Investment Management Solutions

Dear Valued Client,

With the economy limping, markets wilting and impending political change, what can we do to help ensure that we keep the vital promises we make in life?

It’s always darkest before the dawn. The media’s gloom-and-doom assault reached its lowest point with a magazine cover photo of 1930s Depression-era bread lines. Now that we’ve seen the worst scenario imaginable, it’s a good time to think rationally, assess our position and look for opportunities – and opportunities are all around.

With the collapse of sub-prime mortgages, the values of fixed income investments have noticeably dropped. Sub-prime, non-investment-grade "junk" bonds have deservedly been reduced in price. But, interestingly, the uncertainty over the valuation measures and the lack of credibility of the credit rating services have caused investors to shun investment-grade bonds as well. That’s the equivalent of "throwing out the baby with the bath water."

Two investment opportunities in fixed income appear attractive:

• Investment-grade, high-quality corporate bonds. Issued by quality companies, when bond prices fall, the corresponding yields rise. Investment-grade corporate bonds may be an excellent fit for your investment portfolio and now could be a great time for you to add them.
• Municipal bonds. These fixed income securities have also seen drastic price reductions. Lower prices and higher yields make an attractive combination. Throw in the potential for tax increases by the new powers in Congress and the White House, and the case for federally tax-free municipal bonds gets even stronger.

If you are currently worried about your investment portfolio, one area to explore is your fixed income allocation. As part of an overall diversified portfolio, fixed income plays an important role in dampening volatility over the long run and generating current income.

Call us today at 858.752.1726 to schedule an appointment to discuss opportunities that utilize fixed income during bear markets. We’ll review your investment holdings, overall asset allocation and fixed income positions. Together we can craft a plan that puts you back on track to deliver on your important promises.

Sincerely,

Dion Gouws, CPA