The Law Offices Of
William A. Massarweh
Estate Transition Professional®
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| Where Do We Go From Here? |
March 2009 | |
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 Greetings!
"The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails."
William Arthur Ward
And so it is that while the stock market is beginning to show signs of a recovery as of this writing, in fact it may have already turned the corner and ready to head upwards, every investor must "adjust the sails" and chart a new path in what can only be described as a financial disaster. The only question to ask now is "where do we go from here?"
The answer I believe lies in defying all heretofore accepted principals of Modern Portfolio Theory which preaches always being fully invested in the Market, and basing that conclusion on the sub-principal that not all asset classes react in the same way to either an Up or Down Market. Well, so much for that as this financial disaster has brought every asset class, and every stock index in every country around the world to its knees begging for mercy.
This financial tsuname has destroyed my trust in Modern Portfolio Theory because it simply does not work. We rode the tech bubble up in the 90's only to give it all back in 2000-2002. We then rode the real estate bubble up and the bull market that ensued for over 5 years, only to give it all back again, and then some. I personally do not think that we will see anything that is "normal" in the market any time soon. Sure, the market may rebound now helped by all the Federal Stimulus, but what lies ahead one or two years out? The state of affairs is suspect and not healthy with a prognosis of more pain to come, its just a question of when and from what source?
To stand Idly by and hope for things to change is not the answer any longer. If you do what you've always done, you'll get what you've always gotten...
This tsunami of a Market Meltdown has victimized both the investment gurus and the unwary. Those who should have been aware, weren't. Yet, We must accept the current condition and focus on where do we go from here? The reality is that millionares are made in every market cycle. It is also true that when there is a forest fire, it is both a disaster of major proportions and an opportunity for new growth.
I have charted a path that I believe places my clients and I in a position to achieve growth in our portfolios notwithstanding the current disaster. I would relish the opportunity to discuss it in detail with each and every one of you. Unfortunately, this newsletter format hinders such a discussion. However, a phone conversation or an in person meeting are very effective. Take the time to set aside 10 minutes for us to talk by telephone. Better yet, set aside 30 minutes and we can cover a great deal more ground. |
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 Breakfast With Bill
Il Fornaio Restaurant
1430 Mt. Diablo Blvd
Walnut Creek
(Across from Nordstrom)
9 AM - 10 AM
Every Wednesday
Allow me to buy you a great cup of coffee and a pastry and let's sit down and talk about what is on your mind. I will explain my plan, there is no charge, and I buy! |
 The State of "Oil"
Oil reached a high of $140.00 per barrel in the summer of 2008, and now hovers around $40.00. If you were going to bet on the direction of oil prices for the forseeable future, what would your answer be?
Before you answer, consider the following factors; 1) The Fed has flooded the market with dollars in an effort to remove as much of the toxic assets off bank ledgers as possible. 2) the effect of more dollars in circulation will surely place devaluation pressure on the dollar, 3) The price of Oil is denominated in the dollar, and 4) with downside pressure on the value of the dollar, OPEC and Hugo Chavez will surely not sit idly by as the $50 a barrel oil is devalued to the equivalent of $35.00.
I believe it is without doubt that when the economy does rebound, and with it China will also rebound, that oil consumption will once again increase. Coupled with a devaluation of the dollar, oil will begin climbing back up and over the $100 per barrel price range.
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What Are "Alternative Investments?"
While stocks and bonds are what we all recognize as the standard investment options, thins like Oil and other commodities, Futures, Currencies, and REIT's are cocnsidered alternative investments. As a rule, alternative investments are not correlated to the stock and bond market and may not be directly affected by the ups and downs of the Dow.
Some portion of a portfolio, like 20%, can be allocated to such investments. If you believe like I do that Oil will rise, then a direct oil investment will make you not only a consumer of oil, but also a seller reapiing the rewards of higher prices. A REIT is a Real Estate Investment Trust. While many REIT's are publicly traded on the stock exchange, many others are non-publicly traded thereby not subject to the ups and downs of the daily market valuations. They generally pay between 6-7% yearly divivdend with a four year redemption option. In a market that is fluctuating up and down, turbulence in a portfolio can be greatly reduced with four years of 6-7% dividends.
Alternatives to stocks and bonds; there are many to choose from and each client will find benefits and faults with different ones. A thorough analysis of your particular situation will uncover whether alternatives are right for you. |
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For Estate Planning and Financial information you can use visit our website at:
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Many thanks for your trust and confidence.
Your estate is as important to us, as it is to you.
Our practice continues to grow by referrals from out clients. |
| Send us your Topics of interest |
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Are you confused about a particular topic? Have you recently read or heard things that have caused you to question what you thought you understood?
Send me an email at Help@eplanlaw.com and allow me to clarify the issue for you. Are there topics you would like me to cover in this newsletter? Drop me an email with you suggestions. |
| Contact Information |
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William A. Massarweh, Esq.
Estate Transition Professsional ®
Estate Planning Attorney
Investment Advisor
2890 N. Main St, Suite 207
Walnut Creek, CA 94597
925-937-9866
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