Re: Market Update
Monday September 29, 2008
To JoycePayne Partners clients-
Today the markets were under extreme pressure as a result of Congress' rejection of the bailout plan and widespread fears of more failures in the financial sector. While this is not good news, it may lead to a better solution as they have more time to figure out a less burdensome way to solve the financial crisis.
At this point, we don't want to look at your portfolio as an all-or-nothing bet. Hence, we have not and will not recommend selling everything and going to cash, nor do we feel it prudent to begin accumulating stocks and other risky assets which may appear to be cheap but could continue to decline in the immediate future. Remember, your portfolio is not 100% invested in stocks.
Markets run in cycles. One of the classic traits of a down-market cycle is the "capitulation" which is the period characterized by gutwrenching volatility and indiscriminate selling. Although we cannot know with complete certainty, today's market activity had many characteristics of a capitulation. However, this does not mean that the market will immediately bounce back.
We recognize that the US financial system has been irrevocably changed over the past several weeks. Nonetheless, for the longterm portion of your portfolio, we remain confident that a globally diversified allocation is the most prudent strategy to achieve your goals and objectives.
We continue to monitor current events and will employ short-term tactics to preserve capital and to take advantage of select market opportunities as they arise. This may result in higher portfolio turnover and more discretionary actions in the weeks ahead.
We will be in touch in the coming days as these remarkable events unfold.
Mike and Jack