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Shoreline Wealth & Investment Management
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The Stock & Bond Markets The Big W? The Big V? This is the big debate on Wall Street as economists, strategists and firms analyze data and make strategic decisions for themselves and their clients. While those decisions should be one and the same, history has shown some firms betting against advice they were giving their clients. That said, the question is whether our economy hit a bottom in March 2009 and is continuing to recover from that point (a "V" shaped recovery) or whether there will be another test of the lows before a longer and more sustainable economic recovery ("W" shaped). Honestly, I don't know and there is enough debate among the "experts" to suggest either possibility. Consequently, and as always, I'm recommending broad diversification in asset classes (stocks, bonds, cash) and within each asset class as well as domestic and international investments.
This month, rather than enlighten my readers with my own bond commentary, I wanted to pass along some pearls of wisdom from Bill Gross, manager of not only the world's largest bond fund but also the world's largest mutual fund with assets in excess of $1 trillion. He suggested that bond are priced for near depression rather than recession. "A multi-generational acceptance of debt available for the asking became so large that the interest burden and probability of repayment overwhelmed borrower and lender alike in near unison. Humanity's free will is infected with greed, avarice and hope as opposed to common sense. Baby boomers around the world will demand a disproportionate share" of that debt we have allowed. "Now the financial reaper is at the door, scythe and financial bill in one hand with the other knocking on door after door of previously unsuspecting households and sovereigns to initiate a standard of living death sentence." Cheered up yet? The yield for 1-year Treasuries is only about .3%, for 5-year notes about 2.0%, for 10-year bonds about 3.2% and around 4.1% for 30-year bonds. Investment-grade municipals yield tax free income and are paying about .5%, 1.9%, 3.1%, and 4.5% for the same time periods. Similarly, investment-grade corporate bonds are yielding .8%, 1.9%, 3.2% and 6.4%. Shoreline continues to recommend playing it safe and staying on the short-to-intermediate side of the yield curve. For those worried that inflation make negatively impact bond values but still prefer the safety and income offered by bonds, this may be a time to consider "inflation-protected" Treasuries.
CELEBRATING 30 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
There are signs that without government incentives, the housing "recovery" won't be able to sustain itself. New home sales in May dropped 33% to the slowest level on record (47 years) representing, also, the largest monthly drop on record. And those declines were not limited to the sunbelt states (California, Nevada, Arizona and Florida) but consistent in every region throughout the country. These numbers suggest the possibility of a "W" shaped recovery (down, up, down, up) rather than the "V" shape economists and those within the real estate related industries were hoping for. Real estate should be looked at as a longer-term investment and not an asset designed for "flipping" or using as a bank account to fund lifestyle choices. Those willing to understand the market relative to where they are (location, location, location) will continue to find under-priced properties that will out-perform over the long-term but patience will be a mandatory component for any buying decision. |
| 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 |
| Understanding Bond Investing |
Bonds were the number one asset category in 2000, 2001 and 2002. This was due to a "flight to quality" from stocks as the dot-com boom crumbled as well as interest rates declining to the lowest level in 45 years. While rates jumped in the past couple of years , further increases in rates seem unlikely. And bonds do pay a 300% premium to just leaving excess cash in money market accounts or CDs ... Full Story |
| Offshore Trusts: Disinheriting Uncle Sam |
As a well-established asset protection strategy, "offshore" trusts provide protection for your assets and may also be the right vehicle to use to diversify your portfolio by investing internationally ... 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. find out more |
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