That's a correction of 8 1/2%.
 
During that time, we saw the astonishingly volatile session on May 6th when the Dow plunged 1,000 points in minutes, apparently due to technical issues. Then, on May 10th, after the announcement of the euro zone bail-out we saw a violent rally; but that only lasted 24 hours. In the last ten trading days alone, the Dow has lost 6 1/2%. Many investors are quite concerned. DWM clients need not be. We'll explain why in just a moment.
 
The markets' stuttering performance reflects continuing confusion about the economic environment and different signals from the "experts" and the media. The U.S. economy is recovering but it is "lumpy" in that the recovery is being felt unevenly in different industries and different parts of the country. Employment is improving but very slowly and real estate has probably not reached its natural price level. Europe is a disaster. And while Asia appears to be doing well, there is concern about China's data, stock markets and real estate.
 
Even so, some experts say the markets will continue "up". Yesterday, the National Association for Business Economics forecast the pace of U.S. growth to pick up in the year ahead as consumers and businesses alike accelerate spending. The majority of these experts are expecting the economy's performance to exceed the long-term norm in 2010 and 2011. The Wall Street Journal reported on May 24th that some veteran managers, including Steve Leuthold and Laszlo Birinyi, have told their clients that we now have a "huge buying opportunity". These optimists point out the the Federal Reserve is committed to keeping interest rates low, that the central bank recently boosted its forecast for economic growth, and companies are reporting stronger profits than expected.
  
However, some "experts" say the markets are going "down." People like Harry Dent and Robert Prechter of the Elliott Wave have been predicting huge downturns in the market for some time.  Dent predicts there will be a steep crash starting anytime in the next few months. Prechter believes that the "waves" of the stock market (based on Fibonacci time relationships) will head down, pushing the Dow under 9,000 over the next several weeks alone and then continuing downward for six years. Legendary investor Seth Klarman is more worried than ever. Last week, speaking to 1,600 CFAs, Klarman compared the financial markets to a "Hostess Twinkie" by asserting "There is no nutritional value and there is nothing natural in the markets."
 
The truth is, no one knows the future. But, affluent, enlightened investors recognize that DWM strategies perform in up markets and protect in down markets.
 
Of course, each of DWM client's circumstances, objectives and risk tolerance are different. But, as a general rule, we can tell you the main components of our portfolios. We invest our clients' money the same way we invest our own money. We are all part of the same investment platform. The portfolios are diversified through various asset classes. The typical permanent long-term investment in equities is roughly 25%. Our portfolios also include a significant amount of fixed income investments, both domestic and international. Lastly, most portfolios include an allocation to non-correlated assets, including real estate, tactical investments, equipment leasing, and other asset classes. All of these investments are actively managed and regularly monitored in our Palatine office. As a result, our typical portfolio outperformed the markets substantially in 2008. Our typical portfolio did well in 2009. And, we expect our typical portfolio will do well in 2010.
 
The short answer to the question is: we don't know what the future holds for the stock market, but we do expect that our investments and those of our DWM clients will do relatively well regardless of what's next.
 
If you would like more details on how we accomplish these results, please send us an email or give us a call.

Now that Washington seems to be overhauling Big Finance, President Obama wants to tinker with "small change". It's not surprising; it currently costs almost nine cents to make a nickel and almost two cents to mint a penny. Larger denomination coins aren't a problem.
 
Actually, nickels contain only 25% nickel; the rest is copper. A penny is a copper-coated coin made mostly of zinc. No coin contains silver anymore. Dan Tangherlini, the Treasury Department's chief financial officer, says that $100 million or more could be saved each year by making coins from more cost-effective materials.
 
Composition of coins is a big deal to many Americans. Rod Gillis, educator at the American Numismatic Association says that "people believe we are still on some sort of precious-metal standard". Americans persist, on websites like coinflation.com, in tracking the value of the metal in their currency. Of course, the Zinc association is not interested in reducing the zinc content in coins. And the Coin Laundry Association, whose owners have machines that recognize the size, weight, and alloy content of current US coins, aren't too keen on a change either.
 
Hence, for now, the government isn't saying what new material it might be considering. Non-metal coins would undoubtedly go over like "wooden nickels". The most likely candidate is an aluminum alloy currently used by other countries.
 
Some have called for the discontinuance of the penny. However, talk like that worries Americans for Common Cents, who see the penny as a hedge to inflation. They reason that without it, merchants would round up to the nearest nickel. In fact, when surging metal prices in 2006 had Congress again looking at eliminating the penny, this group released a study under the title, "Lincoln Penny Still America's Sweetheart Even Though It Doesn't Make Cents."
 
Lastly, there is one group that would definitely like to see a change in the composition of the nation's coinage. That would be the American Academy of Allergy, Asthma & Immunology. Nickel, the most expensive and most commonly used metal at the mint is the most allergy-producing metal in the world. People allergic to nickel who have sustained contact with the metal develop an itchy, poison-ivy-type reaction that can last up to a month.
 
Ultimately, though, one has to ask the question: "Will Nickel-Free Nickels Make a Dime's Worth of Difference?"
 
Coincidentally, if anyone doubts the enduring appeal of American currency, a sale was completed last Thursday of a sparkling 1794 silver dollar for $7.85 million. This coin was believed to be the very first United States dollar ever minted.