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Shoreline Wealth & Investment Management
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The Stock & Bond Markets
There is a lot of talk about "stress tests" for banks. What about the stress tests we've been experiencing as investors? From a market that was down 25% to a market that's now even, many feel as stressed out as they do relieved. There does appear to be a bottoming process in place with respect to the stock market but it's important to remember the market is a leading, not following indicator. The recovery for the economy, employment and consumer spending is still 6-12 months in the future. And given the increased regulatory environment in which corporations will have to operate, the rates of return will be limited but, hopefully, so will risk. This is a great time to dollar-cost-average into the market and maintain a broadly diversified portfolio in terms of asset classes as well as domestic and international markets.
Shoreline uses "strategic" rather than "tactical" asset allocation. This means that specific (and in my case proprietary) models are used with specific percentages in each asset class or market unlike tactical which tries to time the market which hasn't worked consistently.
Corporate and municipal bonds are finally looking attractive relative to Treasury bills, notes and bonds which many invested in due to the inherent safety of Treasuries. The yield for 1-year Treasuries is only about 1%, for 5-year notes about 4%, for 10-year bonds about 4.5% and around 4.5% for 30-year bonds. Investment-grade municipals yield tax free income and are paying about 1.5%, 2.5%, 3.5%, and 5.5% for the same time periods. Similarly, investment-grade corporate bonds are yielding 2.5%, 3%, 5% and 7%. Given the passage of the stimulus package, the higher yields outside of the Treasury market are compelling.
CELEBRATING 29 YEARS
Since 1980, I have been providing financial advice to investors and I'm proud to say that our service and performance (see "Bottom Line" section on the right) continue to be superior to the market and our peers. Thanks for your support.
Real Estate
Finally, some positive news! Pending sales of previously owned homes rose for the second straight month in March and construction spending for new homes rose. While home prices in 20 major U.S. metropolitan areas dropped in February, they did so at a slower pace. The biggest declines were in Phoenix (35%), Las Vegas (32%) and San Francisco (31%). Whether the slowing decline in prices is a sign the market may finally be stabilizing or not is another debate. Regardless, this was welcome news.
The efforts by the Federal Reserve to bring mortgage rates down and the government's efforts to provide tax credits to first-time buyers is providing some relief against a backdrop of unemployment rising to the highest levels since 1983. An additional positive statistic released by the National Association of Realtors showed the affordability index surged to the highest level in 20 years. With price declines slowing, government incentives like the $8,000 tax credit available and affordability improved, this may be a time to buy "selectively." |
| Selecting an Advisor |
Warren Buffet, the most successful investor of the 20th century learned his craft from Benjamin Graham, author of several books including the legendary "Intelligent Investor." This important book has been updated by Jason Zweig who includes 16 key questions to ask your advisor and 11 an advisor might ask ... click here for more details
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| Understanding Stock Market Investing |
Stocks are one form of business ownership. Although most investors are owners of this investment category directly or through mutual funds, not everyone understands how they work (other than seeming to go down immediately after you buy them) or the "classes" of stock ownership. Full Story
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| Gifting: Disinheriting Uncle Sam |
There are many strategies for gifting, one of the many effective ways to transfer wealth before the government gets to share in the estate you have created. Learn More |
| Looking for a Speaker for Your Event? |
Shoreline Wealth & Investment Management has given presentations to Fortune 500 companies as well as many local groups and organizations. If you are looking for a professional presentation on topics ranging from investments to estate taxes to business or tax law, please contact us ... click here for more details
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Thanks for reading. Please send questions or comments.
Sincerely,
Chuck
Charles M. Bloom
Shoreline Wealth & Investment Management
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| Portfolio Performance |
| This is where we provide the performance of our conservative, moderate and aggressive portfolios and compare these to the S&P 500 and NASDAQ Indexes. While they are an important consideration, performance is only a portion of the evaluation investors should consider when evaluating investment management. Other considerations include the risk taken to generate the returns, the quality of the service, the reasonableness of the fees and, more important now than ever, the integrity of the investment manager.
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