Market Summary
June 2014
For our June newsletter, we wanted to share an interesting blog with you. This is from Sy Harding at StreetSmartReport.com. Have a read and let us know your thoughts!

Do the Very Rich Have it Right to be Holding on to So Much Cash? 

A Reuters report out of London yesterday seems to indicate the world's wealthiest people are more concerned right now about high risk of losing wealth than the potential of adding to their wealth.

The report says that the world's wealthiest investors have raised cash levels to more than double what they held in 2006 and 2007, prior to the 2008 meltdown. The report notes that a survey of 4,000 "rich investors" by Legg Mason shows they are holding an average of 26.5% in cash. An estimate by Wells Fargo Asset Management puts cash among its wealthiest clients at 40%.

Those are huge numbers given that the very wealthy do not have it as easy as ordinary investors to sell a significant percentage of their holdings to move to cash. (Yet, we always learn after market plunges that even those with huge mega-holdings, like Warren Buffett, billionaire hedge fund managers, and other members of the "top 5%", somehow managed to quietly raise many billions in cash prior to market tops, and put it back to work at the lows, scooping up beaten down stocks and indexes at their lows).
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.

 

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Market Summary Continued
We have to remember that they turned very defensive last year, and got it wrong, under-performing last year's big market gain.

We also had quite a list of warnings last spring from so-called 'smart money'.

To recall just a few; Leon Black, founder of $114 billion Apollo Global Management said, "With stocks having more than doubled since 2009, it's time to sell. We're selling everything that's not nailed down." Billionaire investor George Soros was so convinced a serious decline was imminent that he bought a $1 billion Put option against the S&P 500. BofA/Merrill Lynch's report of its client's trading patterns in June of last year, showed that its institutional clients had been selling to raise cash since January, pulling $10.7 billion out of stocks, while its retail clients had poured $7.4 billion in.

And retail investors were right to ignore the risk, the 'smart money' was wrong to be concerned about it.

This year, according to the Reuters report the very wealthy have raised even more cash. George Soros was reported to have increased his bet against the S&P 500 from $1 billion to $1.3 billion. Corporate insiders are selling at a very heavy pace, and so on.

Will they be wrong again? Could be.

However, they did not get to be the very wealthy by being wrong very often.  

 

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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