Happy New Year and Welcome 2010
By Jeff Christie, January 7, 2010
It is always difficult to foresee what a new year will bring, but one thing that you know you will receive, are wide-ranging market predictions to start the year off with extra confusion.
This year is no different, I have read outlooks for the year that range from a double dip in the equity markets, with the S&P 500 plummeting below the March 2009 lows, to this is the beginning of an 8-10 year bull rally and the S&P 500 should be around 1300 by mid-year. It never ceases to amaze me how highly paid, so called market pundits, can be looking at the same data, yet come up with extremely different predictions. But I’ve got to tell you, I love it. If you take the time to look through them, pulling out the useful information, but not necessarily subscribe to their conclusions and seeing what they missed, there sensationalistic headlines may lead you to some fantastic opportunities in up or down markets.
I cannot predict whether or not the stock market will go up this year, and if the last few years have taught us nothing else, it is that very few people, if anybody, can. But I can tell you that up or down, there will be some type of opportunity to pounce on if you are ready.
So the question remains, how do you prepare yourself for this 2010? I suggest you create a strategy that works for you, stick to it, track it closely, and make adjustments as the market dictates. As private wealth managers, our firm’s strategy is known as the Alpha System.
The Alpha System takes into account much more then just money management and investing, but for today’s discussion I will stick to the investment side of things. Our strategy is comprised of three parts, core, tactical and uncorrelated or hedge. Each part of the portfolio has its own purpose.
The core portfolio is built with longer-term holdings, we look to buy assets that are cheap by historical measures and sell them as they become overpriced. The tactical portfolio has shorter-term holdings. The strategy here is to take advantage of short-term market conditions, bubbles or busts, where we think we can make a quick buck and then move on. The uncorrelated or hedge portion of the portfolio is created using asset classes that have little to no correlation with the stock market. This portfolio is built to potentially bring absolute return, whether the stock market is up or down. By combining these three pieces in various percentages depending upon your objective, we will hopefully be able to have the proper balance and flexibility in any market conditions. If you would like to learn more about our Alpha System, feel free to email me a jchristie@kenstern.com to receive more information.
When it comes to turbulent markets, you have to stick to your strategy, and not outsmart yourself. It’s like Denzel Washington said in one of my favorite movies, Remember the Titans, when describing his offense, “It’s like novocaine, give it time, always works.”
Good luck in 2010!
Jeff A. Christie
Wealth Manager
CRD# 4889641
CA Insurance License# 0F01343
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Jeff Christie is a registered representative of First Allied Securities, Inc. (FASI), a registered broker/dealer. Ken Stern & Associates (KS&A) is a registered Investment Advisor. FASI & KS&A are not related entities.
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