D3 Business Update:
We are focusing on four activities during the rest of October and November
- Our “thank you’ events will be in November. Please RSVP, either to this email or by telephone, to let us know which event you are coming to. We have attached formal invitations to both events to this correspondence. As a reminder the November 4th date is in Chicago at the LuxBar from 5:00-8:30 and the November 19th date is in Downers Grove at Emmett’s from 6:00-9:00.
- For our family office clients we are reviewing your insurance situation and your estate planning documents. We have loaded your insurance assessment in the client portal. Please review this information and let us know if we need to correct any data. Later in the month we will be emailing or mailing you with our insurance analysis.
- Also for our family office clients, we are beginning the process of reviewing your estate planning documents. We will load these up in the client portal in early November and will be emailing or mailing your our assessment.
- For Portfolio Management clients only, since we do not update your financial plans, we want to make sure we understand your current perspective on investment risk. We have attached a revised risk profile as a word document. Please fill this out and return it to us. This will help us make sure that your investments reflect the amount of risk you are comfortable with. If you do not return this, we will assume your risk tolerance has not changed.
D3 Investment Insight:
The world of investing is being affected more by politics than investment fundamentals. As a result we can anticipate market volatility to continue and will be driven by the most recent positive or negative political headline. If we want to have an impact on our economic situation, we may need to make an effort to have an impact on our political situation.
We attended a presentation by Fidelity’s fixed income portfolio managers last week (Fidelity is the 6th largest bond fund manager in the world). They currently assign a 25% probability to a recession occurring in the next 12 months.
Earnings season started this week and we will get a glimpse of whether the market cares about corporate earnings. We anticipate the numbers will continue to surprise on the upside but the direction of stock price movements will be based primarily on the company’s outlook for the fourth quarter.
The U.S. economy is moving like molasses. The U.S. government needs to put together some type of job creation package to jumpstart the economy. Although the Obama job creation bill was voted down, we still anticipate some of the ideas will eventually make it into law.
D3 Investment Outlook:
If we don’t have a recession, equity prices are inexpensive from a valuation and dividend yield standpoint. Since 1958, 10 year bond yields have always been higher than stock dividend yields (except during the fear laden 2008-2009 financial crisis). Today the opposite is true, stock dividend yields are higher than the 10 year treasury yield. When compared to bonds, stocks are cheap.
D3 Investment Strategy:
We have finished the tax loss harvesting trades (strategies to reduce taxes in taxable accounts). We will revisit this effort again, when we know what distributions the mutual fund companies will make in December.
Our investment strategy is the same as last month. “With short term interest rates as low as they are, and little likelihood of them moving higher soon, we are moving out of short duration bond funds, into more global focused bond funds. We continue to purchase large capitalized, dividend oriented mutual funds and will be investing in some alternative funds.”
We have started to invest in some of the alternative funds, with the objective of lowering overall portfolio volatility. We are also exploring a risk management overlay for our clients that have higher risks in their portfolios.
We continue to monitor your investments daily, taking actions consistent with your financial plans, rebalancing to your target strategic asset allocation and replacing underperforming mutual funds.
Patty, will be emailing or mailing your invoices next week, depending on your preference.
You should know that for the second year in a row, we were named a Five star Wealth Manager in the November issue of Chicago magazine. We won this honor because one of our clients nominated us and we met or exceeded all of the evaluation criteria.
Thank you to our client that nominated us and we hope to see all of our clients at either Emmett’s in Downers Grove or LuxBar in Chicago to say thank you for your confidence in D3.
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