Monday, September 26, 2011

Providing Perspective on the Markets and Economy


September 21, 2011

Dear Valued Investor:
Continued concern over the debt burden of the developed world combined with the deeply divided political landscape in Washington, D.C. has many investors questioning the sustainability of the economic recovery following the Great Recession of 2008. Growth has slowed and we believe the chance of revisiting a recession has increased to approximately 35%. However, the most likely scenario remains that global growth will continue at its modest pace, which could offer an upside surprise for an increasingly bearish-biased market.
While these volatile markets are sending many investors scrambling for a rock to hide under to wait out the uncertainty, I believe turning over those rocks in search of investment opportunities may prove fruitful over the long term. Fear and emotion oftentimes defines short-term market reactions. However, when fear is at its pinnacle, a patient temperament, faith in your investment plan, and a commitment to opportunistic investments can ultimately turn short-term market challenges into long-term investment success.
One does not have to go far into the history books to find two periods where short-term fear transitioned into investment triumphs. Today’s investment environment is causing investors to face similar challenges to those that haunted them in 2008 and again during the summer of 2010. In both of those periods, prices had declined further than their fundamental values and proactive policy action by central banks served as the catalyst to lure opportunistic investors back into the market. I believe that the same environment exists today and the same elixir is needed for these uncertain times.
The crowded trade certainly remains bearish, but policy actions to stoke the economic growth fire have begun again in earnest. The Federal Reserve Bank announced today that they will provide additional stimulative monetary policy through Operation Twist. Moreover, many central banks around the world that had been intentionally slowing their country’s growth in an attempt to head off inflation are now switching from the brake to the gas pedal to provide more stimulus to jump start growth and the stalling global economic recovery.
The market appears to be suffering much more from a lack of clarity and a wave of uncertainty than it is a degradation in economic fundamentals. While growth has undoubtedly slowed, most corporations are still on pace to post near-record third quarter profits, business spending continues to be strong, and retail sales remain positive. In fact, buoyed by surging auto production and sales following the disruption caused by Japan’s springtime natural disaster, economic growth this quarter for the United States may be poised to not only be the fastest of the year, but also to be faster than the first two quarters of the year combined.
Despite this modest and far from disastrous outlook, uncertainty has outweighed optimism and question marks have outpaced clarity. The market is essentially suffering from a recession of confidence. With the mood decidedly bearish, the market does not believe in this recovery and investors do not have faith that policy makers can avert the second recession in three years. But, it is fear and emotional disbelief that often serves as the catalysts to lower expectations—and stock prices—to levels that even market bears see the value of owning. While the market still faces a challenging environment and has a wall of worry to overcome, I believe that patience and a vigorous commitment to your investment plan is the best strategy to weather this bout of uncertainty and serve as yet another example of the resiliency of the markets, the global economy, and American business.
As always, I encourage you to contact your financial professional with any questions.
Sincerely,
Bob
Robert J. Carr III
38555 Mound Rd., Ste 200
Sterling Heights, MI 48310
(586) 979-2678
(586) 979-8550 Fax
(800) 788-1979 Toll Free

Securities Offered throught LPL Financial
Member FINRA/SIPC

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 me prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
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.
The Federal Open Market Committee action known as “Operation Twist” began in 1961. The intent was to flatten the yield curve in order to promote capital inflows and strengthen the dollar. The Fed utilized open market operations to shorten the maturity of public debt in the open market. The action has subsequently been reexamined in isolation and found to have been more effective than originally thought. As a result of this reappraisal, similar action has been suggested as an alternative to quantitative easing by central banks.
This research material has been prepared by LPL Financial.
Tracking #1-008605 | (Exp.09/12)

Monday, September 12, 2011

September 11: A Decade Later

September 12, 2011

Dear Valued Investor,

No one will ever forget where they were when the horror and disbelief of the events on September 11, 2001 unfolded. On an otherwise perfect late summer morning, the unimaginable materialized before our very eyes as the cloudless blue sky laid witness to the billowing black smoke of hate and the country was filled with cries of confusion, anger, and fear. America had lost its innocence, but not its pride, compassion, or resolve.

September 11 has become such an important thread within the fabric of America that it joins July 4 as one of the two most important days on the calendar that is simply referred to by its date. Both days shaped America in their own unique way and marked a new beginning for our country. More importantly, both 7/4 and 9/11 tested the country’s resolve and required perseverance to overcome never-before encountered obstacles—but ultimately, both led to the declaration of America’s pursuit for freedom, independence, and justice.

A decade later the healing continues—though we have a somewhat greater sense of closure since this anniversary closely follows the elimination of al Qaeda leader Osama Bin Laden on May 2, 2011. But even this heroic task by U.S. armed forces felt empty and hollow when lined up against the resurfaced painful memories of the unjustified losses of that September day. In addition, it was a reminder that senseless hate remains in the world and that our communities, markets, and country will continue to be tested. But, America is used to being tested and passing with flying colors. America is safer now than it was 10 years ago. In addition to stepped up security measures and increased counter-terrorism intelligence efforts, America is also safer because we all wear the scars of 9/11 to forever remind us how a nation of diverse beliefs can become united around a common purpose.

National Public Radio, on their website NPR.com, conducted a survey of Americans and asked them to share, in just one word, how they felt on 9/11/01 and now a decade later. Not surprisingly, words like “shocked,” “confused,” and “scared” topped the feelings of Americans on 9/11/01. Over the decade since that day, our nation has faced a difficult healing process that coincided with additional challenges, such as two severe recessions, a collapsing housing market, and a challenging employment environment. Nonetheless, a decade later while the memories remain vivid, the tone has changed. Words like “hopeful” and “proud” compose the list of feelings that Americans now associate with the aftermath of the 9/11 tragedies—perhaps it is this resilience and sense of optimism that can serve as the blueprint on how to navigate through the tough and unsettling economic times that we now face.

Make no doubt about it, September 11 will not be the last time hatred washes onto America’s shores nor will it be the last time America’s resolve is tested. These uncertain economic times are challenging this nation’s confidence and unity as we speak. Perhaps the tenth anniversary of the September 11 tragedies will mark more than just a tribute to the fallen, the mourning, and the brave. Just maybe, this great country will use this milestone to remember how a united nation came together to conquer uncertainty and fear a decade ago and use the same strategy to tackle today’s hurdles. If each business could find a way to hire just one extra worker, if the political divide in Washington could find a bit more compromise, and if the market could find the faith that the future of America is an investment worth making, I believe that our country, our communities, and our investment portfolios can overcome this latest challenge.

As always, I encourage you to contact me with any questions.

Sincerely,

Robert J. Carr III

RJ Carr III & Associates
38555 Mound Rd., Ste 200
Sterling Heights, MI 48310
(586) 979-2678
(586) 979-8550 Fax
(800) 788-1979 Toll Free


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 me prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

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.


This research material has been prepared by LPL Financial.

Tracking #1-005645 | (Exp.09/12)