January 3, 2011

What a difference a quarter makes. The S&P has gone from its January 3rd opening price of 1,277 to 1,408 on March 30th. This compares to all of last year with an opening price of 1,271 and ended the year at 1,257 for a loss. The Greek “situation” has, for now, been solved by the ECB (European Central Bank) printing one trillion Euros’. As one person has said “Sarkozy will defend the French banks down to the last German taxpayer.” Yes, it’s funny because it’s true.  The equity markets have reacted accordingly and shot up. Most of the US economy is slowly digging out of the worst recession in memory. The sprouts of economic growth are noticeable, but that’s about it, no stalk (pun intended) and any number of events can derail it, oil prices, unemployment and our national debt, just to mention few. We will find out in June the result of the Obama Care legislation which will affect almost 20% of our economy. To say we live in interesting times is an understatement. On the investment front we have had a fascinating series of events. The US bond market was expected to be on a long slow decline because of our fiscal irresponsibility. However, because of the “Euro” zone crisis, the world ran to the US dollar and debt as a safe haven. The largest bond manager and many think the smartest, PIMCO, last year advised people to get out of or reduce bond positions. They lost billions of dollars betting the wrong way. Many people are scared to death of China losing their economic growth and have run from the markets. Their economic growth has slowed from 9% to anywhere between 5% and 7%, hardly a stall, especially when compared to the US economic growth rate of 2%, if we are lucky. These events and many others reinforce my strong belief that investing where and when you can at prices below historical values and then having the patience to sit tight thru the rough times will result in good outcomes. There are too many items where you just don’t know what you don’t know.

We once again have received your feedback from the surveys you filled out and I thank you for the time you spent filling them out. We are pleased with the overall result scoring, which were very high when compared to other advisors. There are a few places where we can improve and we will work to do so. C R (you know who you are) won the trip to Vail and I send our congratulations to him/her. I will contact you to set it up the arrangements.

In closing, I thank you and leave you with a quote from a Harvard professor to contemplate. “When debt service exceeds military spending it is over; Spain in the 17th century, France in the 18th, the Ottoman in the 19th and Great Britain in the 20th”.

Yours Truly,

Willis

Willis Ashby, CFP®

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