We thought you may be interested in our Year End 2010 Economic and Market Summary.
 
As we head into 2011, we continue to see signs of the gradual economic recovery.  Our major concern as we look forward is related to the bond market, not the equity market.  A recovering economy, strong corporate profits and cash flow, and reasonable valuations leave us constructive on the equity market.  The bond market, however, is likely to face greater interest rate risk as the year progresses.  Inflationary pressures are mounting and could begin to move interest rates higher throughout the year, putting pressure on all bond prices.  The U.S. Treasury market and the municipal bond market are more risky given the credit concerns at both government levels.  As we point out in our year end letter, many municipalities are facing increasing debt strain with reduced revenue and cash flow.  Budget shortfalls are occurring around the country.  Combining the current low yield with the interest rate risk and the credit risk leaves us pessimistic when analyzing the bond market.  We are encouraging investors to seek alternatives to traditional fixed income for risk control and the opportunity to earn a competitive return.
 
So which alternatives may make sense?  First, our tactical investment strategies such as Diversified, Tactical Allocation and High Yield Bond programs (which offer risk control and downside protection with the potential for competitive returns) are great alternatives to traditional fixed income portfolios.  Or, consider adding a portfolio of high-quality, dividend-paying large capitalization US equities.  We have enclosed a white paper on dividend income stocks titled 'Power of Dividends' courtesy of Oppenheimer Funds.  We have been advocating dividend stocks since late 2009 and continue to believe that they offer a risk-controlled, high-yielding alternative to the fixed income market for a portion of investor portfolios.  Our dividend income portfolio currently offers a 4.2% yield with attractive valuations and it holds approximately thirty of the largest and most stable U.S. businesses. 
 
Please feel free to call or email with any questions.

Your Braver Wealth Team

Dave D'Amico         ddamico@thebravergroup.com
Brad Sharp             bsharp@thebravergroup.com
Debbie Levenson     dlevenson@thebravergroup.com
Charlie Toole          ctoole@thebravergroup.com
Joe Ludwig             joeludwig@thebravergroup.com
Judy Ludwig           judyludwig@thebravergroup.com

Download PDF:  Year End 2010 Economic & Market Summary

Download PDF:  The Power of Dividends in a Slow Growth Environment