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Third Quarter 2014 Review

Dear Friend,Catherine Head Shot
 

Market jitters have reappeared and provide a most welcome pause.

 

In past newsletters we've talked about how we expected market volatility to increase once the Fed's Quantitative Easing program ended. And in preparation last month we relaunched our 2011 report: "Dividends for an Uncertain World."  

 

To reiterate, this is not a scenario where you sell all your stocks until the coast is clear (whenever that might be!).   It's a scenario where you rely on the premise that you own solid companies that provide you cash every quarter, and add to positions that are still attractive at lower prices.

 

We are still not completely out of the woods when it comes to the issues created by the financial market. The 10-year Treasury yield dipped below 2% last week.   And we understand it's hard to put money in a savings account or CD paying no interest.   Remember that the stock market still offers a great opportunity if you do not need to access the money for another 5 years.

 

We are aware that the markets can make many individuals nervous. Please do not hesitate to call if you have any questions.

 

 Warm regards, 

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Catherine Maniscalco Avery

 

The backbone of CAIM is to employ a classic long term investment strategy including dividend paying stocks. CAIM is an independent, women owned investment management firm specializing in managing investment portfolios for women and baby boomers.

203.966.2712  p
203.966.5697  f 



October 21, 2014|  Issue No. 56
In This Issue
3/Q 2014 Review
Dividends/Uncertain World
2/Q 2014 Market Update
Quick Links
Find Out More
Call me at 203.966.2712
or visit www.caimllc.com.

 


Third Quarter 2014 Review 

                                                                                                                       

The third quarter began with much talk about the ending of the Quantitative Easing (QE) program, implemented by the Fed to help maintain a 2% level of inflation.   Unemployment numbers were improving, manufacturing was showing signs of strength and consumer confidence was high.  

 

Then the markets began to worry about inflation becoming an issue. The one time idea that we would have faster growth, higher inflation and higher rates was quickly turned on its head at the first weak employment report. Simultaneously we began receiving reports that housing was struggling, the dollar was strengthening and Europe was falling into a recession. All this volatile news in the quarter reversed the move up we had seen in interest rates. For example, the 10-year treasury yield that was at 2.61% one month ago, is now backing down to 2.20%.  

 

As of today, the equity markets are down about 5%. If you have been reading our newsletter consistently, you know that we have always talked about how the QE programs have propped up the market returns over the years.   Last year the market was up over 30%, at a time when the economy grew just 2.2%. Which is not bad, but not enough to warrant such outsized returns.  

 

A correction in the equity markets is an opportunity for investors. We expect economic growth to be between 1.5 and 2.0% for a while.   But it is our opinion that we will need to see fiscal reform both here, and in Europe, to move the markets substantially higher. In the meantime, the large multinational companies have survived sluggish economic growth in the past and will continue to do so.   At CAIM we will continue to focus on those companies with stellar balance sheets and the ability to grow their cash flow. Many of those companies that have not done well last quarter, have attractive dividend yields and continue to increase their dividends.

 

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Dividends For An Uncertain World 

US financial markets have been able to ride out all the turmoil domestically and internationally and have done nothing but gone up.   Not what you might expect...  Read more >>
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2nd Quarter Market Update 2014  
 

In retrospect the second quarter's theme seemed to be that what was bad news on the economic and global fronts, was actually good news for the market.   The US GDP... Read more >>  
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