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| J. PINK ASSOCIATES, INC.,
FINANCIAL ADVISORS
555 Taxter Rd. Suite 190
Elmsford, NY 10523
Ph 914-909-1576
Fax 914-524-7771
Weekly Market Review |
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Greetings!
I wanted to take this time to write to you but not just as an advisor who comes across as repeating the company line of stay the course and long term investing beats trying to time the markets.
I do believe all of the above and I do think that those of you who do stick with the long term investment approach of broad diversification, keeping money that is needed in the near term in less risky investments like money markets, CDs, Treasuries and bond funds and keeping the money that will not be needed for an extended period invested in a diversified portfolio will do well. (Please note that diversification does not guarantee against loss).
It is time like these that try your faith, your beliefs and your judgment as to whether or not you have done the right thing for your clients and have given them your best advice. I truly feel that I have given my best advice and will continue to do so. I do want you to know however that I do have sleepless nights worried about my clients and their ability to retire comfortably, send kids to college, pay their mortgage, pay their insurance premiums and just feel that they will be okay.
Those of you who have known me for a long time or just had a recent review or financial plan done by me know that I subscribe to the bucket approach of investing, which means that money needed in the near term is not invested in the stock market and that I strive to create buckets so that the client has 3, 5, 7 or 10 years worth of conservative assets before needing to touch the money that is invested in the stock market. The goal behind this approach is the ability to ride out the bad markets like we are having now, knowing that the money invested in the markets will not be needed for a while and that those assets will have the time to recover. The only way they will have time to recover is if they are left invested.
What I describe in the paragraph above is what I am practicing today in these markets. Though difficult to stomach in these volatile days and days of fear and uncertainty, I do believe it is a winning formula and will help you withstand these tough markets.
Lastly, I just want to take the time to thank all of you who have written to me and thanked me for being here and offering their best wishes and prayers to me in such a tough environment. It means a lot to me and gives me the courage and faith to keep moving forward.
It is times like these that I really earn my pay by helping you make the right choices for your long term security.
Thanks for taking the time to read this and most of all thank you for your business and support.
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| Market Commentary
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The S&P 500 fell 18.2% last week, almost meeting the "20% decline" definition of a bear market in just 5 trading days. It was the worst 1-week tumble for the index since July 1933. The plunge across stock markets worldwide totaled $7 trillion for the week. From its all-time closing high in October 2007, the S&P 500 has fallen 42.5%, making it the 3rd worst bear market in the last 50 years. US stocks have dropped an astonishing $8.4 trillion in value in the last 12 months (source: FT, WSJ).
Leaders of 20 major countries met in Washington D.C. over the weekend to plot the next steps for the central banks throughout the world. The financial framework that may come from the discussions is likely to be played out in the next few weeks. The US government is considering multiple strategies to deal with our financial crisis, including the infusion of capital directly into banks where cash levels had dropped significantly; ending the dearth of lending activity by banks; taking an equity stake in the form of preferred, non-voting stock in banks; guaranteeing inter-bank loans; and lending money directly to public corporations (source: BTN Research).
The last 4 Mondays have produced an average daily loss of 5.3% for the S&P 500, a streak stock investors are looking to end today (source: BTN Research). |
| Notable Numbers for the Week:
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1. PREDICTIONS - At the end of 2007, equity strategists from 12 Wall Street firms were asked to forecast where the S&P 500 would be as of 12/31/08. The predictions ranged from a high of 1750 to a low of 1525. The stock index began this year at 1468. The S&P 500 ended last week at 899 (source: Barron's).
2. DEPRESSION JUNKIE - Ben Bernanke became the Fed chairman on 2/01/06 or more than 2 ½ years ago. A 12/07/05 WSJ article quoted him as saying "I am a Great Depression buff, the way some people are Civil War buffs." Bernanke attributed his early fascination in the Great Depression to conversations he had with his maternal grandmother who had lived through the Depression in Norwich, CT (source: WSJ).
3. BANKS - More than 1,000 banks closed in 1930, 3 years before the Federal Deposit Insurance Corp. was created. 13 US banks have been taken over by the FDIC in 2008 (source: FDIC, WSJ).
4. HOME VALUES - There are 76 million households nationwide that own their home. The number of households that own their home free and clear of debt (24 million) is twice that of the number of households (12 million) that have mortgages in excess of what their house is currently worth (source: WSJ). |
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This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed by NFP Securities, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The indices mentioned are unmanaged and cannot be directly invested into. Past performance does not guarantee future results. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the US stock market.
Securities and Investment Advisory Services offered through NFP Securities, Inc. a Broker/ Dealer, Member FINRA/ SIPC and a Federally Registered Investment Advisor.
NFP Securities, Inc. Is not affiliated with J. Pink Associates, Inc., Financial Advisors | |
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