D3 Business Update:
We are finishing up the remainder of the financial plan updates for all of our family office clients. We should have these completed by July 8th. As we have shared with you all, the updates are being loaded on your personal D3 client portal. Ryan Pace, our new employee, has been making sure that every client has access to this valuable feature. If you are having any issues accessing your portal, please give the office a call and ask for Ryan.
Starting around July 15th, we anticipate loading up your semi-annual performance reports in your personal client portal. We will send you an email, notifying you that your performance reports are ready for review. We encourage everyone to review these reports in conjunction with your financial plan update. If any of our client’s do not have an email address or prefer U.S. mail, we will continue to mail the documents we prepare. We will be calling you later in July to schedule a meeting to review these two important parts of your financial lives.
Adam, received his official recognition from the Certified Financial Planning Board of Standards that he is officially a CFP®. Without missing a beat, Adam has started phase 2 of our Financial Planning Management Development program with an emphasis on portfolio management. He is now preparing for his Certified Investment Management Analyst designation, which focuses on strategic asset allocation and includes some intensive training at the Wharton Business School.
D3 Investment Insight:
Our outlook in our last letter focused on the uncertainty facing the capital markets. Specifically we said, “Until some certainty is determined in this arena, we do not see any incentive for the equity markets to move forward, even if second quarter corporate profits are stellar. We anticipate a consolidating, sideways market for U.S. equities until this is resolved. Once this issue is resolved and if corporate profits remain strong, the U.S. equity market rally should continue.”
Not much has changed from last month. We still have uncertainty headwinds emanating from the negotiations about the U.S. debt ceiling, the European debt crisis and the Federal Reserve ending Quantitative Easing 2 (QE2). Add some weaker than expected U.S. economic numbers, indicating potentially slower second quarter growth and you have further fuel for investors to sell in “May and go away.”
On the positive side, even with QE2 ending at the end of this month, the interest rate markets have not priced in any dramatic increase in rates. Additionally, the coordinated efforts by developed countries to replace the loss of Libyan oil, by tapping strategic oil reserves, will have a net stimulative effect on the global economy.
Also, Japan is making progress recovering from the devastating earthquake and tsunami. We are also hearing the supply chain impact is starting to mitigate. We suspect that the supply chain disruption was part of the reason for the slow down in reported economic statistics and that the numbers are likely to improve as the disruptions from the earthquake are alleviated.
D3 Investment Outlook:
Yogi Berra was quoted as saying that it looks like “Déjà vu all over again.” The Summer of 2011 is starting to look and feel like the Summer of 2010. The Summer of 2010 started off with the lingering effects of Greek debt restructuring and concerns about weaker than anticipated economic numbers. We have those same issues this Summer. We were also still struggling with the uncertainty of the impact of the British Petroleum oil spill on the gulf coast economy and we liken that event to the uncertainty regarding the U.S. debt ceiling issue. Last August, Ben Bernanke, the Federal Reserve Chairman, announced QE2, to provide further monetary stimulus to the economy. This Summer we will likely get some announcement from either the White House, Congress, or both, regarding a jobs package providing fiscal stimulus to the economy in front of the 2012 elections.
As a result we continue to believe that the stock and bond markets are in a trading range until some significant positive catalyst motivates more investors to purchase equities or to sell bonds. The catalyst could be better than expected corporate earnings and positive projections from corporations regarding the remainder of 2012. Second quarter earnings season begins in during the second week of July.
D3 Investment Strategy:
Our risk controlled investment management approach is focused on finding attractive investment options in each of the asset classes in our client’s portfolios. We are also focused on finding alternative investment products that help reduce overall risk in client’s portfolios (low correlations with other asset classes).
To that end, we are still in the process of replacing some of the mutual funds on our preferred list. Additionally, we have also commissioned a consulting study from a fellow CFA™, to help us whittle down the available alternative investments to add to our preferred investment list.
We are currently adding additional clients, so if you know of anyone that would like to reduce some uncertainty in their financial lives, please refer them to us.
Happy Fourth of July! Enjoy the fireworks and always, thank you for your confidence in D3 Financial Counselors.
Donald D. Duncan MBA CFA™ CPA CFP® Adam Glassberg CFP®
Michael Meyers MBA CFP® Patty Shipinski, Office Manager
Neil Lefort MBA J.D. CPA Ryan Pace, Junior Financial Planner