I hope all of you are having an enjoyable summer despite the record breaking heat on most of the eastern seaboard. The rally we experienced in the equity markets in 2009 and the first quarter of 2010 cooled off in the 2nd quarter with a 12% drop in the S&P 500 over that time.1 As we stated before, we were cautious during the rally because it was too much and too fast and we felt a correction would come soon. We may have just had that correction.
Recently, we have seen the media warn of a “double-dip recession”. While I don’t personally believe that we will have this double-dip, I do see our recovery taking longer than we traditionally experience following recession. Until unemployment rates drop and our housing market finds rock-bottom, it will be difficult for growth to resume pre-recession rates. On the positive side, corporate balance sheets have near record amounts of cash. Leaders of business and industry are reluctant to put the cash to work due to the uncertainty of our fragile economy. One byproduct of this cash is a pickup in mergers and acquisitions, which usually follows with positive equity markets.
We continue to consult with our strategists on their portfolio allocations and strategies.
This week we attended our Q2 Investor Policy Committee Meeting. The purpose for the meeting is to get an update from our strategists and to review how they are positioning their portfolios moving forward within their respective models. While no one can tell us with certainty the near-term direction of the markets, there is no question that diversifying among different types of strategies may reduce overall volatility not only in the short-term, but over the long-term as well. In light of this we plan to have more detailed discussions with you over the next quarter.
In order to provide added value to your wealth management services, we are working closely with our partner firms and have begun reviewing our clients various insurance contracts. We utilize their expertise for specialized life, health and property & casualty (P&C) insurance. In the current environment every dollar counts and if there are ways that we can reduce costs, improve benefits, or identify critical needs within your wealth management plan, we will work with you to address them.
Above all we wish you a healthy rest of the summer. Please do not hesitate to contact us to discuss any wealth management topics or just to say hi.
Best regards,
Bernie Wolfe, CFP®
1 – Business Week - US Stocks Drop, Kelly Bit, June 31, 2010
