Don't Get Caught In THIS Interview!
The headlines this morning for the market "Stocks Open Sharply Lower" in and of itself is a good reason why you should read this weeks briefing room. Don explains why we are not participating in this market. This morning's large losses in the market shows that our outlook on the situation is correct.
It appears in the Euro Zone's infinite wisdom putting their big deal together, that they missed some unexpected consequences. Many institutional investors are ditching the bonds (loans) of Euro Zone Countries, which is making it more expensive for these Countries to borrow. This is akin to your credit rating dropping like a rock, so when your loan comes due at the bank and you must refinance it, the interest rates go through the roof. The only thing keeping Italy and Spain interest rates below 7% is the European Central Bank's buying up the slack as best they can. This is like having your dad be the president of the bank, but soon he must report to the board (the market).
We will continue to watch these developments as they create major amounts of volatility for our markets. You can rest assured we are doing everything in our power to insulate you from the negative developments that will only continue and probably get worse.
The bright side? These sharp downturns always create nice upturns. It doesn't take too many of these upturns to make for a nice annual return.
I've updated the chart for our Moderately Aggressive and Moderate Models. I also included the risk and reward tables. Our value, spoken in terms of return compared to the S&P 500 is about 12% for each. You can see by viewing the charts that the ride is a little smoother for the moderate model. Both actually have positive returns while the S&P 500 is down 12.84% from its high (Current Draw Down). This has been accomplished with substantially less volatility than the index.
It appears in the Euro Zone's infinite wisdom putting their big deal together, that they missed some unexpected consequences. Many institutional investors are ditching the bonds (loans) of Euro Zone Countries, which is making it more expensive for these Countries to borrow. This is akin to your credit rating dropping like a rock, so when your loan comes due at the bank and you must refinance it, the interest rates go through the roof. The only thing keeping Italy and Spain interest rates below 7% is the European Central Bank's buying up the slack as best they can. This is like having your dad be the president of the bank, but soon he must report to the board (the market).
We will continue to watch these developments as they create major amounts of volatility for our markets. You can rest assured we are doing everything in our power to insulate you from the negative developments that will only continue and probably get worse.
The bright side? These sharp downturns always create nice upturns. It doesn't take too many of these upturns to make for a nice annual return.
I've updated the chart for our Moderately Aggressive and Moderate Models. I also included the risk and reward tables. Our value, spoken in terms of return compared to the S&P 500 is about 12% for each. You can see by viewing the charts that the ride is a little smoother for the moderate model. Both actually have positive returns while the S&P 500 is down 12.84% from its high (Current Draw Down). This has been accomplished with substantially less volatility than the index.
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