Download Travels (September) - Laurel Wealth Planning

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LAUJ\&L WEALTH
P LA N N I N
G
September, 2012. Travels. As you know, I've just returned from my cruise, and my tours of sites
in Spain, Italy, Greece, and Turkey. I'd like to start this letter to you with a few observations I took
away.
Spain, Italy, & Greece. I asked many cab and bus drivers, tour guides, hotel workers, etc., how they
felt about the economy. They all said, "badly," but when I asked what has caused this, I was
surprised that not a one said, "We took on too much government debt." Instead, they blamed "the
crisis," the U.S. bank near failures, being in the Eurozone, their own governments, etc. At the same
time it struck me as telling that the citizens of these countries are tolerating the pain of about 25%
unemployment (same as ours during Great Depression) to stay in the EU. I would have loved to
have seen more accountability for their public debt, but I am heartened to have seen the
importance these populations place on EU membership.
Turkey. Another surprise were the comments I heard from the Turkish people. With Turkey's about
+9% per year economic growth, I expected to meet an optimistic people. Instead, I thought faces
looked strained and when I asked my tour guide and bus driver about this, they said, to paraphrase,
that the common man is going behind financially every day. That concerns me.
On a personal note, my mom said that the trip, for her, was the "trip of a lifetime," and I am very,
very glad we did this together.
Investment Results. Your investment results are attached. You likely won't be surprised to see
that you have a gain for the year. Please let us know any questions on your portfolio's performance
or structure.
Some 2012 Year to Date Investment Category Results
Stocks (equities)
S&P 500 (large U.S. stocks)
Global Dow (non U.S. stocks)
Inflation Hedges
Dow Jones- UBS Commodities
+11%
+8%
+6
Fixed Income (bonds, money markets, CD's)
Example, 2-year CD yield, 3/31/12
+1%
(example of shorter-term position)
BarCap Aggregate Bond Index
+4%
(example of mid to longer-term positions)
Category definitions on page 3.
Investment Outlook. I just spent two days at an investment conference, and I have a lot to say on
investing! But, I'll keep it short here and if you have an interest in hearing more, please call me.
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Future performance can never be guaranteed. See page three for footnotes and important information.
33 00 Edi nborough Way. Suite 790
I Edina. MN 55435
I O ffi ce: 952-854 -6250
I Fax: 952-854-6276
I www. laure lwea llhpl anning.com
Securitie' offered through Raymond James Financ ial Services. Inc. Member FINIWSII'C. La urel Wea lth Pl anning LLC is an indepe ndent registered inves tment adv isor.
Negatives:
• Too much federal debt which is risky and inflationary.
• Lots of money "being printed" which is inflationary.
• U.S. government and corporate bonds with high ratings have been through a 20-year bull
market and probably are "cruisin' for a bruisin' " at some point.
• Europe is unresolved.
Positives:
• Strong corporate finances, with lots of cash reserves. This will encourage corporations to
increase dividends, buy back stock, or reinvest in their companies.
• Increased U.S. manufacturing due to the natural gas finds. These deposits may also help
keep energy prices, i.e., inflation, lower, and may also help many areas of our economy over
time, and may help make us more energy independent.
• The growth markets of China, India, Indonesia, South America, etc. are still the story. Even if
growth slows in these countries, which it has and will over time, substantial middle classes
have been created and the companies you own will work hard to meet the needs of these
people.
• The stock market looks out about six months, and is currently saying, "I can deal with either
presidential candidate as a winner."
Here are some strategies we are using to address the above:
• Retaining the target weight of equities since, over time, they help keep up with inflation.
• Participating in the growth markets.
• Underweighting more vulnerable bonds.
• Standing ready to buy equities if they become a bargain due (due to European or other
issues).
• Participating in the natural gas finds.
Tax Outlook. Tax planning was a big discussion at our investment conference. Many of our
speakers were conservative folks, but most thought that we will see a combination of government
spending cuts and higher taxes (especially for the perceived wealthy) next year and in coming
years. We will continue to bring tax strategies to your attention that fit you.
Office News. Susan and her husband, Spencer, just bought their first home. Please wish Mallory
luck; she is considering beginning studies for a difficult licensing exam.
Please do call us with anything. As always, it is our absolute pleasure to serve you.
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Future performance can never be guaranteed. See page three for footnotes and important information.
FOOTNOTES, INDEX DEFINITIONS AND IMPORTANT INFORMATION
Index Definitions. The S&P 500 index is an unmanaged index of 500 widely held stocks. The Dow Jones
Globallndex•M is a broad yet investable measure of the global stock market. It targets 95% coverage of
markets open to foreign investment. The index currently tracks 42 countries, including 25 developed
markets and 17 emerging markets. Example, 2-year CD, as of 3/31/12: simply a rough estimate of an
average rate for a 2-year certificate of deposit offered through Raymond James Financial. The BarCap
Aggregate Bond Index represents securities that are SEC-registered, taxable and dollar denominated.
The index covers the U.S. investment grade fixed rate bond market, with index components for
government and corporate securities, mortgage pass-through securities and asset-backed securities.
The Dow Jones- UBS Commodity lndexes•M are composed of exchange-traded commodity futures
contracts rather than physical commodities.
Important Information. Performance data from https://ecommerce.barcap.com/indices/index.dxml or
the Wall Street Journal.
The information on the previous pages is not intended as a complete description of the securities,
markets, or developments referred to in this material. The information has been obtained from sources
considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete .
Any opinions are those of Laura A. Kuntz, Financial Advisor, and not necessarily those of RJFS or
Raymond James. Expressions of opinion are as of this date and are subject to change without notice .
This information is not intended for a solicitation or an offer to buy or sell any security referred to
herein . Investments mentioned may not be suitable for every investor. Investing involves risk and
investors may incur a profit or a loss, including the loss of all principal. Please note that international
investing involves special risks, including currency fluctuations, differing financial accounting standards,
and possible political and economic volatility. Diversification does not assure profit or protection
against loss. Commodities are generally considered speculative because of the significant potential for
investment loss. Commodities are volatile invest ments and should only form a small part of a diversified
portfolio. There may be sharp price fluctuations even during periods when prices overall are rising.
Bond prices and yields are subject to change based upon market conditions and availability. If bonds are
sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term
allows redemption at par value. Bond prices and interest rates have an inverse relationship. Dividends
are not guaranteed and must be authorized by the company's board of directors. Please note, changes
in tax laws or regulations may occur at any time and could substantially impact your situation . While we
are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS we are
not qualified to render advice on tax or legal matters. Precious metals are subject to special risks,
including but not limited to: price may be subject to wide fluctuation; the market is relatively limited;
the sources are concentrated in countries that have the potential for instability; and the market is
unregulated. Investing in oil involves special risks, including the potential adverse effects of state and
federal regulation and may not be suitable for all investors.
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Future performance can never be guaranteed. See page three for footnotes and important information.