The two most important ingredients affecting equity prices are interest rates and corporate earnings. The Federal Reserve Board raised interest rates several times last year which led to December being the worst December for equities since 1931. Subsequent announcements from the chairman of the board indicates that a slowing of these interest rate increases may be forthcoming. That’s good news, especially since, according to the attached article, there are little signs, if any, that inflation is rearing its ugly head. And, January is turning out to be a very good month for equities.

When I do reviews for some of my younger clients that are still in the workforce, the one consistent comment I get is that Social Security will not be there when they become eligible to draw on it. The attached article offers a great explanation on how the system is funded and the projections for the funding going forward. And, I read a comment some time ago that the United States eventually gets things right after they have exhausted all the wrong options. There is no question that the SS system needs some adjustments. I do think that, eventually, the politicians will come together and make those adjustments so that the system will continue to provide all working Americans with a retirement income stream in addition to any other income streams like pensions, IRAs and other investments.

Speaking of investments, I want to keep repeating what our portfolio managers are doing that is a totally unique and a one of a kind investment strategy. One factor is a built-in strategy for a yearly cash flow, in addition to dividends, interest and market returns. Another ingredient included is that, in the event of a sudden and dramatic drop like 9/11, the portfolios are designed to recover most, if not all, the losses. The only drawback is that, if the markets trend down, these portfolios will underperform market returns. (There is no free lunch) And, please always remember there are no guarantees when it comes to investing in the equity markets and investing does have risks.

As always, should you wish to talk with or meet with me, just email or call. Now, let’s all make it a great week!

Doug Alden

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