Dear Client,
Enclosed you will find your Second Quarter 2010 Performance Report for your review.
No Surprises Yet:
As we have been saying since the Fourth Quarter of 2009, the choppy theme seems to be occurring just as expected. This from our last Quarterly Cover Letter:
“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.”
Over the Second Quarter of 2010 most capital markets fell over 11% with the larger European indexes dropping over 16%. Again, Not Surprising!
With economic numbers slowing slightly, and the unemployment rate remaining high for an extended period of time, many investors have been calling for the Double Dip or second recession. While anything is possible, we would like to call your attention to a few important factors:
- Interest rates have remained low adding a tailwind to economic growth.
- While many economic numbers have slowed, they are still growing
- Company managers continue to navigate well in this economic environment
This time Too Pessimistic:
We are sticking to our estimated return of 8-10% for the year even as the markets have gone from extremely positive to extremely negative.
In closing, we have mid-term elections in the fall, and several new rules and regulations (Health, Financial) to discuss in coming Newsletters. Have a Great Summer!
Sincerely,
John A. Kvale CFA, CFP
Enclosure (2010 Quarter 2 Performance Report)