December 1, 2009
Study Shows Lack of Confidence by Fund Managers
My Favorite Event of the Year
And my wife Cathleen was there at the beginning, in 1988, when Lavon Anderson, a longtime supporter of music education, birthed the idea and became the driving force behind this terrific event.
Over the years Cathleen has sung at Raskin’s Jewlers, Lamerson’s Jewelry, and for the last 10 years in City Council Chamber with the world renowned Angelorum choir from Yavapai College.
The 18 women of Angelorum are led by Dr. Will Fisher, and they sound like Angels singing. The precision and vocal finesse is like nothing else in Prescott.
Angelorum is also in the running to represent the United States in an international chorale competition in France in June of next year. This is a really special group of singers and you can hear them perform at Acker Night.
Acker night is Friday December 11th from 5:30 to 8:30 p.m. I’ll look for you around the Plaza.
How’s the market doing?
Perhaps you saw the reports of their indoor downhill ski facility or the world’s largest man-made island shaped like a palm tree or one of the world’s tallest buildings, the spinnaker-looking Burj hotel, with tennis courts a quarter of a mile up.
Last week, as we all ate turkey, Dubai ate crow as the main developer, Dubai World, teetered on the brink of bankruptcy, defaulting on $60 billion in loans.
I doubt if this specific default will create lasting damage to the world’s financial markets, Dubai World will be no Lehmann Brothers since the UAE is sitting on $500 billion in reserves and has pledged to bail out Dubai, but the failure has shaken the foundations of the world’s financial systems.
The concern is that if the Middle East, with perhaps the soundest finances in the world can have devastating economic problems, is there any place that one’s money is really safe right now? Sadly, not.
This incident will cause investors world-wide to reassess how much risk they really have in their portfolios, and for that reason it has the potential to throw a wet blanket on the world markets.
Accounts at HCM are well positioned to withstand a shift in world markets, so this need not be a cause for concern for you. But it sure makes for interesting times.
What We Were Saying A Year Ago
Fortune wrote: “[in this economic environment] everyone is going to lose something,” said Will Hepburn, president and chief investment officer of Hepburn Capital Management in Prescott, Ariz. “The winners will be those who end up losing the least.”
That is true. Last winter, investors lost money in virtually all asset classes. And, savers found themselves reaping much lower interest wherever they went.
Those who did best were able to switch from growth investments to capital preservation l ast winter, and then back into growth after the market bottomed in March.
Riddle of the Week
Q: A certain crime is punishable if attempted but not punishable if committed.
What is it?
A: Suicide
And if you answered and Coup d’ etat you were also right.
What’s Going On In Your Portfolio?
Our Flexible Income* model remains fully invested in high yield bond funds. High yield prices have gone flat during the past month, but we still collect nice dividends, so it is worth being patient with these investments while the market sorts itself out.
HCM’s Careful Growth* model still holds 40% in foreign or gold mining stocks, 30% high yield bond funds and 30% cash.
This remains a very high risk time in the stock market, with signs of possible problems cropping up every day. I am being cautious right now and waiting for some of the risk to subside. Hopefully the next couple of weeks will allow us to see what direction the market wants to go.
I get occasional inquiries about buying gold in the growth portfolios. I like to own things in up trends and gold clearly qualifies in that regard, but ever since October when the government of India jumped in as a big buyer of gold, it has been ridiculously high, making this a very risky entry point. History suggests that we will get a lower price before long, so I am waiting for the price to come down before buying.
Our Spotlight Strategy
We use our hedging and active management techniques to provide reduced risk to these investors, while keeping income levels high.
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** The S&P 500 and Nasdaq Indexes are unmanaged lists of stocks considered representative of the broad stock market. Investors cannot invest directly in the S&P 500 Index.
Balanced Strategy Description and Performance Information
Careful Growth Strategy Description and Performance Information
Flexible Income Strategy Description and Performance Information
Socially Screened Investments Description and Performance Information
