Hi everybody! Welcome to the December 2011 Asset Management Strategies Newsletter. Hope everybody had a good holiday and happy new year. Early December was dominated again by news out of Europe. They don’t have all the issues resolved there, but they do seem to have a strategy for having a plan in place. That seems to calm the market considerably. Later in the month we did have more political dysfunction surrounding the extension of the 2% payroll tax reduction which really didn’t do anything to help business plan long term. We did see some lower jobless claims numbers and improving consumer confidence numbers. Consumer confidence is important since usually about 70% of our GDP is consumption driven.

If we look at the entire year for 2011and look at is as a snap shot; I often talk to clients about how easy my job would be if I could get clients to look at their statements once a year. If you look at it once a year it takes all the drama out, and we sure had some drama this year! Early in the year we had the Japanese tsunami, we had the expiration of QE2 in the summer which is pretty much a forgotten event, and then we had the debate over the debt ceiling. At the end of the day this entire calendar year result was that we had one of the flattest years we’ve ever had in the stock market. We’ve had years when the markets gone down, we’ve had years when the markets go up, but it’s very unusual this flat of a stock market. There’s only one other year in the last 50 years that the market ended up as closely at the end of the year to where it started in the beginning of the year. My way of looking at 2011 is I think it was really a year of worry. We had all the concern over what happened in Europe; the debt issue there. We had concern after the impact of the tsunami in Japan as to how that would affect supply lines and the world wide economy. We still have a tremendous debt problem here in our own country, and I think that we’re worried about our political situation as well. We also worry about the first time down grade that the country took on its debt which has never happened before. Of course we also worry quite a bit about Peyton Manning.

So what are the lessons from 2011? I think we’ve placed too much importance on what’s happened most recently. This isn’t always the way things will be. We forget that in the late 70s and early 80s we had 10% unemployment, we had 10 % inflation, we had 18% car loans, we had 15% 30 year mortgages. We thought that that was the way things would always be, and yet our most productive years in the stock market were soon to follow after that.

My advice for 2012, cheer up! We don’t have to have all the problems completely solved and put to bed. We just need to have a plan to start. Look at Europe. That’s what they did and it seems we’re going to be able to digest that problem. Small steady sustained improvements will keep us in the right direction.

I had an interesting conversation with a client who was understandably very frustrated. His daughter just graduated from one of the good schools, had great grades, and she was very lucky to find a good job. Corporations aren’t hiring if they don’t see demand and consumers don’t spend if they don’t feel secure that they’ll be working next month and their homes will be worth even less. I think we need a catalyst. We need an igniter. We need some kind of a flashpoint to get things moving, and it’s kind of like an opposite game of musical chairs. Right now there is no music and everybody’s just sitting on their hands waiting for something to happen. It will happen. Maybe it will be the election, maybe it will be continued strong earnings numbers, maybe it will be the absence of bad news, but here’s my bold prediction for 2012. Are you ready?

At the end of 2012, we’ll still be here and my prediction is we’ll be that we’re better off at the end of 2012 then where we stand today. Thanks for listening. As always we appreciate any comments or feedback that you have. Feel free to call our office or shoot us an email at tonyf@amsria.com. I’ll talk to you next time and thanks.

Hi everyone,

Welcome to the November edition of the Asset Management Strategies’ Newsletter.

Hope everyone had a happy Thanksgiving. November was pretty much a flat month from beginning to the end of the month but there sure was plenty of drama in between. A lot of the volatility that came for the month came out of the news from Europe and there were also some economic indicators that recorded during the month that caused some gyrations as well. Let’s take a look at the chart. The chart that we use is from Yahoo Finance’s public website. Anybody can access this chart and look at the S&P 500. This is just a year-to-date chart for the S&P 500 and we’ll take a look specifically at November. The S&P 500 is the 500 largest stocks in the United States. So it’s more what we call the broad market index as opposed to the Dow Jones Industrial.

You’ll see here that we had a large market decline just before Thanksgiving. This really wasn’t so much related to the issues in Europe as it was some of the economic indicators that came out in a disappointing fashion. We had jobless claims, we had durable good orders, we had moderate personal income growth, we had downward revision third-quarter GDP numbers; all those contributed to the turmoil that we saw. We did have a month end rally mostly on rumors that the IMF was going to loan $600 billion to Italy and the IMF has now consistently denied that that’s going to happen. They seem to be focused on a lot of long-term solutions in Europe and they really need to focus on both long-term and short-term solutions. There’s a significant liquidity crisis that they need to resolve on the short-term basis I think once that a plan is in place then we can move on from that issue.

Interesting note for the month of November: we did see a 10% drop in just seven days and that dropped the market back down to a level that it had not been to since October 7, which was barely 50 days earlier. So what changed in that 50 days? What pushed the market up 10% and then very quickly sold that 10% right back down. A lot of that excitement I think you see in the market is because the gains in the markets are short lived but the losses are somewhat short lived. We’ve been in this range since roughly June and I think that shows a market that’s really confused. It doesn’t really know whether it wants to go up; it doesn’t really know whether it wants to go down. The markets left alone typically want to go up, but then you have bad news and bad news delivers a pretty significant level of fear and the market sells off.

The individual investor is still pretty frightened, sitting on the sidelines with literally mountains of cash; record levels of cash, and that cash is earning next to nothing. Until those individuals see if it’s safer to get back in the market, I think you’re going to see the market dominated by institutional trading and those trades tend to have big swings. Big swings up and big swings down. And, really, the gains are not substantiated and they don’t hold.

We did see a good start to the spending season. The numbers look pretty good and hopefully those will push economic indicators forward. But we are back on the sidelines as far as our allocation in the equity markets and we’ll wait for the market to move up and to hold on to those gains before we feel it’s safe to get back in. Hope everybody has a Happy Holidays and Happy New Year. Please call us or e-mail us with your thoughts or comments. Thanks for listening.