|
|
FROM THE DESK OF:
THOMAS M. RIDDLE CPA, CFP
September 2, 2003
(610) 868-9000 X107
MARKET COMMENTARY – ITS “WAIT
AND SEE”
The US stock market rebounded in the spring in response to the stronger probability that the economy will strengthen in the second half of 2003.
But that rise has been followed by a market moving sideways – not moving up or down to any sizeable extent. So, why is the stock market waiting
to make a move? It appears that the market is simply waiting to see if economic data really does indicate that the economy has strengthened.
The economic data that the market is waiting to see will be announced during the
month of September. The first important information is the “back
to school” retail sales data. The back to school shopping season is the second busiest retail sales period of the year. It is highly likely that a strong
back to school season means a strong retail season during the holidays (the busiest season). Strong back to school sales is a big plus for the
stock
market.
The end of September will also bring a flurry of economic data involving jobs, consumer confidence, business activity, profits, home sales, and the
GDP. My opinion is that the US Stock market will scrutinize these reports more than normal. The economic data MUST show a strengthening
economy in order to support the stock market at its current level. If the economic data is disappointing, the stock market will probably drop in response.
On the other
hand, strong economic data sets the stage for a good 4th quarter.
Your portfolio may need to be adjusted in response to these economic reports. So, it’s extremely important that we communicate on or about
September 30. I suggest that you mark your calendar to call me on 9/30. I have cleared my calendar to await phone calls from clients to discuss the
implications to their portfolio and recommended actions.
KEYSTONE SAVINGS BANK ALERT
In the March, 2003 newsletter I gave you the “heads up” that Keystone Savings would be seeking its depositors’ participation in its stock offering.
Some of you may have received the offering documents. Should you participate??? The answer depends upon your financial situation, your investment
time
horizon, and your risk tolerance.
I suggest that you contact me to discuss the risks and merits of the investment and whether this fits into your portfolio.
NATIONAL ADVISORS TRUST COMPANY
- $1 BILLION AND GROWING
Several years ago Valley National and approximately 100 leading financial planning professionals from across the country formed a nationally
chartered Trust company. The goal of the endeavor is to bring trust services to you, our clients. Not only has the National Advisors Trust turned out to
be successful, but it has hit an important milestone – one Billion dollars of client’s trust and custodial assets are now held (from the clients of the 100
financial planning
shareholder firms). National Advisors Trust is one of fastest growing trust
companies in the United States.
There are two reasons for the growth. First, investors are skeptical of big impersonal, sell anything, national conglomerates and they feel
comfortable having their trust and custodial assets held by an independent trust company, owned, in part, by a financial advisor they know and trust.
Second, while clients want a strong personal relationship with a local financial advisor, they also want an array of investment and financial services a small
firm could not
offer on its own.
We helped start National Advisors Trust because we realized our clients needed our personal attention as well as access to a range quality trust and
custodial services.
A GUIDE TO FIXING YOUR
401(k)
Be honest: How
long has it been since you last gave your 401(k) a tune-up? The most likely
answer: Too long.
Most investors these days can be forgiven for not wanting to even open their 401(k) statements, much less take time to get their investments back
on track. Though the stock market has regained some ground this year, the value of most Americans’ 401(k)s is still lower today than in 2000. So, how
are most people dealing with the
problem? By not doing anything.
Is “not doing anything” the right thing? It is true that most investors have heard the message from experts that they should stay the course and invest
in their 401(k) for the long term. But, they have misinterpreted that to mean they should leave their asset mix unchanged. Instead, 401(k) investors
should decided how much of an investment risk they are willing to take and then check their portfolios every year to make sure that market changes have
not warped their planned allocations.
We call this check up process “rebalancing the portfolio”.
Rebalancing is the process of comparing the percentage of 401(k) investments now in stocks, bonds and guaranteed fixed accounts to the
percentage in your target portfolio (the target is dependent upon your risk tolerance). Then, make switches in your 401(k) to bring it into balance with the
target portfolio.
Morningstar has a great program for rebalancing 401(k) s. We subscribe to this service. If you would like this Morningstar analysis on your 401(k),
please contact me.
PERSONAL NOTES
Last weekend, my wife Jo Anne and I trucked our two daughters off to college. The younger daughter Jennifer is attending St. Joes for her
sophomore year as a Marketing major.
My older daughter Erika completed her undergrad work at Lehigh in May and now has returned to Lehigh full-time for her Masters in Accounting
and Information Systems. She will receive her Masters degree next spring – just in time to sit for the CPA exam in May 2004. Pennsylvania as well as
many other states requires a Masters degree for a new CPA licensee. Erika just completed an internship at Price Waterhouse in Manhattan, and the
current plan is for her to return to Price Waterhouse for CPA experience requirement.
As always, if you have any questions regarding any of this information or any other financial planning issue, please feel free to call me at
(610) 868-9000 x 107. I am happy to help you.