What a Difference a Year Makes!

The market had a rebound of over 50% in the S&P from the March lows to September. Has everyone jumped back into the market to capture these jaw dropping returns? I would say no. March was the depth of the market decline and fear was palpable. Would the market turn up or continue down brought on by another fear based sell-off? Very few had the conviction and courage to begin investing at that time.  I think most individual investors are still sitting on the sidelines. The inflows into bond funds so far this year prove this to be true.  The majority of inflows into all mutual funds this year went to bond funds.  80% of money flowing into open end mutual funds went this way: 60% to taxable bond funds and another 20% to municipal bond funds.


PIMCO Total Return Bond Fund is the top selling fund of the year and took in $5.5 BILLION in August alone. This one fund now accounts for 13% of the entire taxable bond fund universe to invest in.

I worry over this equity market run up because the volume has been below the normal trading volume. Is a correction still coming? It looks as though most equity investors still believe so and are showing that belief by not reinvesting in the market.  Although some investors have watched the S&P rise and are now concerned they are missing the rally, I think they still have time. It is very hard not to second guess decisions when memories are short. The market was in a complete melt down with financial stocks one year ago at this time. Merrill Lynch, Lehman Bros, AIG were daily headlines. What a difference a year makes!  I am happy to put this past year behind us.

How has the market performed year to date?  The MSCI EAFE (International) index is up 29%; the Dow is up 10.7% and the S&P 500 is up 17%.

 

Everything can be taken from a man but one thing; the last of the human

 freedoms - to choose one's attitude in any given set of circumstances,

to choose one's own way." Viktor Frankl

 

My summer racing recap

 

I did not comment on my racing the last 2 quarters and clients have asked what I have been doing. I did the Redondo Beach Triathlon, Long Beach Triathlon, two mile ocean swim from Balboa Pier to Newport Beach pier, two mile ocean swim from Hermosa Beach Pier to Manhattan Beach Pier, one mile ocean Corona del Mar race and the big swim in Hawaii. On Labor Day, I completed the 2.43 mile swim from Diamond Head, along the Waikiki coast line, and finished at the Hawaiian Rainbow Tower. I swam with many different beautiful fish, giant sea turtles and one six foot ray under me. We swam a half mile off the coast where the water is very deep and crystal clear (unlike our coastline) and you can clearly see the coral and fish you pass over. That was the 7th time I have completed that swim and it is on my life list of goals to complete it 10 times. One more triathlon next week!

 

"Our lives are not determined by what happens to us but by how we react to what happens, not by what life brings us, but by the attitude we bring to life.  A positive attitude causes a change reaction of positive thoughts, events and outcomes.  It is a catalyst, a spark that creates extraordinary results."  Anonymous 

 

 

Asset Planning is proud to announce we were once again included in the 2009 Financial Advisor Top RIA Ranking. This is a list published by Financial Advisor Magazine. We were also blessed to be named one of the Wealth Manager’s “Top Wealth Managers” in the country. This was announced in their 2009 July/August issue. I thank our clients for your continued trust in us to achieve these honors.

 

Sandy

 

 

Notes from Carol:

 

This past week I attended a conference presented by WISE – Women Investing In Security and Education, a philanthropic educational organization that facilitates the financial education of women and girls.  The main speaker was Bill Gross – the bond guru for PIMCO and the fund manager for the fund Sandy mentioned above among others.  The main points that I took away were that the US will not recover to the growth it enjoyed in prior years.  The “new normal” will have GDP increasing at 1-2% for the next few years and unemployment will be around 7-8%.  The exception to this will be the emerging markets.  He sees growth in Brazil and China among others.  He sees the California housing market prices dropping another 10% because of the unavailability of jumbo mortgage loans.  The auto and housing industries are broken and will take time to recover. Consumers are starting to heal by saving more and while it hurts the economy in the short term it will benefit all of us in the long run.

 

Get your flu shots and stay healthy,

Carol