I am writing to provide you with yet another market update. Last week we continued our portfolio repositioning and saw some dramatic market volatility. Today I hope to provide you with some insight into both topics.
Friday we took profits in a balanced fund that is concentrated in growth stocks and convertible bonds. As always, we did this where we had discretion and/or were able to contact you where necessary. Our investment team decided that after the significant run-up in the NASDAQ that we wanted to reduce our large overweight in growth stocks and cash in on profitable convertible bond performance. We also achieved our objective of slightly reducing overall bond positions. As we and others have reported, we ultimately think that interest rates have nowhere to go but up.
We immediately repositioned cash into a well-known commodity strategy fund that is weighted towards the energy and food sectors. We believe last week’s positive job and retail sales reports support our’s and LPL’s view that a global recovery is continuing to gain traction. With the possibility that financial reform may curtail speculative derivative use, it appears that fundamental supply and demand are now more in sync and may potentially drive prices, in line with growth, over the next 3 to 5 years.
Which takes us to last week’s other events — major stock market volatility and the Greek debt crisis. First, let me say those events did not precipitate our decisions. We are not trying to time the markets. We decided two weeks ago what to sell and then calculated the correct way to execute it within client portfolios. The fact that prices for all assets came down quickly did nudge us to immediately reinvest into the commodity strategy fund. We think we have achieved a relatively good entry point.
Next, the Greek debt crisis is just a symptom of a larger problem; excessive spending and entitlement promises by many governments – ours included. As I said before, you can’t borrow indefinitely. And if you “can’t” default to creditors, then you can only default on promises to your citizens. The Greek riots and protests may well play out in other countries over the next decade as fiscal reality sets in. But, in the long run, these are good things that continue to support a slow and steady recovery. The fact that credit is being offered under more stringent terms and that demand for credit is slow to rebound means we probably won’t get too far ahead of ourselves for awhile. Things will continue to loosen up and jobs will be added slowly. By the way, we’ve just added a recent St. Thomas business graduate to our professional team. You will probably be talking to Rachel soon if you’re scheduled for a review.
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on Thursday, June 3rd, 2010 at 1:48 pm and is filed under Market Commentary.
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The world, at a glance
I am writing to provide you with yet another market update. Last week we continued our portfolio repositioning and saw some dramatic market volatility. Today I hope to provide you with some insight into both topics.
Friday we took profits in a balanced fund that is concentrated in growth stocks and convertible bonds. As always, we did this where we had discretion and/or were able to contact you where necessary. Our investment team decided that after the significant run-up in the NASDAQ that we wanted to reduce our large overweight in growth stocks and cash in on profitable convertible bond performance. We also achieved our objective of slightly reducing overall bond positions. As we and others have reported, we ultimately think that interest rates have nowhere to go but up.
We immediately repositioned cash into a well-known commodity strategy fund that is weighted towards the energy and food sectors. We believe last week’s positive job and retail sales reports support our’s and LPL’s view that a global recovery is continuing to gain traction. With the possibility that financial reform may curtail speculative derivative use, it appears that fundamental supply and demand are now more in sync and may potentially drive prices, in line with growth, over the next 3 to 5 years.
Which takes us to last week’s other events — major stock market volatility and the Greek debt crisis. First, let me say those events did not precipitate our decisions. We are not trying to time the markets. We decided two weeks ago what to sell and then calculated the correct way to execute it within client portfolios. The fact that prices for all assets came down quickly did nudge us to immediately reinvest into the commodity strategy fund. We think we have achieved a relatively good entry point.
Next, the Greek debt crisis is just a symptom of a larger problem; excessive spending and entitlement promises by many governments – ours included. As I said before, you can’t borrow indefinitely. And if you “can’t” default to creditors, then you can only default on promises to your citizens. The Greek riots and protests may well play out in other countries over the next decade as fiscal reality sets in. But, in the long run, these are good things that continue to support a slow and steady recovery. The fact that credit is being offered under more stringent terms and that demand for credit is slow to rebound means we probably won’t get too far ahead of ourselves for awhile. Things will continue to loosen up and jobs will be added slowly. By the way, we’ve just added a recent St. Thomas business graduate to our professional team. You will probably be talking to Rachel soon if you’re scheduled for a review.
This entry was posted on Thursday, June 3rd, 2010 at 1:48 pm and is filed under Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.