Enclosed you will find your First Quarter 2010 Performance Report. As a reminder this report is a summary of your monthly statements and transactions you receive directly from TD Ameritrade Institutional along with the IRS tax basis of each of your investments. This report summarizes the last 90 days activities. This report is designed to help give you a slightly easier view of your portfolio activity over the latest quarter and is intended not as a replacement, but rather an enhancement of your regular monthly reports which are sent to you directly from TD Ameritrade. We are happy to announce a new added page (Page 2 of your report) that will detail your CASH withdrawals and deposits throughout the year. We found ourselves frequently searching for this information, and as such, have added this easy to read page for your review.
Following our 2010 “Choppy” theme from our Q 1 2010 Newsletter and our last performance report cover letter, the Capital Markets, (S&P 500) did not disappoint, dropping over 10% through early February only to recover for a nice gain of over 4% for the quarter. Four continued quarters of returns such as this would lead to a gain of well over 15% for the year, which we believe is highly unlikely.
We feel we are in a recovery process, but as we have stated before there will be bumps in the road and many events that may possibly derail the mending. We continue to closely monitor interest rates, as a sudden, unexpected jump in rates could act as a headwind for the recovery. In our minds, an unexpected sudden increase may pose a substantial threat to the gradual recovery we have already begun. With the Federal Government winding down their purchase of Mortgage Backed Securities, we are interested in the change in residential mortgage rates, which ultimately may act as a headwind to the residential housing recovery.
Unemployment is still nagging, but in our minds, is on the mend as well. Our belief of a gradual recovery lends itself to a slowly declining unemployment rate through this year and well into 2011.
In closing, we hope you have a moment to review our upcoming Newsletter, where we intend to discuss these topics and more in much greater detail, and of course have time to visit our live educational comments and deciphered news at www.$treet-¢ents.com. Have a Great Spring!
Sincerely,
John A. Kvale CFA, CFP