Jan 29
Last year was interesting. Just when many prognosticators were predicting the return of
soup lines like the Great Depression, March 9th came around. The bulls woke up and
came out with a stampede! Last year the Standard and Poor’s 500 (broad US benchmark)
was up 26%, the DJIA was up 22% and the tech heavy NASDAQ was up a whopping
44%! But the real fun was overseas, Emerging Markets (MSCI Emerging Markets Index)
was plus 73%, China (Shanghai Composite) up 80% and our friends in India (MSCI India
Index) were up a staggering 101%! Don’t get used to these numbers though as they are
not likely to maintain this level of positive results.
Every year we listen to 8-15 economists on their economic outlooks. This was the first
year they all had more than a few themes in common. They were as follows:
Here are our thoughts for 2010; broad diversification with a hard look outside the US
19.4 times, the trend is likely to be lower.
early 2011.
account for 2.5 billion people and they are forecasting that in the next 10 years
450 million of them will be entering into the middle class for the first time,
something to think about.
(remember that these markets tend to be more volatile). Diversification might include
non-correlated assets; remember volatility is still out there. Rebalance and Reallocate!
Most likely your current asset allocation has become unbalanced due to recent market
activity; remember the proper portfolio allocation is key for successful goal attainment.
2010 is a year of change for investments, estate planning and long term care. As many of
you are aware the Roth conversion income limits go away for 2010 and you are able to
convert your qualified tax-deferred plans into Roth IRAs. For the most part this will
work well for some but be aware there may be some unforeseen pitfalls.
Estate Planning also gets a boost this year with the federal estate tax taking a breather in
2010 and then reemerges in 2011. Again, there are some pitfalls that you need to be
aware of, such as step-ups being revised. Giving this year is also much nicer with a 10%
break in the gift tax; you might want to think about gifting assets that have been devalued
from market conditions. Make sure you address your current situation with an Estate
Attorney before making any changes to your current plan.
Finally with Long Term Care what does the future hold? According to Boomer Market
Advisor, January 2010, the yearly costs are $60,000 to $150,000, dependent upon the
area. There are alternative ways that you can address this part of your portfolio without
having to buy a traditional long-term care policy. You don’t have to “lose it if you don’t
use it.”
I hope that this gives you a little guidance and insight on what is available and how things
change year after year. If you have any questions or concerns call us…….We are here
for you! Have a wonderful, safe and prosperous 2010.
Indices are unmanaged measures of market conditions. It is not possible to invest directly into an index.
Diversification helps you spread risk throughout your portfolio, so investments that do poorly may be balanced by others that do
relatively better.
Neither diversification nor rebalancing can ensure a profit or protect against loss.
International investing entails special risk considerations, including currency fluctuations, lower liquidity, economic and political risks and differences in accounting methods. Past performance is not a guarantee of future results.
2009 returns quoted from Morningstar.