• In markets like this we look for clues in sentiment that tell us just how oversold a market may be.  Sentiment indicators are contrarian indicators; that is, when they are at peak bearishness, the market is likely to rally.  Currently, sentiment indicators are very negative which may be a short-term positive for the equity market.  AAII bears remain above 50% for a third straight week – the first time since the 2009 lows. The Investor Intelligence bull/bear ratio has finally fallen below 1.  The CNN Fear/Greed Indicator is showing “extreme fear.”  The Citi panic/euphoric model has moved to “panic.”
     
  • We agree with Bespoke Investment Group that semiconductors are the “Transports of the 21st Century” as they are part of our daily lives from phones, cars, appliances, and even medical devices.  Just about every major market rally in the last several years has been led by outperformance of the Philadelphia Semiconductor Index.  It should be noted that semis have seen a sharp degree of outperformance in the last week.  It also bodes well for technology stocks resuming their market leadership role as stocks bottom (maybe with a retest – see below).

MASSIVE STIMULUS THROWN AT THE ECONOMY AND MARKETS

A good word to describe the stimulus meant to protect our economy and markets is “massive.”  Last week Congress passed a relief/stimulus bill that will throw more than $2 trillion into the economy.  The Fed continued expanding its balance sheet to the tune of well over $1 trillion in assets over the last four weeks – dwarfing anything done during the financial crisis.  And they promised more as needed – whatever it takes.  The massive combined monetary and fiscal stimulus of the last few weeks has taken everything that was thrown at the financial crisis over a two year period, and did it all in about three weeks.  Last Thursday we got the first hard data on why all of this is necessary:  A total of 3.3 million initial jobless claims.  On Monday, the St. Louis Fed forecast an unemployment rate of up to 32%.  Yesterday Goldman Sachs revised their Q2 GDP forecast to down 34% (annualized). 
 
To everyone’s relief, the markets responded favorably to the stimulus.  Not just the stock market, but bonds, too.  The bond market seized up the week before, but the Fed’s liquidity infusion helped calm investors.  But how will stocks react when we see a full month of depression-level data, without the reassurance of more stimulus?  We are confident in the long-term effects of the stimulus, but the short-term is still in question.  It will be tough for many investors to keep the faith as the economic pain gets worse.  There is a strong chance that stocks have not seen their lows.
 
Let’s turn to typical market behavior during periods like this.  After a waterfall decline in stock prices made worse by panic, stocks tend to have sharp swings up and down which we seem to be experiencing now.  Last week showed just how violently stocks can rally from the lows.  After this, the typical next phase would be a retest of the March 23rd lows on lower volume.  It can take weeks or months for a retest to occur and there is no guarantee it will happen, but the odds are high that last week’s low will be tested.  Once a successful retest has been made and a permanent low is established, the move off the low is usually explosive.
 
How are we responding to this turbulent market?  First, a shopping list is being compiled of quality stocks we would like to buy.  We are finding attractively valued stocks but not as many “bargains” as we expected – not like we did in 2008 and 2011.  We will purchase “bargains” when we find them.  Timing the bottom is an impossible task, but identifying good value is something we have been able to do for many years.

Knowledge – Results

Experts in Risk Management

Are you prepared for the next market correction or financial crisis?

Knowledge – Results

Experts in Risk Management

Are you prepared for the next market correction or financial crisis?

Knowledge – Results

Experts in Risk Management

Are you prepared for the next market correction or financial crisis?

Knowledge – Results

Experts in Risk Management

Are you prepared for the next market correction or financial crisis?

Real Retirement Solutions

designed to improve
  • Wealth Preservation
  • Management of Risky Assets
  • Peace of Mind

This is achieved through an ongoing assessment of market risks given your specific financial situation and goals.

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Professional Expertise

Leadership Team

Richard Furmanski

Richard Furmanski

CFA

has been a portfolio manager and analyst for over 35 years. He manages conservative, tax-efficient portfolios for both pre-retirees and retirees. His lower risk approach appeals to investors who want less volatility and competitive risk-adjusted returns.

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Mary Ellen Adam

Mary Ellen Adam

Director of Operations

has been in office administration for over twenty years. Her experience includes customer service, firm operations, and office administration. She interacts with our clients on a day-to-day basis and handles any requests that may arise.

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Frequently Asked Questions

If you can't find the answer to your questions here, feel free to give us a call at 847-847-2505

Do you manage both stock and bond portfolios?

Yes. We build a portfolio of conservative, high-quality stocks and hold them for the long-term. The average holding period is 4 – 5 years. Our focus is on stocks that are suitable for retirement portfolios.

Our high-quality bond portfolios are designed to provide both income and stability of principal. Bonds provide the anchor for balanced accounts (those holding both stocks and bonds).

What is your investment philosophy?
We take great care in purchasing only high-quality stocks and bonds intent on a multi-year holding period. Portfolio turnover and taxable realized gains are modest in comparison to other active managers. We do not time the market but will become more defensive, in terms of stock holdings, when market conditions warrant.
Will the portfolio be managed in accordance with my financial goals?
Yes. Each of our clients has a custom-tailored portfolio. These custom portfolios are designed to meet specific client objectives with a thoughtful approach to specific constraints such as risk tolerance. And as each client’s situation changes, the portfolio does as well. There is no cookie cutter approach.
What kind of expertise do you have and how can that help me in difficult markets?
We have been working with high-net-worth clients like you since 1982. Over that time we have helped them to navigate several bear markets and financial crises (including the stock market crash of 1987). We hold the Chartered Financial Analyst (CFA) and Certified Financial Planner (CFP) designations.
Are you sensitive to taxes when managing portfolios?
Yes. Our holding period for an individual stock averages 4 plus years which means our turnover is low and realized gains can be carefully managed. Further, where possible, we tax loss harvest small losses as a way of offsetting gains taken elsewhere in the portfolio.
How have you performed?
Results will differ by client and the level of customization but we have provided competitive investment returns for many years.
How do you charge for your services?
We charge a management or consultant fee based upon the size and level of customization of the account. As the account grows, we benefit together.

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