investment year has started out with a bang! Most
asset classes are up, much as in the past two
years. The election year and continuing Greece
saga taint the outlook, while economic news on
the home front is positive. The Federal Reserve
is broadcasting low rates for the coming two years,
home sales and prices seem to be firming.
Spreads between the interest rates in treasuries
and high yield securities are still rather wide
(meaning interest rates on high yield bonds is
significantly higher than on Treasuries). Bonds
have been very positive performers for several
years and there is reason to begin to evaluate
how to best position portfolios going forward.
Specifically, I have been evaluating how to obtain
the highest yield per unit of bond investments
in your portfolio and have reached the conclusion
that it is time to reduce exposure to treasury
securities. I still like Treasuries, but feel
that for at least a time looking forward corporate
and foreign (NOT European) bond bring greater
value to portfolios.
I have restructured
the bond portfolios that I manage to reflect this
philosophy and have noticed that strategist I
employ on your behalf are doing the same.
While I am pleased with the direction of the
economy and markets, I hesitate to declare that
we are out of the woods. Thus I remain mostly
defensive with tactical positions in various individual
stocks and market sectors, retaining the ability
to exit those positions should things get dicey.
I hope this brings you up-to-date on my thinking
and may explain some of the paperwork you have
received lately. As Always, please feel free to
contact me with your questions and concerns. I
remind you that I accept new clients by referral
from my existing clients.