2006 News Archive

December 4, 2006

93 Commonwealth Avenue

Despite some market drama late in the month November built on October gains. Our portfolio averages increased by 2% over the month and are up 13.3% so far this year, 15.1% from a year ago. The major stock indices range from 10.3 - 14.0% YTD and 7.3 - 12.0% from a year ago. The 30 large company stocks in the DOW have led the markets for the past two months, for the first time in several years. Small company stocks have recovered recently from their setbacks last spring. International stocks are running close to U.S. returns. Health care and energy stocks were down most of the month. REITs and bonds moved steadily forward another month.

The recent ailing of the dollar has not sent the markets into shock as some economists feared. Bonds thrive in a weakening economy and international stocks flourish from the weakened dollar. Diversity smoothes a lot of bumps in investing. Making purchases when prices dip and capturing some gains while markets are high, paying attention to tax effects and long term goals: these are the basics of successful investing.

Christmas transports young children to a magical place where dreams come true and good things happen because people are kind. The lights, scents of holiday baking and festive decorations build anticipation. The air is full of secrets of planned surprise gifts. Favorite stories are retold. People smile more. The world could use so much more of this. Some part of this childhood should live like a fire in each of us.

November 1, 2006

93 Commonwealth Avenue

Continuing the stock rally through a third month, October's heavy trading raised our portfolio average by 2.67%. Our returns now trail the DOW, up 3.4% in October, as it surged past the 12000 mark with its best monthly return in a year. Our year-to-date and one year returns, 11.1% and 16.1% respectively, handily keep pace with the diverse markets in the portfolios. Major stock market index returns range from 7.32 - 12.7% YTD and 11.95 - 16.1% from a year ago. Bonds are again positive YTD with the expectation that any change in the Fed interest rate now will be lower.

The current rally in stocks suggests the economy projects well for the beginning of next year. While we may see a dip in the market before the year end, overall the coming months look bullish with a strengthening economy. Mid-term elections usually have a minimal effect on stocks. Consumer confidence expressed in the holiday shopping season does affect the market. Lower oil prices definitely help the economy and stock prices, as well as our heating bills.

The charm of magically costumed children, uplifted faces glowing through stage paint and gruesome masks collecting treats from the house witch - there is no night like Halloween. It is a be-witching spell to haunt happy memories of shared fun in a safe/scary dark.

October 5, 2006

93 Commonwealth Avenue

It is a good thing that we have something as engaging as autumn to take us from summer to winter. Brilliant color and sparkling air, dewy mornings and balmy afternoons - easy to get lost in - these are fleeting days to savor for their own worth. The best is not to come; it is today.

The record books say that the past quarter was the best third quarter in the markets since 1995. This was not the summer to "sell in May and go away". September lifted diversified portfolios another 1.1%. They are up 8.2% year to date and 10.6% from a year ago. The major domestic indices range from 2.4 to 9.0% YTD and 5.0 to 10.5% for the past 12 months. Growth through the end of this year is expected to be slow to moderate. It will be good to retain the returns we have achieved so far this year from an aging bull market.

The DOW market index has been hovering around its previous high close of 11722.98. That record was set in January, 2000. The DOW has moved above that point a few times in the past week but always closed the day lower. This means that if you had bought the 30 stocks in the DOW in January of 2000, your investment would again be worth what you initially paid. However the energy, financial, utilities, health care and materials stocks are now worth much more while the technology and telecom stocks are worth much less. Only the total repeats; the components change continually. Both the S&P 500 and the NASDAQ remain well below their record highs.

The holiday season approaches - three months of them. While some are demanding, others are pure pleasure. I hope your plans remain simple but involving and your pleasures satisfying. How our goals change with time. Empty trappings fall away. It is not how much we have but how much we care. It is not even what we do but what we are willing to do without in order to ease another's burden, to bring balance to a wrong. There are so many ways to celebrate. Some of them have power in them. These are the ones that hold on to us.

September 5, 2006

93 Commonwealth Avenue

The average return on diversified portfolios rose 2.15% in August. With most investors on vacation over the month, the market is affected by the moves of fewer traders. This summer has returned most of last May's losses for our portfolios, which now average a 7% return this year and 10.7% from a year ago. The major indices range from -1 to +6.2% year to date and 1.7 to 8.8% from a year ago. The only market sector down in August was energy. All other investment sectors rose, with technology and REITs taking the lead.

Inflation, interest rates and oil prices continue to volley the daily changes in investments. Political issues buffet oil prices, keeping the mix in flux and the short term forecast widely variable. Stock investments reward those who understand that long term they will experience growth and still have access to the principle whenever they need it.

Of course our purpose for our clients is not just about return, but the quality of life you may enjoy as a successful investor. Supporting your goals, working with you regularly to keep your portfolio relevant to your changing needs, these are the real value we offer you.

The last weeks of summer are in some ways the best of the season. Vacations morph into memories to renew on demand. Schedules resume familiar routines but we are changed by summer experiences. More than plants grow in summer. Lives shift sometimes imperceptibly in new directions. The new vitality is not just in the air.

August 2, 2006

93 Commonwealth Avenue

July ended up slightly for stocks, with utilities, healthcare, energy and international stocks leading the way. Bond prices are gaining. The major indices range from -5.2 to +4.4% year to date and -4.7 to +5.3% from a year ago. Our diversified portfolios average 4.76% YTD and 8.74% over the past year.

Markets will continue nervous until the Fed decides on interest rates again, next week. Inflation is not a reality until wages increase. Wages increase when the labor pool shrinks. The unemployment numbers will be out on Friday. As long as unemployment does not drop too quickly, interest rate hikes may take a welcome breather. Higher oil prices are gradually slowing economic growth and the pause in interest rate increases would help keep the economy moving. Now that the Fed rate is appropriate, changes will depend on economic conditions.

Tomatoes and peppers and eggplant have been waiting for this heat to ripen. We endure it but steamy is magic for them. The fruits of summer capture the essence of golden days in sweet flavors; blended scents of herbs laden the morning air - simple, priceless luxuries. Let concerns slide away as you renew your treasures of summer. I look forward to seeing you again soon.

Another harvest season approaches and again we are reminded of the abundance in our lives. Successful investor Warren Buffet surprised us with his announced contribution to the Bill and Melinda Gates Foundation. The Press was amazed that his heirs supported his generosity. We all feel strengthened by their values. When the wealthiest join resources to aid the neediest, the real world progresses.

July 6, 2006

93 Commonwealth Avenue

After slogging through much of June, investors rallied at the end of the month on words from Fed Chair Ben Bernanke suggesting inflation may be under control. This was interpreted to mean that a rate hike in August might be the last for a while - welcome news. As the Federal Reserve raises interest rates, the money supply tightens and the economy is reined in. While some indicators warn of inflation, others suggest that the economy is already less robust and may weaken by the year end. Interpreting the mixed signals and maintaining some balance in the economy through interest rate adjustment is the Federal Reserve's job. Investors' actions, or reactions, make the market place cycle.

In diversified portfolios, June closed the month near May end values. Year to date portfolios average a 4.56% gain and are up 12.3% from a year ago. Major indices range -1.5 - +4.0 YTD and 5.6 to 8.2% over the past 12 months. Tech stocks peaked this quarter in April and International stocks in May. Interest rate increases worldwide have dampened international stock prices. Generally, we expect single digit overall investment returns for 2006.

Already the earth tips into the second half of the year. The only way to hang on to a day is to seek its value and feel grateful for it. If we have the wheat, the chaff can blow in the wind. June included a visit with my niece and her husband and two sons in London. It was wonderful to see them for a week long visit and live like a Londoner with two small people in schools. The weather was perfect and events included a school fair day and a visit to the Tower of London with lunch (fish'n'chips) beside the Thames. They all seem to be thriving and will return to the states next summer.

June 2, 2006

93 Commonwealth Avenue

May markets began the back step we need before real growth continues. For the past twelve - to thirty-six - months the markets have been bountiful and portfolios have responded. Pausing for a breather now may spare us a harsher correction later. A full bear market is a drop of 20%. With the economy strong, that seems unlikely now. Even if it comes to that, historically bear markets are relatively brief. I still expect this year to end well for investments. Major indices now range from -1.2 to +4.2% YTD and 4.4 to 5.8% for the past year. Our portfolios average 4.3% YTD and 13.8% for the past year.

TD Waterhouse is officially TD Ameritrade. There are no changes for your accounts in this merger and my communications with them are also unchanged. Tom Bradley, the president of TD Waterhouse Institutional Services continues as president of TD Ameritrade Institutional, providing the stability and control we need during this time.

The garden comes together more quickly every year. Routines of regular maintenance with long range goals works well in gardening too. The landscape changes a little each year but keeps a restful familiarity. The groundhog family is temporarily banished from paradise - mothballs, lots of them. Now to cover the holes under the fence and deck with netting before the offending odor evaporates away - it's a new solution to an old problem.

The summer weather has burst upon us, and welcome. Languid, sultry afternoons melt into limpid, soft evenings. Would it be so delightful if it were not so fleeting? Capture the moment and keep it in a safe place - "Memory is the power to gather roses in winter".

May 2, 2006

93 Commonwealth Avenue

April took portfolios forward again with international stocks bounding. REITs stepped back as bonds regained their balance and mid-sized companies led returns for U.S. stocks. Year to date major U.S. stock index returns range from 5-6%, while bonds are down. One year stock index returns range from 11.5-21% Adding international and REITs to the mix, our portfolios average 7.4% YTD and 21% from a year ago. The economy is stable now but inflation could rise if wages increase and that will trigger more interest rate hikes by the Federal Reserve.

Working in the garden this weekend I was reminded that pruning and portfolio maintenance have some parallels. The first rule in pruning is the three D's - remove the dead, diseased, and deformed. When done regularly, pruning disturbs the plant minimally and helps it immensely, focusing its energy on balanced and productive growth. In portfolios we monitor for poorly performing investments and maintain the overall balance of the original design. When trimming strongly growing positions we capture the gains (harvest) and buy currently out-of-favor investments (seeds) for future growth. It is the old "sell high and buy low" axiom applied to re-optimizing the portfolio. Meeting regularly allows us to inspect the portfolio together in the light of changes in the economy and your lives, and prune in a timely way.

Meanwhile, the aging dwarf pear tree has decked its lichen-covered boughs again in fragile white finery. Typically it sets far more fruit than it can sustain and I will spend some quiet hours popping off as much as twenty pounds of marble-sized green pears over the next few weeks. The insects that pollinate the blossoms are only matched by the ones that attack the fruit. I savor a few fine pears in late August. Squirrels enjoy the remaining fruit in September.

April 4, 2006

93 Commonwealth Avenue

Weather wise, March went out like a lamb. The markets, meanwhile, closed another positive month. The DOW and S&P large company indices are up 4% so far this year and 8-11% from a year ago. Small and international stock indices are up 10-12% YTD and 25-27% over the past year. Our diversified portfolios average 6.2% since December and 18% over the past year. We may have received the best market returns of this year already but short-term markets are full of surprises. The real comfort is the direction of the markets and our portfolios' participation in the growth.

With mutual fund money market interest rates between 3.9 and 4.5% and rising, they are delivering bond returns with less risk. We are recommending using money markets now as a holding position for future bond purchases. When interest rates cycle toward lowering, bonds will again be a valuable portfolio position.

Our new office space already helps us serve you better. Laurie Dyer is streamlining much of what we do. With less meta-work, we can spend more time on the work we do for you. Clients appreciate Laurie's reminder calls the day before their appointments, especially for the chance to confirm our new location.

A Robin is more than just a pretty face. Robins are the first voice as the sky lightens in the morning and fades at the end of the spring day. With irrepressible exuberance - rational or irrational is irrelevant - their early morning song raises more voices, chorusing as if it was their job to move the sun.

March 9, 2006

93 Commonwealth Avenue

Markets dipped slightly in February but year to date gains are still strong. Our international, REIT and small cap positions give portfolios a leading edge over the major U.S. stock index returns, both recently and longer term. Diversity is the simplest buffer against the complex interplay in a market that is influenced by many conflicting factors. It works very well for us.

The new office is open for business. We have settled in and technical services are functioning smoothly. It works. I am pleased and look forward to working with you in the new facility. Our assistant, Laurie Dyer, is the best part of the new situation and her valuable contribution is the reason for the move to this larger space.

One added direction: the entrance to Suite 3 is at the left front of the building. All the other units enter from the right side of the building. If you drive around the building, there are parking spaces for you beside our entrance, near the exit from the parking area.

Spring is a promise more than a season. Sometimes we cling to the assurance that the days of bitter cold and tugging with a coat will soon give way to milder times. Like waves on a shore, the constant shifting gradually brings the tide in. The empowering sun is the unmistakable constant that moves winter out for another year.

February 6, 2006

555 Elm Street

A new face there...

With the changing of the guard at the Federal Reserve, market returns paused at the close of a strong January. The new year has begun well. U.S. stock index returns range from 1.4 - 8.9% for the month and 3 - 16% over the past 12 months. Our average return for diversified portfolios in January is 4.1% and 12-month returns average 17.3%. The first quarter of 2006 is expected to be strong, perhaps the best market returns for the year. One big lesson from Alan Greenspan is to avoid trying to predict, trying to find patterns; we need to pay attention to all that is going on. The future is full of surprises and diversification prepares and protects investments.

a new face here...

Fortune smiled on us in the person of Laurie Dyer, our new administrative assistant. This month she is helping with decisions around new equipment and office setup. As of March 1 you will speak with her on the phone and meet her in the new office. Laurie's professional experience and friendly, helpful manner make her the key player we need.

and a new here here!

The future invades our lives in a big way this month. New office plans have replaced planting plans for me this winter. Peaceful moments in the garden will be welcome come spring. Next month's bulletin will come from our new office. The phone service will be in transition Monday, February 27, but you probably won't notice it. We'll post specifics next month.

January 6, 2006

555 Elm Street

With the market stall in December, the year in the domestic stock market ended near where it began. This does set the stage for a strong January and perhaps a year of solid gains for 2006. Our average portfolio gain for 2005 was 10.3%. Domestic stock indices range from -0.6% (DJIA) to +4.6%. International and REIT returns bolstered diversified portfolios.

The expected end of Federal Reserve interest rate hikes this year may produce some shifts in market cycles. Greenspan chairs his final Federal Reserve meeting on January 31. While his successor, Ben Bernanke, has the confidence of investors, the switch will be scrutinized. The next meeting on rate change will be March 28. Interest rate change inversely affects bond values. It is also expected that a rally in large U.S. company stock is due and that they may out perform small company stocks in 2006 for the first time in many years. We will be recommending minor adjustments to portfolios as we meet in the coming months.

The new year opens with a challenge. A string of gray days after the holidays requires a fire within. Keeping a hearty spirit makes us hardy in this season; promises ahead lead us past winter.

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