CAIM’s Third Quarter Update

A Personal Note Back in May, we published a report titled, “Total Return Investing: Dividends for an Uncertain World.” At that time the financial markets were very close to their year to date high and the idea of volatility was just a concept we were all hoping would never happen. However, with the combination of QE2 ending, a dire situation in Greece and a fledging economy here in the United States has led to some intense volatility in the stock market. Below are details on 5 tips for surviving this market. Please feel free to call with any questions. Warm regards, Catherine Maniscalco Avery CAIM specializes in creating and managing customized and fully diversified investment portfolios for private investors. 203.966.2712  p 203.966.5697  f www.caimllc.com CAIM’s Third Quarter Update Back in May, we published a report titled, “Total Return Investing: Dividends for an Uncertain World.” At that time the financial markets were very close to their year to date high and the idea of volatility was just a concept we were all hoping would never happen. The combination of QE2 ending, a dire situation in Greece and a fledging economy here in the United States led to some intense volatility in the stock market. At the close of September 30, 2011, the S&P 500 was down 13.8% for the quarter and down 8.7% year to date. Individual investors once again pulled their money out of the stock market and poured money into the over priced bond market. We continue to believe that volatility is here to stay and as investors we will need  to learn to adjust to this new environment.   Here are our 5 tips for surviving this market: Keep 10 -20% of your investments in cash to meet your short term needs. Look to reduce and eliminate your debt. Continue to save for your retirement. Invest in high quality dividend paying stocks for higher income and long term appreciation. Turn off the tv, the media loves to hype the bad news and it often discourages investors from doing the right thing which is buy low, sell high! Yes, we do think there will be a light at the end of this tunnel. As of now, there is a huge void of confidence amongst investors and corporations. In a recent quarterly update, one of my colleagues at SEI points out that while investors may want to run for the hills, low levels of consumer sentiment have turned out to be great buying opportunities for stocks.   Consumer Sentiment Index   Source: University of Michigan In the coming weeks, we will be listening carefully to corporate conference calls to keep an eye on the direction of the economy. It appears that we will likely avoid a recession, but we will experience such low levels of growth that it will actually feel like we are in a recession. Corporations are still flush with cash and we expect to see more dividend increases. As of today, 23 of our 30 companies have increased their dividend an average of 10.8%, with an average dividend yield of 3.0%. We encourage you to read or reread our report, Total Return Investing: Dividends for an Uncertain World, to see how these types of stocks can help navigate investors through volatile markets.     Copyright 2011, CAIM LLC Disclaimer: NO CONTENT PUBLISHED AS PART OF THE CAIM LLC NEWSLETTER CONSTITUTES A RECOMMENDATION THAT ANY PARTICULAR INVESTMENT, SECURITY, PORTFOLIO OF SECURITIES, TRANSACTION OR INVESTMENT STRATEGY IS SUITABLE FOR ANY SPECIFIC PERSON.  TO THE EXTENT ANY OF THE CONTENT PUBLISHED AS PART OF THE BLOG MAY BE DEEMED TO BE INVESTMENT ADVICE, SUCH INFORMATION IS IMPERSONAL AND MAY NOT NECESSARILY MEET THE OBJECTIVES OR NEEDS OF ANY SPECIFIC INDIVIDUAL OR ACCOUNT, OR BE SUITABLE ADVICE FOR ANY PARTICULAR READER.  EACH READER AGREES AND ACKNOWLEDGES THAT ANY SPECIFIC ADVICE OR INVESTMENT DISCUSSED IN THE BLOG MUST BE INDEPENDENTLY EVALUATED BY THE READER AND HIS OR HER ADVISER IN VIEW OF THE READER’S INVESTMENT NEEDS AND OBJECTIVES.