The Markets in Summer Respite

Perspectives on long-term investing

by Kenneth Leach, Steve Selengut, Matthew Melendy & Amie Snyder

LMK Wealth Management

Markets have been performing well this year and while we expect bumps along the way, we’re always on the lookout for new investment opportunities and strategies to manage risk. The economy performed well in the first-quarter of 2013, with preliminary reports estimating GDP growth of 2.5% and we hope that the economic recovery continues in the second quarter.

 

Read the complete Summer Seasonal Newsletter: The Prudent Investor

Excerpts:

Focus on total returns: To maximize investment growth over time, it’s critical to factor in the effects of fees, taxes and inflation on your returns. Many posted investment returns explicitly exclude the effects of fees, which come right off the top of each year’s gains, so it’s important to dig a little deeper and find out how much that  performance is costing you each year.Taxes can also take a serious bite out of your investment gains each year and it’s important to structure your investments to account for taxes on capital gains,
dividends, and income. While we don’t believe that taxes should be the primary driver of an investment
strategy, incorporating tax efficiency into your overall plan will help you keep more of what you earn. If taxes are a problem for you, structuring your investments so that taxable investments can grow in a tax-deferred account may be an option.

a good axiom to remember is that it is usually wise to avoid following the herd. By the time your friends, family, neighbors and newspaper columnists are all investing in a particular sector or security, it’s often too late to benefit because hype has already inflated the price

Don’t chase the crowd: No one knows with any certainty which direction markets will go in the future. However, a good axiom to remember is that it is usually wise to avoid following the herd. By the time your friends, family, neighbors and newspaper columnists are all investing in a particular sector or security, it’s often too late to benefit because hype has already inflated the price. Whenever investment dollars charge in, prices soar and savvy investors usually move on. By the time the mass of average investors have caught on to a new fad, prices are often too high and investments are overvalued, making them a poor choice for investors who are seeking value.

We don’t necessarily advise becoming contrarian investors, i.e. those who believe that crowds are always wrong and look for opportunities to invest against the prevailing trend. Instead, we strongly encourage an investment strategy that is based on objective research using the best information available, calculated choices, a realistic assessment of risk, and a determination to avoid emotional decision-making.

We sincerely hope that you find this Newsletter interesting, informative and educational. We’re  constantly seeking out new ways to educate our clients and provide them with insight. We are always interested in hearing your feedback about our newsletter. If you have any ideas you’d like to share with us or have questions you’d like answered in one of our issues, please let us know. If you have any  family or friends who would enjoy receiving their own copy, please give us their information and we will be happy to add them to our growing list of subscribers. As always, it is an honor and a privilege to  serve you. On behalf of all of us at LMK Advisor’s, thank you and best wishes for Summer 2013.

 

Read the complete Summer Seasonal Newsletter: The Prudent Investor