Market Alert - January 21, 2008
There are unusual events unfolding in the stock markets today, and
rather than wait for my normal newsletter I wanted to get this message
out to you as quickly as possible. I apologize about the "last
century" look of this, but fancy formatting takes time.
The stock markets overseas took a real beating on Monday while the
US markets were closed, and a few minutes ago the S&P 500 Index
opened down over 4% below Friday's close. And that is just for openers.
I know after a horrible few weeks that everyone is thinking "how
much worse can this get". No one really knows, but we may find out as
the day unfolds. I expect the Federal Reserve to get involved, but
again, who knows what will happen.
What I wanted to tell you is that you do not have to worry much
about what you hear in the news today. For several weeks I have been
slowly reducing your exposure to the stock markets in your managed
accounts with me. All of our accounts are now heavily weighted toward
bonds, which are doing well, and money market funds. What little we
have in the stock market is protected by "inverse" funds - those that
go up when the stock market goes down.
To give you a general idea of how you are doing, Friday, January
18, while the S&P 500 lost .6%, every one of our strategic models -
the patterns that our accounts follow - made money, generally between
.3 and .5%. Our income strategies, Flexible Income (formerly called
Tactical High Yield) and Muni Bond Protection have not been affected by
the stock market troubles, and are perking right along so don't waste
much time worrying about them, either.
It takes me a while to adjust to a market decline like this -
remember, I don't have a crystal ball, I just react to what has already
happened. As a result of this lag time in reactions, our growth
accounts generally have had small losses in the 2-3% range
year-to-date. Considering that as of this morning, the S&P 500
index is down 13% since January 1st and 18% since its highest point in
back in October, you are doing pretty well.
The purpose of this email is to let you know that I am on the job,
and I have already reacted to protect you from the market's decline.
Your money is safe in the current market environment, and poised to
make money even if it continues.
Having already "sold high", we now have a lot of cash available to
"buy low" when the current decline is behind us, pursuing the great
American investment creed of buy low, sell high.
This is what I do best for my clients. If you have friends who are
stressing out about the current market conditions, please have them
give me a call at 778-4000. Perhaps I can help them, too.
Thank you for your business.
Best regards,
Will Hepburn
President
|
