Recession Worries

Whether the US economy is in a recession by technical definitions (the US 1st quarter GDP was recently revised upward, to a modest, but positive 1%), it certainly feels that way. And certain industries (autos, airlines, residential real estate sales and construction, and many areas of financial services beyond just mortgage lending) are in deep distress. With the exception only of some fixed income classes and commodities, investment markets around the world are reflecting a broad sense of gloom.

After what looked like a strong recovery in April and May, June, especially in its final days, delivered very deep one month declines in most asset classes to produce an overall loss this quarter for most client portfolios.

This was in response to a combination of disturbing factors: a weak dollar, an unprecedented price for oil, increasing inflation pressures, and the still unresolved crises in mortgage and other debt. In addition, the Federal Reserve’s recent decision to halt rate reductions frustrated both those investors looking for further economic stimulus and those hoping for rate increases to stem incipient inflation.

In our last two editions, we commented at length on the genesis and impacts of this debt crisis. We wish we could now say that it is behind us. We have no such assurances to offer. Some insightful commentators are suggesting that about half the loan defaults have yet to surface. The steep losses suffered in the market values of financial stocks reflect this concern but may have already discounted even more than the actual losses still to occur. continue story

Commodities in Context

In the 1970s, a four-fold rise in the price of oil brought the world economy to its knees. The Arab oil embargo left a deep scar in the psyche of many countries and drove a broad-based response: significant investment in oil production capacity outside of the Middle East, fuel-efficiency standards, and nuclear power, to name a few. These responses, combined with inconsistent growth in the developing world, drove down the price of oil. In response to that, oil companies then found it un-economic to make further significant investments in productive capacity, particularly in a political context that was more sensitive to environmental concerns. read more

Unconventional Wisdom: Uniting Active and Passive Management

“Dow plunges over 300 points, leading to global market rout.”

“Bears prowl Wall Street; Global investors flee from equities.”

“Investment banks on the brink of collapse.”

Headlines like these are unnerving, to say the least. And after nearly a year of such reports, it’s common, and entirely normal, to feel intense pressure to do something... anything!... to relieve the pressure.  But resisting that instinct is key to generating solid long-term performance.   read more

The "Family Mission Statement"...A Key to Effective Philanthropy

Many of our clients feel passionately about contributing to society. For those that do, developing a “family mission statement” for your charitable activities should be one of your first priorities, along with matching the proper charitable structure to your charitable intent. Your family mission statement tells the world exactly what is important to you when making charitable gifts and reminds your family of its charitable purpose. A well thought out family mission statement will return direct long term benefits to your family in the areas of values, legacy, intra-family relationships, and the family’s relationships with the community at large. read more