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Journey with DWM to
What's Next
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Some economists say "up" and some say "down". 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. Regardless of what the future holds, with DWM, savvy investors are ready for what's next. | |
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Business: Beer: This Domaine DuPage is for You! | |

So, what will it be on a hot summer's day? A Budweiser or a Domaine DuPage?
If you selected Domaine DuPage, you're one of a growing number of Americans who are switching to a beer for the more "refined palette", choosing a craft beer or microbrew instead of the low cost, mass-produced beer.
Overall, beer consumption is declining in developed countries, like the United States. Anheuser Busch reported its total volumes dropped 2.5% in America and Western Europe in the last year. Smaller companies, like Duvel of Belgium, on the other hand, expanded sales in Belgium by 24%, the Netherlands by 17% and in France by 10%. Duvel CEO Daniel Krug puts it this way, "We want to appeal to people who are drinking ordinary beer and want to drink something a bit better." Boston Beer Co, which brews Sam Adams, has been a model for Duvel. Both share a similar formula: high prices, tasty beers, creative marketing and an emphasis on mature customers. Companies like Anheuser Busch are now looking to Asia, Russia and Latin America for their growth.
In the U.S. much smaller brewers, know as craft brewers, are having great success. An American craft brewer is a small, independent and traditional brewer.According to the Brewers Association, craft brewers accounted for 4.9% of all beer sales in the U.S. in 2010 by volume and 7.6% in dollars.There was 11% growth in the industry in 2010. Craft brewers currently provide 100,000 jobs in the U.S.
The craft beer industry is defined by four distinct markets: brewpubs, microbreweries, regional craft breweries and contract brewing companies. Microbrewers produce less than 15,000 barrels of beer each year (there's about 31 gallons in every barrel) with 75% of its beer sold offsite. A brewpub is a restaurant-brewery that sells 25% of more of its beer on site. A contract brewing company hires another company to produce its beer while handling the marketing, sales and distribution itself.A regional craft brewery is an independent regional brewery that has either an all malt flagship or at least 50% of its volume in all malts or in beers which use adjuncts to enhance rather than lighten flavor.
In 30 years, craft breweries have grown from less than 100 nationwide to 1,759 at the end of 2010.Small local breweries are not a new idea. Before the days of refrigeration, most towns and villages had a brewery, as beer could not be transported before it went bad.After refrigerated transport became possible, most local brewers were closed down in favor of the larger more consistent brewers such as Anheuser Busch and Miller. During the years of prohibition, all beer was home brewed. It was at this time that the microbrewery was reborn.
Taste, body and overall flavor of microbrewed beer certainly exceeds that of the major brands. The majority of microbrewers produce ales and lagers,generally more robust than regular beer. Microbrewers claim that once a customer drinks craft beer, they never want to return to the bland, pale peer that comes in a can.
Two great microbreweries in the Chicagoland area are the Three Floyds Brewing Company in Munster, Indiana and the Two Brothers Brewing Company in Warrenville, Illinois. The Three Floyd's first brew house was an old 5 barrel kettle fired by a wok burner with an old open Swiss cheese tank for fermentation. Today, Three Floyds is still considered a very small brewery even by micro brewery standards. Yet, its limited production from its 35 barrel brewhouse is in such demand, that it is all distributed locally. They describe their flagship beer, Alpha King, as big American pale ale that pours deep amber with a creamy head."
The Two Brothers Brewery started in Warrenville much like Three Floyds.Jim and Jason Ebel opened for business in 1996.They had spent time as ex-pats in Europe and learned the diversity and culture of European beers. Upon returning to the States and with virtually no opportunity to drink craft beers, they decided to begin homebrewing to replicate the beer styles they had come to love. Their first brewhouse included a 15 barrel kettle and milk tanks, donated by their grandfather, that were converted to fermenters. Today they have a 50 barrel brewing system and a new 40,000 square foot facility. One of their top sellers is Domaine DuPage, "inspired by the brothers' time in France, this food-friendly ale is deep amber in color, with a toasty and sweet caramel start. Bon Appétit.
http://online.wsj.com/article/SB10001424052702303499204576389473593410488.html |
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Detterbeck Wealth Management
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Palatine, IL 60067
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Adertising: Geico-Finding an Easier Way to Save Money |
Geico has featured some great advertising characters- the gecko, the cavemen, the Rod Serling clone and others. The look and style of the ads vary, but the core idea is always the same: saving money. The idea behind multiple campaigns is to attract attention without boring viewers/potential customers. Geico spent $745 million in major media advertising in 2010, up 21% from 2009. Warren Buffet, owner of Geico parent Berkshire Hathaway, indicated he would spend $2 billion on Geico ads "if he could." The campaigns are working. Geico has been growing at roughly 10% per year and gaining market share with its advertising. Their premium volume is closing in on Progressive Insurance, the industry's leader. Progressive's ads are the ones with the hyper-enthusiast sales clerk.
Some of the memorable Geico television ads include:
- A man looks at his most recent auto insurance bill with his dog at his side; the dog, finding out his owner spent way too much money rolls on the floor laughing.
- Actor Mike McGlone, doing his Rod Serling impersonation, and rhetorically asking, "Do the Waltons take way too long to say good night? (Cuts to scene of Waltons saying "good night" numerous times.)
- A man, whose insurance company didn't offer a loaner car left his house while covered in magnets and "bummed a ride" by attaching himself to a passing car.
- The gecko is part of spokesperson auditions and while on his way to the audition, he runs into the Taco Bell Chihuahua saying, "Oh, great, a talking gecko."
That Gecko is great. What a brainstorm.
The Gecko, a green reptile with a Cockney accent, has been a great mascot for Geico. The idea for the Gecko grew out of a creative session by the Martin agency in the late 90s. The Gecko made his debut in the 1999-2000 television season. The name "Geico" was often mispronounced "Gecko" and, after a quick doodle of a gecko appeared, a star was born.The Gecko was voted America's favorite advertising icon in 2005. Geico's website salutes the Gecko: "His constant good cheer, insatiable need to meet people, and natural tenacity all make him perfectly suited to help people find outstanding values on insurance."
Now, so we don't get bored, Geico is adding another campaign. It will again feature the concept of how spending 15 minutes with Geico can help save money on insurance purchases. This time, the new campaign will use exaggerated humor to depict some difficult, and possibly unpleasant, attempts at saving money.
The New York Times on Friday identified some of the new spots, including "teaching a 5-year old to dunk a basketball so that he may eventually land a college scholarship, economizing on sushi by foraging in your fish tank, replacing the human workers at a day care center with robots and avoiding the expense of downloading music by teaching pets to play songs." The new ads are all about an "Easier Way to Save" campaign.
The ads attempt to demonstrate that it's easier to spend 15 minutes at the Geico website than it is, for example, to teach a 5 year old to dunk. For many families these days, finding an easier way to save money, really hits home.
Here's another Geico youtube we really like:
www.youtube.com/watch?v=8F_G2zp-opg
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World: China on the Fast Track |
Last week, China proudly launched its high-speed railway from Beijing to Shanghai. Running at over 200 miles per hour, the sleek electric train cuts the travel time of the 820 mile trip from China's two most important cities by nearly half, to just under five hours. 90 trains will run a day in each direction.It's another example of the boon in China.
China last enjoyed a golden age some 250 years ago, at the height of the Qing dynasty.Now, some Chinese leaders say that, thanks to the Communist Party and its economic prowess, another shengshi, or age of prosperity ,has arrived.
Last year, China became the world's biggest manufacturer, displacing America. In less than a decade it could become the world's largest economy. China recovered rapidly from the global financial crisis and operates at a surplus while the countries in the West continue to struggle economically. Wen Jiabao, China's prime minister, attributes much of the success to socialism which enables China to "make decisions efficiently, organize effectively and concentrate resources to accomplish large undertakings."
The high-speed rail system is a perfect example. China now boasts the world's most advanced fast rail system. Just as building the interstate highway system a half-century ago made modern, national commerce more feasible in the United States, China's rail rollout is helping integrate the economy of this sprawling, populous nation.
Work crews of as many as 100,000 people per line have built about half of the 10,000 mile network in just six years, in many cases ahead of schedule. The Beijing to Shanghai line was not originally expected to open until 2012. The entire system is on course to be completed by 2020.
It's more than just civil engineering. China's manufacturing might and global export machine are likely to grow more powerful as the high speed trains will link cities and provinces that were previously 24 hours or more by road or rail from the entrepreneurial seacoast. Airports are being limited to the largest cities, as high-speed rail handles transportation, both commercial and personal, to and from second tier cities.
Around China, real estate prices and investment have surged in the more than 200 inland cities that have been connected by a bullet train to China's busiest and most international metropolises. Urbanization for China is a particularly important goal for the future.Urban workers earn more, which increases the country's GDP and provides more money for consumption from within. Currently, 40-50% of the Chinese population lives in the cities.Inland provinces, such as Chongquing, are offering peasants inducements to become urban hukou card holders and thereby receive welfare benefits. China hopes to attain 70-80% of the population living and working in the cities by 2020. The bullet trains will help make that happen.
The Beijing-Shanghai line took only three years to build.With a cost of $34 billion, it may never recoup its costs.Still, bullet trains connect the country and promote more urbanization. It is only a matter of time before the cities pull up to the stations, rather than the other way around.
For more information: http://www.economist.com/node/18832092
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Ask DWM:"Please Compare ETFs to Mutual Funds" |

ETFs ("Exchange Traded Funds") have been around since 1990. Currently there is $1.5 trillion invested in 2,700 ETF funds, almost as much as all hedge funds. The original idea was to create portfolios of shares replicating a stockmarket index, such as the S&P 500. Since then, ETFs have expanded to fixed and alternative asset classes as well. They also now include funds that are leveraged, inverse (which aim to go up when the index goes down) and even leveraged inverse ETFs. The appeal of ETFs has been primarily in stocks, where they have been mainly index-based and generally offer great tax efficiency and lower costs than most actively managed mutual funds.
Managers of mutual funds ("MFs"), on the other hand, have much more flexibility in what they can buy and sell. Holdings can be switched or asset classes trimmed as managers attempt to capture gains-or stem losses- in all market conditions. In comparison, the typical ETF loses value when the markets fall since, by definition, it simply replicates the market.
A good example is Pimco's Total Return MF (PTTRX), a holding of many DWM clients. In the last five years, PTTRX has returned 8.4% per year, after expenses, beating the Barclays Capital U.S. Aggregate Bond index by 2.3% per year. Yes, an investor could have paid only .20% operating fees with the Aggregate Bond Index ETF (AGG), but their net return would be have been 2.5% less per year than PTTRX. Kiplinger's describes Total Return's performance as "stunning."
In summary, both ETFs and MFs provide broad diversification and professional management.Here's where they generally differ:
1. ETFs are passive and track an index whereas MFs are actively managed.
2. MFs are more flexible as fund managers attempt to outperform the benchmark. ETFs typically mirror an index.
3. ETFs can trade all day long, MFs trade at day's end.
4. ETFs disclose holdings daily; MFs do not.
5. ETFs are more tax efficient since they generally don't have as many trades as similar MFs.
6. Operating expenses for ETFs are typically less than MFs. However, ETFs have transaction fees when buying or selling like stocks do, while most MFs purchased through Schwab have no transaction fees.
At DWM, our first goal is to protect clients' assets; our second to grow them. We use both ETFs and MFs, along with other securities, to accomplish these objectives. Of course, each client's circumstances and objectives are unique, so this work is done in a very customized way.
Researching, selecting, implementing, monitoring, rebalancing and choosing between ETFs and MFs are core elements of our business. We enjoy the work and we enjoy discussing it. Please let us know if you would like to talk- anytime. |
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