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Money Manager Monthly |
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August 2009 |
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MARKET COMMENTARY
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Taking Stock: Should Investors Avoid Equities?
By Gabriel F. Burczyk, President & CEO
 In my 25 years in the financial markets, I can't recall getting the same question from so many investors:
"Should I get out of stocks?"
No doubt, it's a fair question - and it's one on the minds of millions of investors these days, as the economy struggles to climb out of recession. Viewed through that prism, let's give the question a review and a fair answer.
First, a caveat. Stocks are to investment performance like Michael Jordan was to basketball. In fact, history indicates that avoiding stocks is a real drag on portfolio performance. According to the St. Louis Federal Reserve, $100 invested in stock, Treasury Bonds, and Treasury Bills from 1928 through 2007 has grown like so:
Stocks = $178,114
Treasury Bills = $1,934
Treasury Bonds = $5,007
Based on $100 invested in each category from 1928 through 2007
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MONEY MANAGER COMMENTARY
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Economic Data Lifts Optimism for 3rd Quarter
 Wells Fargo Advisors
"The 14% advance this year for the S&P 500 index reflects a similar increase in the aggregate market value of the component companies, now $9 trillion...The arrest and partial reversal of last year's steep setback has recreated a portion of the wealth lost, and is contributing to a sense of relief and increasing confidence."
Click here for complete Weekly Commentary, August 25, 2009
 Goldman Sachs Asset Management
"Improved news flow in homebuilding, home prices, manufacturing, and employment contribute to an upgrade in our second half 2009 GDP forecast from 1.0% to 3.0% annualized. This change is particularly warranted due to the economic jolt coming from the positive turn in the inventory cycle and fiscal stimulus."
Click here for full Market Pulse, August 2009
 Fred Alger Management, Inc.
"In our view, the rally to date has been driven by the recession of Fear. The data and fundamental
outcomes of the recovery, both for our broader U.S. economy and, more importantly, for investors within the sectors and companies of the U.S. equity market, has not yet been played out. We therefore think we are in a sweet spot of the market for investors with a firm grip on the multi-year opportunity ahead."
Click here for complete Market Commentary, 2nd Quarter 2009
 BlackRock
"We continue to believe that the recession is coming to an end and that US gross domestic product (GDP) growth will be positive in the third quarter. Based on historical patterns, a recession of the current magnitude would typically result in GDP growth levels of between 6% and 8% over the next 12 months, but with the economy still facing deleveraging and credit issues, we expect growth to be, at best, half of those levels."
Click here for full Investment Commentary, August 17, 2009
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FINANCIAL TIDBITS
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Money Flows Indicate Possible Need for Rebalancing
A look at recent mutual fund flows provides an interesting perspective on the attitude of investors today. Despite signs of economic recovery and
a major surge in stock prices, July marked the 20th consecutive month whereby investors have poured more money into bond funds than into stock funds. The problem is, the persistence of flows into bond funds coupled with the severity of stock market losses during the recession may mean that investors are painfully underweight stocks relative to their long-term risk tolerances and financial goals. Perhaps it's time for a rebalancing?
Difference between Net Flows into Stock and Bond Funds
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The attached report and information have been prepared or produced by WrapManager, Inc. from sources and data believed to be reliable. Information provided in this report is for educational and illustrative purposes only and should not be construed as individualized investment advice, as an offer to sell, or the solicitation of an offer to buy any security in any states where such an offer or solicitation would be prohibited by regulations. WrapManager, Inc. is not a tax advisory firm. We recommend you contact your tax attorney or CPA prior to utilizing any of the tax-related strategies mentioned or discussed. Returns and experiences will vary for each client. Each client's risk tolerance and investment objectives are unique to them. Past performance may not be indicative of future results. No assumption that future performance of any specific investment or product made reference to directly by WrapManager, Inc., on its Web site and in marketing materials, will be profitable or equal the corresponding indicated performance level(s). If performance numbers are generated gross of fees, a client's return will be reduced by investment advisory fees and any other expenses. Opinions expressed are those of WrapManager, Inc. and are subject to change without notice and are not necessarily those of Prospera Financial Services, Inc., its directors, parent company or its affiliates. Securities offered through Prospera Financial Services and cleared through First Clearing, LLC. Prospera Financial Services - Member FINRA/SIPC. © 2009 WrapManager, Inc. (800) 541-7774 |
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