Summertime and volatile markets
Hello! How are you?
My family and I are all doing well. It's hard to believe my son is now 23 and my daughter is finishing up 9th grade already. She and I are going out to UVA this month for a reunion and tour.
The investment world continues to be volatile. I've stayed conservative for a while, expecting another drop in the overall stock market of 15-30% again. The latter figure would wipe out much of the gains seen through April. We've already seen a 10% drop in May. And with that I have started nudging many portfolios toward more moderate allocations. Let me emphasize "NUDGING". Finally investing another round of cash and moving small portions of bonds/other fixed income to conservative equities.
I want everyone to know that I am NOT negative on our long-term future, but cautious about several potential major problems that may keep the markets down for a while (few years possibly). I am certainly not expecting 9 or 10% returns per year over the next five years. And with a positive long-term outlook I have been buying some positions in good equities, funds and ETFs during dips.
Right now I'm focused on strong companies with high dividends so we get paid more than cash while waiting out any downs on capital gains. I like a few foreign markets that have dropped way back in 2010 and have excellent potential. Volatility indexes have been one method of diversification that has worked well during this dip. Gold has been going up lately but could easily drop 30% from reduced speculation if markets settle down. Most commodities have been going down. Oil has plummeted due to supply & demand and the crisis in the gulf. I believe that is a good value investment right now if done conservatively. I'm not buying BP, that's for sure (or Halliburton or Transocean)- though they are part of other funds that I have bought lately. I checked those funds to make sure those three were not too high a percentage of the totals. Always do your due diligence!
Many of you are vacationing or otherwise preoccupied during the summer. If you need a review of any type, please call anytime. I am not yet sure of my vacation schedule, but do plan to take three personal days for catch up work and a six or seven days for R&R.
Take good care,
John
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