Market Summary
FEBRUARY 2014

As I mentioned in last month's newsletter, our belief was that a pullback in equity markets was due in the January/February timeframe.

 

And, as I write this newsletter on February 11th, that is exactly what has happened, with the S&P 500 reaching a low of close to 6% and the Dow Jones losing nearly 7% to start the year.

 

So, now the question is, is this just a normal, healthy pullback or will it morph into something greater?

 

Let me start by defining a few terms that everyone hears on TV but may not quite understand what they are.

 

A market PULLBACK is defined as downturn of less than 10%.

 

A market CORRECTION is defined as a downturn of 10%-20%.

 

A BEAR market is defined as a downturn of greater than 20%.

 

While we are currently only in a market pullback, there are a few factors that do have us somewhat concerned that this could become a market correction.

 

1. Bad economic data showing the Chinese economy as slowing down sent jitters throughout Asia and Europe, and started the U.S. markets slide.

 

2. The job numbers and economic data such as manufacturing, factory orders, auto sales and new home sales here in the U.S. has been negative. (Source: ProfitConfidential Newsletter Feb5)

Our Management Philosophy

Limit downside risk and provide clients a reasonable rate of return over a market cycle.

 

With over five decades of combined money management experience in South Texas, you can be sure that Walter and Anthony Reyna have seen it all. This father-son pair built and developed Walter J. Reyna Inc. on the importance of hard work and strategic planning and continue to implement these core values in their business today.

 

The Reynas believe that wealth accumulation and protection are the result of exceptional planning, not luck. Visit our website to learn more.

 

Walter J. Reyna, Inc.
5315 North McColl Road
McAllen, Texas 78504 
956.682.4196 

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Market Summary Continued

3. Corporate earnings growth has fallen to its lowest levels since 2009. (Source:  Lombardi Crisis Profit Alert Jan 31)

 

4. Finally, the catalyst behind last year's market uptrend is slowly coming to an end, as the Fed has now pulled back $20 billion of monthly stimulus funds, and is expected to keep subtracting at a rate of $10 billion a month. (Source: Yahoo!Finance Feb 11)

 

From a technical standpoint, we have seen some breakdowns in support in the major market averages, with the S&P 500 breaking through the 100 day moving average decisively last Monday for the first time in over a year.  This has caused us to reduce our equity exposure some, to protect against possible further breakdowns.

 

Last month, it was mentioned that the possibility of a larger downturn looms a few months away.  Could it be that this is it?  Maybe.  We are cautious, but we are not ready to make that call yet.  It may be that further downside moves could set up for buying equities at more reasonable prices.

 

One last note...Last year's laggard, Gold, just so happens to be this year's leading performer so far, up over 3% as people look for safe havens to protect themselves.

 

Visit our website to learn more

 

For more information about your portfolio performance, please refer to your personalized statements or contact us. Regulatory restrictions prevent us from reporting personalized performance data in this newsletter. See below for important disclosures. 

Portfolio Insights
(1)The S&P 500 Index is representative of domestic markets and includes the average performance of 500 widely held common stocks.  Individuals cannot invest directly in any index and unlike investments; the S&P 500 Index does not incur management fees, charges, or expenses. (2) All Statistical information, investment category determinations, and economic data retrieved from www.bloomberg.com. Past performance is no guarantee of future results and all investment strategies involve the risk of financial loss. 

 

This publication is proprietary and limited to the sole use of Walter J. Reyna, Inc. clients.  Client portfolios are designed for the moderate investor but are actively managed on a monthly basis and may not follow traditional risk adjusted asset allocation models. Walter J. Reyna, Inc. maintains full discretion over said accounts and manages as deemed necessary. Clients with questions about the fees associated with their discretionary advisory account should refer to their advisory agreement. The information contained herein is for illustration purposes only. It is not necessarily complete, does not include client directed investments, and its accuracy is not guaranteed by Walter J. Reyna, Inc.  All clients should reference their periodic statements for accuracy. All clients needing additional information about holdings in the portfolio, including the objectives, risks, asset class and costs associated should refer to their respective prospectus. If you have received this communication in error, please notify us immediately by e-mail or telephone.  Neither the information, nor any opinion expressed constitutes a solicitation nor investment advice, for the purchase of any future security referred to in the Advisory Newsletter.  Investments offered through Registered Representatives of Lincoln Financial  Securities Corporation, member SIPC.  Lincoln Financial Securities Corporation and Walter J. Reyna, Inc. are not affiliated.  

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