And Just When We Thought Things Were Looking Up

August 2004

How do we tell how well we are doing with your investments?  The only effective way that I know is to compare them to market averages.  The fancy word for this comparison is called “bench marking”; sometimes we can crow a bit when we beat the averages and other times, well…

So, how did we do this quarter?  Overall the quarter was a slight loss for the average of all mutual funds – (1.1%).  As usual, the totals mask a multitude of variances.  In May the averages came up 1.2% followed by June up 2.2%.  Then in July we gave back virtually everything that the markets had earned in the first half of the year with a net loss of 4.5%.  However these numbers were amplified for those that were vested into small cap funds and even more so those that were invested into technology funds, which lost 4.6% for the quarter.  On average fixed income came ahead 1.1%.

Perhaps the biggest surprise this past quarter has been the performance of growth funds versus value funds.  In general, growth funds seek companies that yield short-term gains whereas value funds tend to look for those that have steadier, longer term gains.  This past quarter growth funds fell an average of 2.5%, where as value funds gained an average of .9%.  Since our target portfolio has been leaning toward value investments, it slightly outperformed the average for this reason alone. 

Thus far, investors in 2004 have been left marking time, with little or nothing to show for their investment return.  Based on past history we should anticipate some gains in this election year with perhaps a retrenching for next year.  However, thus far in this year the markets have not followed traditional patterns.  At this point I am recommending that we continue our program of remaining in diversified, somewhat conservative, value leaning equity investments balanced out with fixed yield investments appropriate to your investing strategy.  In other words, I am encouraging that we stay the course and reap rewards that I still anticipate are to come.

Please call me at anytime if I can help out with your investment or financial affairs and have a great summer!

~Roger D. Werner~