July 3, 1997
Dear
Financial investors have experienced yet another great quarter. Questions I hear frequently are “When will it stop?” or “How long will this last?”
We do not manage portfolios by timing markets and certainly will not begin to do so now. Portfolios we manage are carefully constructed to minimize volatility consistent with each client’s time horizon and tolerance for risk. A market reversal will certainly affect each portfolio, however volatility is inherent in investing and should not be fared by itself.
This is the second oldest economic expansion record. The very elements that have provided market thrust for the past dozen years remain intact: low interest rates and inflation, (the “just-right” economy); 401 (k) and other deferred compensation inflows into equity mutual funds; record stock buyback and merges; stock and option payment to executives and employees; a share of equity ownership to labor and access to equity capital. Most economist do not see these factors dissipating in the near future.
Higher interest seem like the most likely force that could start an unwinding process and everything then nearly follows in reverse. money flows out equities, stocks buybacks dry up, etc., etc.
Few recent adjustments have been made to existing portfolios. Our investment style is to remain “fully invested” unless directed otherwise. We feel we are well positioned for the upcoming months.
Enclosed please find your second quarter and one year Portfolio Performance Summary, Portfolio Holdings statement as of June 30th and quarterly Account Management Fee Statement.
If you desire information on internal rate of return, time weighted rate of return of Morningstar reports on mutual funds in your portfolio, please let us know. If year-to-date realized capital gains reports for non qualified portfolios would assist you to prepare your estimated tax payments, we will provide them at any time by request. Please with any question or to advise us of your investment objectives have changed.
My best regards,
Allan C. Topp, CPA
President