From: Dale Beals <firstname.lastname@example.org>Subject: Just a quick update on my thinking … please call with any questionsDate: February 3, 2010 7:16:09 PM CST
Dear Clients,First, thanks for hanging in there with me when I was so timid from September on. The dip I was concerned about finally arrived, and I was able to dollar-cost average some money into the market this Monday morning, Feb 1 at a good time. Last Friday and Monday, the S&P 500 was back down around the levels from last September and October…. Amazing how the market can give back several months of gains in less than 2 weeks.I don’t know if there is more downside after the bounce of Monday and Tuesday. If the market goes lower after today, I’ll plan on more downside and may hedge a little. Either way, the plan remains the same…. dollar-cost-average into the market, based on our models, at the rate of 10-20% more each month.For those of you who are watching your holdings and comparing to the Asset Allocation Sheets from Appendix A of your Investment Strategy documents,I’m going to use EWJ – the ETF for Japan’s Nikkei index instead of EFA – the ETF for Europe’s developed markets, for the non-US developed markets.I’m going to use GAZ – the ETF for US Natural Gas instead of USO – the ETF for US Oil as part of the allocation in the Satellite portfolio.You may also notice the symbol UUP – the ETF that tracks the movement of the US Dollar against a basket of other currencies. Right now, believe it or not, the US $ has begun an uptrend which we will opportunistically follow until it ends.Don’t put too much stock in what they say on CNBC every day about why the market went up (or down). What years of study have shown me is that every day there is plenty of bad news and there is plenty of good news about the markets or the economy. If the markets go down, then the pundits link that to fear of unemployment, or fear the stimulus will stop… or any of the bad news of the day. Their reasons may have nothing to do with what actually tipped the scales.Similarly, when the market is up, the pundits will say “Intel had great earnings” or “Manufacturing index rose over 50.0”. They don’t know what really tipped the scales any more than you and I. They are like sportscasters who have to keep talking about the action, so folks will stay interested and keep watching their commercials. Making investment decisions on what pundits say is extremely hazardous to your savings.What does matter, and what can be used, is an understanding of the emotion or sentiment of the “Big” investors and the “Little” investors. Like you and me, our overall view causes us to filter the news and focus more on the good news or the bad news, depending on how we feel. The “Big” investors are not immune to this, but they are aware of it and try to compensate. The “Little” investors are usually wrong when they all agree.That is why asset diversification is so critical. That is why allocation of your money to each asset class, based on its volatility and direction is so key to managing risks. That’s why a steady discipline has kept us from big losses during the 2008 crash.Let’s look at our scenarios again:1. Inflation, leading to higher interest rates and devaluation of the dollar.2. Recovery, where we keep reasonable interest rates and gradually return to prosperity.3. Recession / Depression, where economies turn down and stock markets drop.A month ago the inflation and recovery scenarios were about even, and the recession/depression scenario was in 3rd place.Now, in my view Inflation and Recession are tied in 1st, with Recovery in third.I’ll keep watching and positioning with an eye to 1. Risk Management, 2. Disciplined asset allocation, 3. Averaging back into the market, and 4. Opportunistic trades when I think reward outweighs risk.I appreciate each of you so much.Thanks for everything.Dale
From: Dale Beals <email@example.com>Subject: Strategy for entering the marketDate: January 19, 2010 10:13:46 AM CST
Dear Clients,As you know, I’ve been viewing the market with much skepticism for the last half of 2009. If you haven’t done so, please take a look at the email comparing the S&P 500 over the last 3 years with the Justin Mamis diagram of market sentiment-driven cycles. That will show you why I’ve been concerned.But, it’s time to fish. So, you will see me invest around 10-20% of your portfolio each month, thus dollar cost averaging into the market during 2010. If we have a big drop, we’ll take advantage of that through dollar cost averaging. If the market keeps going straight up, we’ll have some money invested.If you have any questions, please give me a call.Dale
From: Dale Beals Financial Wisdom
Subject: Seasons Greetings
Date: December 17, 2009
Dear Clients and Friends,
From: Dale BEALS Financial Wisdom LLC <firstname.lastname@example.org>Subject: Fwd: bloomberg articleDate: November 18, 2009 4:02:54 PM CST
Dear client and friends,I thought you would enjoy the attached article from Bloomberg Magazine talking about the changes in the financial industry. Investors are leaving traditional banks and brokerages in droves for independent Registered Investment Advisors…. like us!Thanks,Dale
Something has always bothered me about the fact that Mom and Pop investors who have most or all their retirement savings in 401k’s or their own IRA’s don’t seem to get much help making their investment decisions for a reasonable price. So, I have created 6 model portfolios using a scaled down version of the methodology I use for my firm’s clients, and made them available on www.portfoliowisdom.com for free. Each week, I plan to update the allocations for each model. I have provided theoretical historical backtests since 1/1/2004 for each portfolio model, so people can decide which model best fits their situation. Also available are instructions for how to use these models for your own information, including how to use the model allocations to inform your own 401k or 403b decisions.
Please let me know what you think about this free service. If there is enough demand, I am open to expanding this to apply the models more specifically to Guidestone, Fidelity, Tennesse Teachers, or other retirement plans.
As you know, we use Morningstar to produce our client performance reports. Until now, you needed to remember a separate web address to reach the web portal for a look at your current portfolios. You also needed to store performance reports as you received them for later reference.
No longer. Now, just go to www.portfoliowisdom.com and look at the menu line across the top of the page. At the left is a link directly to the Morningstar web site. From now on, your performance reports will be available there also, archived for your convenience and later reference.
Thanks again for your business.
For the life of me, the markets seem to be holding their collective breath. I really do not believe that anyone who really knows what happens behind the scenes is going to say anything on the news. So, I advise you to ignore most of what we are seeing and hearing on CNBC and Bloomberg. I doubt that any market movement is truly attributable to the after-the-fact “causes” and “reasons” they give each day for why the market went up or down.
We continue to be very cautious, currently holding a lot of cash, which we will move gently in to the market between now and year-end, unless one of these fiscal problems explodes.
You may notice some other posts to our web site. I’m creating a free section of the web site called portfolio wisdom to help individual investors who do not have financial advisors. I’m actually going to make available a limited but very useful version of the methodology to anyone who wants to learn from it. So, those posts you see may not apply to you, but if you have friends who need help with their 401k’s or IRA’s, send them our way.
Here are the current 6 asset model portfolio allocations. They will be updated every 4 weeks or so, depending on market behavior. For the sake of consistency, this table will use the same ETF’s as the PortfolioWisdom Mobile App. Be aware that the PortfolioWisdom Mobile App may produce slightly different allocation calculations, because the data updates to the App may not occur at exactly the same time as the data update to this spreadsheet. If you always want the latest allocation calculations for 6, 9, or even 12 asset classes, feel free to subscribe to the PortfolioWisdom Mobile App. Also, be aware that Mr. Beals will sometimes use different ETF’s for his client portfolios or otherwise customize the models to their specific situations. Use the tabs in the embedded spreadsheet to view the allocations for each different model.
Although the news continues to reflect great fear and uncertainty, volatility seems to be gradually diminishing in almost all asset classes (which is a good thing). Each peak of fear in the market is a little lower than the peaks of fear in August, September, and then October. If this trend continues, I expect to be fully allocated back into the model portfolios by the end of the year.