Second Quarter 2002|Jim Williams| We are now under a constant barrage of bad news in the financial pages. The declines in stock values have been dramatic. The S&P 500 is trading at levels we last saw over 5 years ago. The internet bubble, the irrational exuberance bubble, the speculative bubble, are all being erased. This is what fills the headlines. Let me urge you to consider where the pain is really coming from.
First Quarter 2002|Jim Williams| Recall that the fundamental reason for fixed income in a diversified portfolio is to moderate the volatility of the equity component of the portfolio while maintaining a reasonable yield and a store of value. A perpetual argument exists among bond investors about the relative merits of using bond funds versus direct investments in individual bonds.
Fourth Quarter 2001|Jim Williams| With all the recent lowering of interest rates by the Federal Reserve, and with money market yields below 2% it would seem that interest rates are about as low as they can get. This is a circumstance that gives us cause to examine the role of fixed income in our portfolios. Why would anyone want to hold bonds knowing that interest rates are going to go up?
Third Quarter 2001|Jim Williams| Watching the abrupt decline in portfolio values after the terrorist attacks was disconcerting, to say the least. The horrible events themselves left many of us with a sense of loss, and a feeling that our personal security was impaired. These emotions were compounded by the reaction of the financial markets. Here's a comparative look at the market impact of several crisis events and the amount of market recovery after the end of the market reaction to the crisis
Second Quarter 2001|Jim Williams| The recently enacted Tax Relief Reconciliation Act of 2001 includes some favorable changes in the law, including income tax changes, education related tax breaks, retirement savings and pension reform, and estate tax relief. While virtually any relief from federal taxes is welcomed, the "back-end loading" of the rate cuts and the "sun-setting" of the estate tax repeal make these changes less exciting than they might otherwise be.
First Quarter 2001|Jim Williams| The returns for the quarter ended and 12-months ended March 2001 were disappointing in historic proportions. An examination of all of the 12-month periods ending on calendar quarters from December 1926 through March 2001 shows that the most recent 12-month period (ended March 2001) was the 15th worst. Is the decline over? Will this pass?