July 6 Lowe Wealth Advisors conference call with Morris Segall
If you missed the conference call with Morris Segall and Lowe Wealth Advisors July 6th click here to listen. The call is about 35 minutes in length and discusses the economic conditions, capital markets and Lowe Wealth Advisors strategies. Note: The call is intended to be informational in nature and should not be considered advice or a recommendation for any particular strategy. Past performance is no guarantee of future results.
As the second quarter of 2010 comes to a close, the mood of investors is undeniably very different than just a few short months ago. Uncertainty prevails and overall consumer sentiment is falling.
For some time, Lowe Wealth Advisors has talked about the possibility of a W shaped recovery and our concerns about the sustainability of the recent stock market gains. Anirban Basu first raised this possibility at our annual client breakfast back in November of 2009. In fact, you probably got tired of hearing the same thing over and over again. Now more than ever that scenario may develop.
This spring, our view turned from one focused on recovery to one titled toward potential preservation based on the current environment. However, we still believed that any substantial slowing would be late in 2010.
It is appropriate at this time to look back a few months to consider what got us where we are today. Yes, without question the prevailing issue we have been focused on is jobs and unemployment. After all, with consumers making up such a large amount of our economy any recovery cannot be sustainable without strong consumer spending. Without jobs and an environment where consumers no longer have access to credit spending simply cannot be a driver of the economic recovery.
Early in 2010 through late April our view was one which anticipated the winding down of the government stimulus and the lack of jobs impacting the recovery in late 2010 or early 2011. Then came Europe and everything changed. The issues most believed would be faced later this year were moved forward to the present.
Without question, although we had a cautionary view of the environment the breadth and speed of the decline in May was surprising.
While there will be a great deal of pessimism and bad news in the coming days, Lowe Wealth Advisors wants to remind you that we guided you through the first wave of the turmoil over the past year and a half. We will do the same during this challenging season.
Our actively managed discretionary portfolios have held very diverse allocations in various asset classes throughout the entire recovery process. Many allocations had exposure to domestic equity, foreign equity, bonds, cash, gold, hard assets, currency holdings and natural resources.
May brought some fine tuning when we shifted our view to one of potential preservation. For our discretionary portfolios cash positions were increased, we reduced the energy sector exposure and added a holding in certain allocations that has the potential to move in the opposite direction of the S&P 500 (see index disclaimer). As of June 30 we took further steps to reduce our European exposure and on July 1 we reduced our currency exposure.
It bears mentioning that our goals as we manage our active discretionary portfolios that a portion of our strategies are indeed designed to deal with the current turmoil and risk. Another portion is designed to produce potential results over a 2 to 3 year period of time. Overall, the combined approach is one which we hope will potentially preserve your assets by losing less when the market goes down, coupled with achieving reasonable gains when the markets are going up.
If your portfolio is discretionary and actively managed in general, while values will be down for the quarter you should expect to see in most cases declines less than the broad markets. Why are we so focused on potential preservation as the core value of our strategy?
Consider the following statistics:
A 25% gain is required to recover from a 20% loss
A 43% gain is required to recover from a 30% loss
A 100% gain is required to recover from a 50% loss
We encourage you to participate in the conference call regarding the current environment with Morris Segall scheduled for Tuesday July 6. For more information regarding the call and to RSVP click here.
In spite of the current challenges we remain confident that not only will our economy ultimately recover but so too with the global economy. We believe that our near term actively managed strategies are working and continue to consider new opportunities and strategies on a regular basis. Our 2 to 3 year outlook remains positive.
In fact, as we approach earnings season it is entirely possible that the stock market could experience a near term rally. The sustainability of any such potential rally will squarely rest upon the jobs picture in our opinion. Lowe Wealth Advisors will be working closely with Anirban Basu and Morris Segall throughout the earnings season and will develop appropriate strategies based on the overall data (for our actively managed discretionary accounts).
We hope that you have a great Independence Day. In spite of all of the challenges and turmoil we are experiencing, we at Lowe Wealth Advisors feel blessed to live here in America and hope that knowing we are working hard on your behalf provides a level of peace of mind. Thank you for allowing us to partner with you in the achievement of your long term goals.
Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice. Not all portfolios are actively managed. If you have a question about how your account is being managed please contact us. Generally accounts less than $150,000 are not actively managed. An Index is a portfolio of specific securities (common examples are S&P, DJIA, NASDAQ), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. Past performance is not indicative of future results.
- Not all portfolios are actively managed. If you have a question about how your account is being managed please contact us.
- No diversification can completely protect against market risk or other risk factors with investing. A diversified portfolio could still lose money.
- An Index is a portfolio of specific securities (common examples are S&P, DJIA, NASDAQ), the performance of which is often used as a benchmark in judging the relative performance of certain asset classes. Indexes are unmanaged portfolios and investors cannot invest directly in an index. Past performance is not indicative of future results.
Foreign investing carries additional risk such as currency risk, political risk and different accounting standards.
*Lowe Wealth Advisors is a registered investment advisor.