10833 Valley View St Cypress, CA 90630
It’s official – we’re moving! We signed a new lease and we will be moving our office two miles east on Katella Ave. Our new office will be twice as big as our current location. Construction is beginning on the build out and we hope to move into the new space in mid December. We will be on the fourth floor of the building, on the corner of Valley View and Plaza, behind the El Torito.
“May you live in interesting times” - ancient Chinese proverb and curse. It is thought that the phrase comes from a saying which means leaders are made in turbulent times. If that is true, I pray the new leaders will come forward and lead us out of this turmoil.
Our markets are changing at a very rapid pace. In response to that, we are working on a new web site. I will have the ability to post a blog comment on the website and you will be able to read my thoughts as often as I post them. This will give us the ability to communicate to our clients more frequently. We are living through a global liquidity crisis and it is causing a financial meltdown of the markets. Even with the turbulent headlines, very few of you have called us. Many of you sent emails, expressing support for us and the stress we are under. One client brought us flowers to cheer us! We appreciate the support you have shown and we are doing everything we possibly can to steer a clear course through these waters. Without a doubt, this is the hardest time I have ever had trying to predict the market. The melt down we had on Black Monday in 1986 was dramatic, but pales, compared to the market of the past few weeks.
An excellent article on the Rescue plan is on the New York Times website called Rescue the Rescue by Thomas Friedman. I think it is correct because the average taxpayer does not understand the magnitude of the liquidity crisis and how it will come to play a part in their lives. The major credit card companies are doubling the minimum monthly payment due from 2% to 4%. I think this is a good thing if some consumers pay off their debts sooner. However, an estimated 40% of cardholders carry a balance from month to month and the low minimums free up cash. Consumers tend to charge the amount that they believe they can afford, via the minimum payment due, not the total amount they can pay. I feel more consumers will not be able to pay the new minimums and begin to be pay late. The average American with a credit file is responsible for $16,635 in debt. For every four dollars paid to a credit card, one dollar is toward a late fee. This will hurt all of us in terms of liquidity and decreased consumer spending.
"Hillary Clinton went from top political cougar to mortally wounded kitty in just three short days, courtesy of John McCain's choice of Sarah Palin." - Jim Woods
An excellent article from The New York Times explaining how we got into the financial crisis:
Recent headlines we have seen in the past month
Dow dives 777 points as the bailout fails to pass; up nearly 500 points the following day
Citigroup buys Wachovia Bank
Lehman Brothers, 158 year old firm, files largest bankruptcy ever
Washington Mutual fails and is bought by JP Morgan
Freddie and Fannie Mae bought by the government
AIG bailed out by purchase of the government for 85 billion
Bear Sterns failed and fell into bankruptcy
Lehman Brothers sells Neuberger Berman
Money market fund, the Reserve, falls below $1 a share
Bank of America buys Merrill Lynch
The market in changing daily; bailouts, bankruptcies, and purchases and sales are taking place on the weekends. My Sunday evening is now spent watching the markets unfold in Asia and Europe. The futures trading give an idea of how the US market will open.
Year to date shows the Dow -18.2%; NASDAQ - 21.5% and the S&P a negative 20.57%. This past Monday (September 29) in particular, the market reacted fiercely to the current events, the Dow dropped -7%; Nasdaq – 9.1% and the S&P – 8.8%.
We have sold positions on a global basis and moved some cash to government securities. We actually had more clients call us about bank failures and where to move their money than to ask us about the stock market. Know that we are working around the clock to address the situation, evaluate, analyze, and determine an outcome for all stocks and mutual funds. If I feel it is prudent to raise cash levels, we will do so, even if it means selling in a depressed market.
October is Breast Cancer Awareness Month
One in eight women will be diagnosed with breast cancer. Have a mammogram and encourage those that you love to do the same. Be diligent with exercise and eat healthy in these stressful times. 70% of those diagnosed do not have a family history of the disease. 87% of women that carry the BRAC gene will develop breast cancer. Please support and donate to the Avon Walk, American Cancer Society and the Susan G. Komen Foundation to find a cure for this disease.
Enjoy the Fall Holidays!
Notes from Carol:
As of this writing, the Senate has passed the bailout package to have the Government act as the lender of last resort and we are awaiting the House vote. What caused the problems and how and why it happened and who should be punished is going to be argued and debated for a long time. But right now the problem needs to be addressed. The banking system is frozen. And if banks refuse to lend money to you, the people, who make the economy run, then the consequence will most likely be a massive recession. The United States makes up 4% of the world population, but its stock market capitalization represents more than a third of the world’s wealth.
Congress is taking its cue from you. I emailed my congresswoman and it took me over half hour to get it through because of everyone that was on the system at the same time.
In regards to our office move, the plan is for our phone number and email addresses to stay the same. The new website should be up Mid-October. We will do our best to keep you informed.
Stay healthy and Don’t forget to Vote!