Dear clients and friends:
The stock market is up about 2% so far this year. Absent the first trading day of 2006 when the S&P 500 lept 1.8%, we are virtually flat for the first 10 weeks.
Stock and bond market volatility continue to make it tough to jump on a rising trend. Consider that since last April the S&P 500 Index (500 of the largest American companies), rose 10% from April to August, then fell 6% into October before rising 9% into year-end. Bond interest rates are up. Ten year money now pays 4.75%, a 20 month high,up from 4.6% just a month ago. While savers gain more, borrowers pay more, which affects many more souls as our National Savings rate is hovering near zero.
What to make of all this? It means that investing is challenging. Buying and holding may not work too well this year. Smaller stocks may perform the bigger ones. Bonds may beat stocks in 2006. As these events unfold, I may be trading portfolios more often. Small profits are preferrable to small losses. And if stock prices move down significantly, you'll see a larger cash or money market balance in your account on your monthly statement.
Call or e-mail me anytime.
-Barry Unterbrink, [firstname.lastname@example.org]