August 15, 2011

What I Sent Clients in Light of Market Volatility

The recent increase in volatility in stock market has prompted a few clients to call to find out how their portfolios are holding up. As of August 9th, the market was down about 9.4% from June 30th (the date of our last portfolio review) and the Low Volatility model was off 1.35%. This is the model in which I have about 90% of clients’ accounts (see previous blog on my models). After receiving the first couple of calls, I decided to send each client an email with their performance numbers relative to the market. This action has been met with great appreciation from my clients. 

The End of the Bond Bull Market?
I'm very curious about the implications of the flattening of the yield curve. The intriguing aspect this time is that rates on all maturities have been falling. Unlike other times in history when the yield curve was flat, this time it's leveling out at historic lows. Could the 10 year Treasury reach 1.75%, 1.50%, or lower? If rates do remain low for several years, I would expect fixed income total returns to be rather muted. At  some point when rates finally start to rise, bond returns would probably not be all that attractive either. Maybe the bond bull market is finally over? 

Getting New Clients From Web Searches
Business has been very good recently. I gained four new clients in the past week. The interesting thing is that three of them found me using a Web search engine. As it turns out, I had met one of them years earlier. The fourth new client was as a referral from an estate attorney. I would have never thought I'd be gathering this many quality clients from the Internet. It's also a very inexpensive marketing strategy. 

My Soapbox
It seems to me that more and more people are seeking objective, proactive, independent advisors these days. I believe people are sick and tired of being sold and are looking for something different. Moreover, I suspect there is a growing number of investors who are unsatisfied with the big-box-sales-driven culture ingrained in the wirehouses and large banks. Too often, these firms are more interested in their own bottom line than in the clients’. I'm not complaining. To the contrary, the more "sales oriented" advisors there are, the greater the contrast between them and myself. That's a recipe for success!

Thanks for reading and have a nice week!

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