The Right Balance

scalesFinding the right balance will be the focus for us this summer when it comes to the correct percent of defensive positions verses equity positions in portfolios. We are beginning to hear questions and see the news media question, “Is there going to be a bond bubble? Will bonds loose value?” One answer could be yes, but we (along with many others we speak with regularly) believe that in all likelihood the Federal Reserve is going to develop a plan of slowly easing their Qualitative Easing (QE) programs versus a quick rate increase. So, our opinion on the “bubble” is NO for now and the near future.

We base this on two key reasons. The first reason is that the timing of this slow easing by the Federal Reserve will be based on economic data points such as housing, unemployment, corporate earnings, manufacturing expansion, etc. And while we have seen some of these areas strengthening this spring, they all not all following a positive upward trend. We believe this is one reason the Fed will remain dedicated for now to the QE programs. The second key reason for our belief is that there are very few signs of inflation, and that too does not appear to be on the horizon.

Now there are always other factors which can be of influence, including GEO-POLITICAL events which could cause us to change our views. We meet weekly to discuss all the factors and are constantly watching for storm clouds.

For now, we continue to strive for that right balance of equities to defensive positions to best fit your risk tolerance and investment objective; searching for yield and growth opportunities without sacrificing risk protection. One thing we still believe is that especially in today’s world, best positioning a portfolio for protection can be as important as positioning for portfolio growth.

We will stay vigilant in monitoring all the factors this summer and will continue to keep you informed.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance reference is historical and is no guarantee of future results.

The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Stock and Mutual Fund investing involves risks, including loss of principal.

All indices are unmanaged and cannot be invested into directly. Past performance is no guarantee of future results.