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Clients and Friends Newsletter for June 27, 2002 "The measure of a man, sir, is not in money, position, station, or possessions. These things mean nothing. The measure of a man is in his character, wisdom, ability, aliveness, intimacy, creativity, courage, fearlessness, perspective, independence and maturity." – Mark W. B. Brinton Dear Clients and Friends, I have to tell you, it is not the most enjoyable time to be a Registered Investment Advisor. Mr. Brinton’s above noble thoughts aside, we are enduring an ongoing bear market of the highest order—a market that has shrunk investors’ account balances to the tune of six trillion dollars and counting at recent tally. The stock market seems to have a continual downward tilt (bumping along towards a retest of the 9/11 lows, if not more), CD’s are paying historically low interest rates, real estate (on the Outer Banks, at least) is starting to take on the look of a speculative market bubble, and bonds are either exposed to heightened default risk due to market contagion or interest rate risk when the Fed starts tightening the money supply. The news isn’t helping matters, either—it seems every day brings another war threat, or disclosure of aggressive accounting, or earnings warning, or (fill in the blank with negative material). It’s easy to get caught up in the noise and turn downright melancholy. Wall Street pundits have long pointed out that a bull market tends to treat good news as good and discount or overlook bad news, while a bear market tends to treat bad news as bad and discount or overlook good news. By that standard, we are in the mother of all bear markets. Good economic news is routinely ignored or is quickly overshadowed by the “gloom du jour”. So what’s a prudent investor to do? Sell everything, buy gold, and stick it under your mattress? Move to Idaho and join a doomsday cult? No need for those extremes, but the following checklist should offer some guidance and may help you sleep a little better: 1. Decide on where you are and where you want to be. When I started working towards the formation of my advisory practice, I got a ton of good ideas from “The Pathfinder” by Nicholas Lore. Lore, an exuberant and fulfilled soul, advocates that folks can add a great deal of joy and purpose to their lives by envisioning their perfect world, then building a path to get there. Some of us are doing pretty well here. The plan may be to retire early to sunny Costa Rica (a common goal of some of my surfing and fishing buddies), or it may be to be in a position to take care of an elderly family member, or to combine work with being a significant part of your children’s life growing up (one of my goals). Scratch your head, stare at the ceiling, and don’t be afraid to aim high! "I think that what we are seeking is an experience of being alive, so that our life experiences on the purely physical plane will have resonances within our own innermost being and reality, so that we actually feel the rapture of being alive." - Joseph Campbell “All fine and well,” you might say, “but what does this have to do with investment advice?” Bear with me—I’ll get there in a minute. 2. Formulate a plan. Your goals deserve an operating schematic. A path to success, replete with hows and whys, estimated financial requirements, and a contingency plan or two, will provide structural backbone to the dreams in #1 above. The process will take some time and effort, but will pay a lot of dividends—“clearer priorities helping to avoid unnecessary impulse purchases” is one that comes to mind almost immediately. Involve your spouse and a trusted financial advisor if you need guidance on appropriate asset allocation, budgeting, college funding, estate or retirement issues, etc. 3. Update the plan annually or in the event of a significant life change. Consider this “preventative maintenance for your finances”. The update will identify strategies that are (or are not) working, and will allow you to fine-tune individual items (like the operating budget) you put into place in #2 above. 4. Ignore the noise. Ah, here’s where it gets good, especially in the current market malaise. You have identified, developed, and updated your own personal “roadmap to fulfillment”—don’t let the bad news bring you down. It’s a fact of life that markets go up and down—and that applies to all markets (stocks, real estate, Pokeman trading cards, you name it). Focus on the things that are important to you and that you can do something about, and don’t worry about the things that you can’t do anything about. I bring up this checklist because it’s easy to get distracted if you don’t have a plan, especially in a skittish, news-driven market. My newsletter will feature market statistics, commentary, and charts of interest, because digesting and disseminating market information is an integral component of my job. Feel free to ignore it. It’s about fulfillment, remember? If you have a plan in place and someone you trust monitoring the situation, do as did William Hurt in "The Big Chill" (paraphrased) "Sit there and let the art flow over you." Just a thought. Now to the monthly update: 1. The US dollar is very weak against other major currencies. As of this morning (6/23) the dollar is at a 27-month low against the euro. Good for US manufacturing (lower prices for US goods abroad), bad for US investment markets (less buying interest by foreign investors, as any US investments are backed by weakening US dollars). The Japanese government has intervened five times in the past month to try to keep the yen weak against the dollar. South American currency markets are very tenuous. A dynamic issue that bears watching, especially if you're sitting on a large cash position or plan to travel abroad in the next few months. 2. Markets have turned decidedly weaker over the last reporting period. No buying interest of note. We are in what's known as a capitulation phase and the going's liable to get pretty hairy over the next few weeks. I have enclosed charts for the DOW and NASDAQ:
3. I am studying to sit for the Certified Financial Planner test in November (if all goes well) Wish me luck--the test covers a BUNCH of material. 4. I am available to meet with prospective clients throughout the summer--please email or call and we'll set up a complementary initial consultation. 5. Leo got straight A’s on his final kindergarten report card, caught the last out on a pop-up in The Hatchell Concrete Yankees’ final game victory over the tenacious Pizza Hut Braves, and is going to Manteo Elementary as a first-grader. Go man go! Hug a kid and laugh a little, Will W. Woodard, III, CFP® "Clients and Friends Newsletter" is published monthly by Dare Capital Management and is free of charge. To subscribe, send your email address to will@darecapital.com and put "subscribe newsletter" in the subject line. All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Will W. Woodard, III and Dare Capital Management and Advisory, and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. Dare Capital Management and Advisory is registered in the State of North Carolina as a Registered Investment Advisor Firm. The information presented herein and the company's web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Dare Capital Management and Advisory may, in some instances, include securities mentioned herein and/or on the company's web site. Positions in securities mentioned will be disclosed at the time of publication and may be subject to change at any time without further notice. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future results may vary for many reasons. |
