2003-2004 News Archive

December 6, 2004

555 Elm Street

Again the fourth quarter saves the year, providing bountiful stock market returns. Diversified portfolios swell, with bonds dipping slightly as stocks soar. International stocks and bonds should continue strong against the weak dollar. All bets are off for the 2005 market performance, so we should enjoy the present while it lasts. This good news is a pleasure for me to enclose for the holidays.

From starlight and candlelight to roaring Yule logs, fires brighten our winter holidays. The gentle message of the season abides in the warm hearts and tender affections that would have no one cold or forgotten or left behind. Peace on earth includes forgiving old injuries, welcoming the unexpected and sharing our hearth with a stranger. Only the wish is easy. Still, each offering fans the glowing embers that would light the world in peace.

Another year dips to its close and already we face the fifth year of the new millennium. Whatever the new year brings, we will work our way through it. I hope you have the happiest of holidays.

November 8, 2004

555 Elm Street

Investment markets closed with mixed results for October; the DOW dropped slightly while the S&P and the NASDAQ rose. International stocks and bonds gained and REITs continued strong. Diversified portfolios averaged an increase of over 1.5-% in October. That translates to a comfortable eighteen percent annual rate of return for the month. With the DOW at its recent lowest point, October provided an optimal time to invest available cash.

Now that the election (and the World Series) is decided, we anticipate a strong year-end in the markets. A ten-percent return for 2004 is quite possible for diversified portfolios, which have averaged five-percent this year already, and should be entirely acceptable after the struggle of the past ten months. We expect Greenspan to continue gradually increasing interest rates. This will keep bond prices low and give stability to the economy, while stock prices are unaffected.

The last weeks of the year approach at a mad gallop. The herd of holidays distracts from the dwindling daylight. Preparations tied to traditions and family and friends and all we hold sacred require lists and organization and expeditions. For the most part, all this is warming against the cold, heartening against the dark, and energizing for the brace against oncoming winter. Humankind has arranged things well to fill the closing year with heartful celebrations.

October 12, 2004

555 Elm Street

The nip of a first frost braces hardy plants. Some herbs intensify their flavor after this signal that their season is spiraling out. I noticed a bee spent a cold night on the last flower it visited, unable to fly back to the hive until the sun warmed it the next day. Cyclic change comes gradually, in uneven steps, signaled by brief clear signs that repeat with increasing intensity. Staying tuned in allows preparation; responding offers prosperity. What does not want to thrive?

For September, portfolios grew. Tech-leaning funds led the gainers. Health care often runs opposite to tech and this was the case this month, with health care just breaking even. Again, small companies out performed larger companies, and international returns held strong.

Considering the quarter, however, September is a reversal of the first two months. Over the months of July through September, REITs hold a strong lead, bonds flourish in spite of Federal interest rate rises, and only specialized, international and value stock funds hold positive. Overall, stock values are negative over the quarter. With diversification, portfolios held just about even with June end values. This is good news for a summer period, when stock portfolios expect a modest decline. The fourth quarter is generally the strongest for stocks. We can expect a rally there once someone (anyone) wins the election. We need this rally to carry stocks into positive territory for the year. Bonds and REITs have ruled 2004 so far, and balanced portfolios already hold gains this year.

In recent news: popular demand for Google pushes its stock to new highs. Also, the SEC began investigating brokers for abuses in their fee-based accounts. While we use TD Waterhouse to execute trades, your accounts are not brokerage fee-based, nor broker related. You're outside this one.

September 4, 2004

555 Elm St
  Summer Diversions

With strong economic indicators prevailing, the market tiptoed back over the last half of August, almost as if afraid of being caught on the rise. Diversified portfolios closed ahead this month, despite the initial steady downturn. Market volume continues the lowest level of trades this year, but if the RNC closes without incident, the markets seem poised to rebound in earnest. REITs continued to lead monthly gains. More conservative stocks again performed better than growth stocks, as tech stocks languished. Health care returns picked up with the recent rise and bonds beamed past the August step-up in interest rates without a flicker. As in July, portfolios look much more encouraging at the end than they did mid-month.

The release of Google IPO stocks was a good distraction in mid-August, as the market quietly turned around. The darling of the Internet search engines is trading at over $100/share after going as high as $113. From today until March 2005, insiders are allowed to begin selling their 207 million GOOG shares. This may depress the price and create a buying opportunity for other seekers to buy in and "Google it". We can expect Google stocks to fluctuate erratically for the next few months.

The Season Ahead

The last month of summer often slips away under the anticipation of autumn. More warm sandy beaches between the toes, more fresh peaches, plums and melons, more ice cream cones, more early morning walks must pile onto summer's bounty before the days give way to crispy autumn. While families and educators return to scheduled lives, we all wonder where the sunny weeks go. From the bees we learn that these late golden days mean more honey for the winter ahead. Sharing the good times and preparing for the hard times, these are the seasons of what we do.

August 5, 2004

555 Elm St
  Cool markets ...

July markets suffered election jitters and tossed off strong corporate gain reports as only temporary good news. Investors often ignore politics, unless the economy and investing climate are sub-par. Statistics from the Wall Street Journal indicate that since 1901, the Dow stock market index has averaged 7.2% annual gain under Democratic presidents and 3.7% under Republicans, with the best gains under a Democratic president and Republican Congress. The thing to remember is that economic concerns drive the market: investors are watching corporate earnings, the price of crude oil and interest rates. Bulls and bears agree that we can anticipate only 5-7% average annual returns in stocks for the rest of this decade. That is an educated guess.

During the summer months, markets drift on low trading volume. Most investors are distracted by vacations, so a small number of trades determines whether buying or selling dominates the day. Diversified portfolios lost about 3% on average over the month, with only REITs and bonds gaining ground. Value stocks fared somewhat better than growth stocks.

... to match the weather

Braced for scorching days, we float through the gentlest of summers. If global warming brings extremes in weather, this is one we can enjoy. Harvesting the fruits of labor - with a breeze - this could be summer on an island off the coast of Maine. Add the scent of sea air and you're transported. It's a powerful thing, imagination.

July 12, 2004

555 Elm St
  Dancing with Mr. G.

Investors paced through June, waiting until the end of the month for Mr. Greenspan's announcement on the interest rate rise. While their two-step dance seemed to seesaw the daily market changes, the net change was growth, raising returns over the month. Diversified portfolios are also giving positive year-to-date returns, waltzing well ahead of stock index indicators.

Bonds settled out after the long awaited, minimal interest rate increase. They were back on track in early July, with solid positive returns. Stocks are now struggling with economic messages of a potential slow-down in growth, possible inflation, and continued high oil prices. While these factors are inter-related, they are not identical. Inflation drains both bonds and stocks of their returning power. The news is not all negative, but it will not be an easy summer for investing. Meanwhile the REIT market has returned in force from its April slump.

Gardening With Due Diligence

Anticipating the sultry side of summer, the garden stretches. Hummingbirds return to their favorite blooms, more welcome than the returning groundhog family. The weeds race against the gardener's occasional lapses to obliterate order and symmetry. Perhaps mosquitoes are in league with the weeds, to deter the timid gardener from diligence. Gardening easily demonstrates the second law of thermodynamics: without an input of energy, the universe rapidly goes to randomness. Chaos has its place in the larger scheme but not here; the garden belongs to the gardener, and even the appearance of primeval confusion starts with a plan.

June 3, 2004

555 Elm St
 

Stocks took a breather as gasoline prices climbed steadily in May. In anticipation of an increase in crude oil production lowering pump prices, stocks rose again yesterday. Bonds have already corrected in anticipation of a coming interest rate rise, so there should be little effect on their prices after Greenspan speaks. There is a saying on the street, "Markets move on the rumor." By the time an event happens, the markets have already adjusted.

Another market adage is "Sell in May and go away." Markets typically slump over the summer months, while investors vacation, away from market trading. Recent summers have been stronger than "typical"; also, the saying does not suggest when to buy back in to the markets. Holding your diversified portfolio solves the issues of timing the market.

Taking your advice, I enjoyed my overdue vacation to the fullest, exploring a culture in many ways opposite to ours. From serene gardens to ancient shrines, temples and castles, from modern cities with modern populations to a small mountain village, I sponged it all in. Delicious food and warm, helpful people made it fun. I would revisit Japan in a minute. Want to join me?

One test of an effective vacation is that it changes your head. The familiar routine feels altered. Thinking is clearer, "unstuck" from the rut of habit; so far, so good.

The garden is alive with activity. Butterflies and mosquito-hungry dragonflies have returned. Colorful cardinals and orioles check the ancient mulberry tree morning and evening - anticipating the first ripe fruit. In timed sequence, the plants burst their flowers for foraging bees. Before the heat, this is the opening of summer.

May 11, 2004

555 Elm St
 Interest rates make it official

A recovering economy gathers strength to withstand the rigors of the new business cycle.  Rising interest rates signal that it's time for the economy to get back to work.  The days of "cheap money" are coming to a close. Interest rates must begin to rise; the actual event grows closer and more certain.

A shift in the direction of interest rates affects all markets. While some of the changes are predictable, there are always some surprises. The market value of current bonds drops when interest rates rise, because new bonds are issued with a higher interest rate. The impact of rising interest rates on stocks is less certain, so the marketplace spent April hesitant and cautious in anticipation. So long as rates rise slowly, most stocks should be unaffected. Greenspan now suggests that the increase will be gradual. This is good for stocks. Increasing rates has wide effects on many markets. Overall, it tends to dampen the flames of economic growth by making loans more expensive, to business and consumers. It is the Fed's antidote for rising inflation, by slowing spending and reducing the demand for goods.

The recent market reaction to news has affected most investments in portfolios. Only Health Care stocks showed significant progress in April. We may weather this storm for a while. Diversified investments offer the best protection in this marketplace, where we come to expect the unexpected.

Let's get on with the growing season

Hothouse plants need to "harden off" before facing the rigors of sun and wind and driving rain. They actually undergo several chemical changes that strengthen their stem cell walls and change their leaf cell composition. Invisible activity - like magic - we see only the results.

p.s.

My long planned vacation begins on May 17th. I will be in the office again on June 1st. Japan is far from here in many respects. I should be nimble with chopsticks by June, or thinner. It will be good to see familiar faces again when I return. Looking forward to meeting with you.

April 6, 2004

555 Elm St
Just In Time

At last the markets have taken a breath. The long awaited sale gave an opportunity for buying at lower prices, so that less money bought more shares. This correction hit the large and mid-cap stocks the hardest. REITs, Internationals, small caps and bonds held up well during most of March. Diversified accounts are down only slightly over the past month, holding on to most of their recent gains.

The rebound from the correction began from a smaller volume of trading, so there may be more to the story before it is over. Usually a rebound is a swell of buying in great volume over a few days. Many investors were waiting for first quarter reports, coming out in April. Reports on new jobs, the strengthening dollar and first quarter stock earnings are among a host of economic indicators out now, and over the next two weeks, which may settle the direction of the market. The overall expectation is optimistic. However, the rise in stocks may trigger an increase in interest rates, and a drop in REITs and the bonds markets. I'll keep you posted on how it affects the balance in your portfolio.

Longer Days

Spring cleaning, weather style: rain-drench and wind-scour with gusto. The soft spring breezes of our wistful dreams are elusive as a remembered fragrance. It is good to have much to be busy about, or the waiting would wear us out from the inside. It is good to be back in the season of long days, summer time on the clock.

With all the holy days and holidays, this month, we have much to celebrate. Time to make some renewal for ourselves - only we can do it - breathe some freshness into our dreary thoughts and weary habits. Apply our spark to start someone else's fire, and bask in the glow. A new season emerges.

March 3, 2004

555 Elm St
In like a lion ...

March markets came in like a lion. Hopefully this will be temporary. Certainly I am not bearish on stocks, but the rate of growth we have enjoyed is unsustainable. When stocks soar at annualized rates of over 40% for too long, we are heading for a drop-off at a great pace. It would be much healthier for the markets to step back for a while, then proceed again at a slower pace. This ideal is not the real market, and we must deal with the potential of a turning tide. February has given us at least a stock market slow down. This helps toward keeping more of what we have recently gained.

The recent mutual fund scandals have been less headlined recently. They are apparently far from over. Several mutual fund companies have paid stiff fines while admitting no wrongdoing. PIMCO has gone public in its own defense. Companies like Fidelity and T.Rowe Price, which have not yet been cited, are reluctant to advertise their innocence before this investigation is over. Major cited companies have taken steps to refund investors and prevent recurrence of the abuses. Your portfolio positions have so far not been affected. We will deal with these issues when they affect us.

... in like a lamb

This belated January thaw has ushered March in like a lamb. So maybe we should expect March to go out like a lion. Meanwhile, the release from a winter that held us prisoner, plus the reappearance of robins and snowdrops, draws us to thinking forward, to better times ahead.

February 3, 2004

555 Elm St

January markets repeated many elements of the runaway markets of 1999, with some significant differences. Current strong stock returns are spread across most companies, not concentrated in a few, as was the case at the height of the 1999 bubble. Technology stocks are active again, but without the following they had in 1999. Although overpriced by traditional standards, current stock prices can be tolerated when interest rates are low and the economy is growing. The long awaited sale in stocks seems to be approaching. I expect to move soon for those clients who have cash positions ready to invest. Your current portfolio report is enclosed.

We should not expect the tremendous rate of growth we have enjoyed since October 2002, to continue. We may even expect to lose some for a while. No one knows whether the current slump is temporary or the beginning of a long defensive mood in the market. Overall, I expect the DOW to move to new highs. Meanwhile, diversification and patience will cushion our ride along the ever-stony path of the present. We will arrive safely at our destination.

The garden

With gardens still many weeks away from the earliest blooms, spring flower shows hold forth a promise of what we long to make real. It is the time for planning, for spinning out possibilities and exploring all our options. This is the task for mid-winter.

And finally ...

At long last I am planning a vacation. I will be away the last two weeks in May. We will have everything in order for you before I leave. Thank you for your inquiries and good wishes. It is your kindness that saw me through a very stressful year in 2003. I am grateful for your friendship and the pleasure of working with you.

January 13, 2004

555 Elm St

Turning a new year is less intimidating when you have recently turned both a century and a millennium.  Resolutions tell more about what we think is important in our lives, and what we think we can control, than what we expect to change.  It is a good exercise, to take stock of our progress, and refocus for the road ahead.  As we get older, this happens more around a birthday than with a new calendar year.

December closed 2003 in the markets with a flourish on the rally year.  Returns were positive in all areas of the investment world last year, even areas that were positive during the bear market.  This is unusual.  Rates of growth now are like they were in 1999, before the bottom fell out.  I keep watching for a serious back-step in the stock market.  A sale, when we can invest with some assurance that we are not buying at the top.  The end of January is a usual time for this, but markets are not following the old patterns any more.  Your year-end portfolio report is enclosed.  It has been a year beyond any expectations.  We are grateful.

The garden

Bracing for the bitter cold of January in New England, the garden catalogs are enticing.  In each season we need an activity we enjoy, or the harsh side of it will chaff us rough.  There is some part of winter that must be just endured.  Wishing you the warmth of family and good friends, whatever the weather.  Looking forward, with you, to the new year ahead.

February 6, 2003

555 Elm St

A quarter of a century since the Blizzard of '78 - catastrophes do grab a piece of our consciousness.  If you were in this area, you remember it like yesterday.  In his later years, my Dad said he remembered the end of WW I, when he was ten years old, how everyone was so wonderfully happy.  So great events, both the good and the challenging, hold like spotlights in the shadows of memory.  They become pivot points, bringing things back into perspective, and sending us on with renewed values.

Our new year market rally was short-lived and the rest of January took it all back and more.  Until the uncertainties around the proposed war are settled, we cannot expect much from investments or the economy.  While the war is not the only issue disturbing investors, it has taken full screen attention, and its resolution may leave other concerns in the background, allowing us to move forward.

Expectations for the coming year are generally minimal, meaning a barely positive year in the markets.  Bonds may continue to lead stocks over the coming months.  Two areas of the market were also very strong this past year, REITs and Emerging Markets.  Emerging markets are third world countries.  They benefit from the low interest rates in the U.S. because their money systems are tied to the dollar.

Diversification again keeps us balanced, prepared for whatever.  The wind is always shifting.  Our sails are ready.

Copyright © 2003-2008 Victoria M. Lechner.  All rights reserved.