced for the drop with only selected exposure to the stock market.

There is a risk to bond investments in today's market also. Bernanke assures us that interest rates will rise gradually, and only with his careful monitoring of the effect on the economy. Rising interest rates restrict the flow of money and the economy, that depends on the flow of cash. As banks are making record few loans, the Fed's restriction of cash may not have the usual dampening effect on the economy. However rising interest rates will gradually reduce the market value of bonds, as money market funds will pay higher interest, without the risk in bond investments. We will be monitoring the effect of anticipated interest rate hikes on bond prices and may seek to reduce portfolio exposure to bonds as this year continues. With markets more volatile, a rigid portfolio allocation makes less sense than one adjusted from time to time to meet new market challenges. Flexible diversification governs portfolios.

Daylight again stretches our days, seeping into earlier mornings and longer afternoons. Warm days and cold nights stir tree sap, softening buds long hardened against bitter cold. March wrestles winter, but the darkest part is done for another year.

February 3, 2010

380 Elm Street

A dip in markets at the end of January removed more than all the month's gains in stocks. Major stock indices lost up to 5%, averaging 3.5%. Our portfolios are short in stocks, so averaged only minor, 0.14%, losses for the month. Bonds continue strong, but will suffer with any anticipation of interest rate increases. Inflation of stock prices over the past year make the market sensitive to even slightly negative news. We can expect more volatility in stocks, and perhaps bonds, for the coming months and continue to maintain limited exposure to stocks in our portfolios.

The world economies still suffer, with Europe and Japan in the same struggle we experience here. It is a catch-22, with economic recovery depending on jobs, depending on economic recovery. Stimulus money to bolster the job market increases the national debt, while it digs us out of the recession. Not spending money on job stimulation now means a longer recession and longer time until the deficit can be repaid by a growing economy. The path forward is thorny, but jobs are the real issue of the moment, and getting people back to work is the only solution for the economic recovery and the debt. Governmental debt is not the same as household debt, and can be incurred to improve the economy and get itself paid back in increased income tax revenue. Americans have always been resourceful, and I have every confidence that we will meet this challenge effectively, as those in the past.

Approaching mid-winter and the emergence of the first spring bulbs thrills. The season shifts and promises of spring are renewed by bold, green shoots in protected places. Long before color and flowers, hope rules.

January 7, 2010

380 Elm Street

Year 2009 brought recovery to stock markets long before recovery to the economy. For several weeks the markets have plateaued, trading in a narrow price range. The eventual move, up or down, may set the trend for the coming months. Economic signals indicate - it can go either way. We maintain a conservative position in portfolios for now, and expect to ease back into stocks gradually, and only as a stronger economy develops. A position that minimizes potential losses offers comfort to most investors at this time. Investments are long term and we continue to seek long term gains in portfolios. Currently our average returns over timeframes longer than one year, well exceed stock market returns.

This financial planning service includes tax, retirement, and estate planning, as well as investment service. Advance preparation for estate planning can make your attorney meeting more efficient, and the resulting documents better adapted to your wishes. With sharpened tools from recent coursework, we are prepared to offer you even more service.

The solstice has passed. A snow covered garden reflects sunlight onto ceilings inside the house. January rooms are bright. Cool maybe, but brilliantly sunlit. Paperwhite narcissus in a sunny window are the winter garden. These are northern January comforts, until the seasons cycle on.

Copyright © 2003-2011 Victoria M. Lechner.  All rights reserved.