Q4/2009 Market Review ~ New Year Brings Changes to Kalorama Wealth Strategies
January 19, 2010
Welcome
to the Kalorama Wealth Strategies Quarterly Market Review. These
quarterly briefs update the performance of the financial markets and
provide information on investment and financial planning topics.
What
a difference a year makes! As 2008 came to a close, the financial
system was on the verge of collapse, the economy was in the midst of a
downward spiral unlike any since the Great Depression, the largest-ever
Ponzi scheme was exposed, and the total loss for the Standard and
Poor's 500-Stock Index was a depressing 37.0%. In 2009, we were
stimulated (and some of us perhaps marinated!) with massive government
fiscal and monetary intervention, and the total return for the S&P
500 was 26.5%. Fortunately, the worst of the "Great Recession" appears
to be over.
The carnage initiated in 2008 continued through the
beginning of March 2009, with stocks unloading more than 50% since
their high-water mark in October 2007. Stocks sank in the first quarter
of 2009, exploded with double-digit upside moves in the second and
third quarter, and lodged more modest increases in the final quarter.
For the year, all indices achieved multiple-digit gains ranging from a
respectable 20% for Domestic Large and Small Cap Value to a whopping
79% for Emerging Markets. Despite the out-sized advances, equities have
yet to recover the losses from their 2007 peak, as market bellwethers
are still off by more than 25%.
Bonds wrote a different story in
2009 by not only recovering 2008's losses, but also, in some cases,
surging ahead. Several sectors posted double-digit returns: Corporate
High Yield skyrocketed 58.2%, International Emerging Markets leapt
34.2%, Municipals climbed 12.9%, and Treasury TIPs expanded 11.4%.
Although
the Federal Reserve left short-term rates unchanged at its two meetings
during the quarter, concerns about the government terminating or
curtailing liquidity programs and future inflation saw the yield on the
10-year Treasury Note trade up to 3.84%, higher by 54 and 162 basis
points for the quarter and year, respectively (the yield as of January
15th was 3.67%).
Below are rates of return for selected market
indices for the fourth quarter of 2009, full-year 2009, and the three,
five, and 10-year compound annual returns as of December 31, 2009.
New Year Brings Changes to Kalorama Wealth Strategies
I am pleased to announce the following recent changes at Kalorama Wealth Strategies:- Kalorama
Wealth Strategies, LLC - After obtaining a Certificate of Organization
from the District of Columbia, Kalorama began the new year operating as
a Limited Liability Company.
- Registered
Investment Adviser - as of January 2010, Kalorama Wealth Strategies,
LLC, became a Registered Investment Adviser (RIA) in Washington, D.C.
- Portfolio
management accounting services - Kalorama is no longer using Medallion
Advisory Services, LLC for these administrative services. They are
being performed internally and by a third-party data-management company.
- New
broker-dealer/custodian - Kalorama is now using Shareholders Service
Group, Inc. (SSG) for transaction execution and account services. SSG
provides services solely to independent RIAs and their clients. SSG
uses the clearing and custody services of Pershing, LLC, a subsidiary
of The Bank of New York Mellon, which is among the world's largest
asset custodians.
What will not change: my dedication to providing clients independent and objective advice, customized to meet their needs and goals.
One
more minor change: looking to the future, although I will always be the
founder of Kalorama, to align my title to my role, I will be using
Chief Executive Officer and Chief Investment Officer. In addition, to
avoid confusion among current and future clients, I will be dropping
the CPA (I still do not prepare tax returns) and Chartered Realty
Investor (CRI) certifications, and will retain the more relevant, and
well known, Chartered Financial Analyst (CFA) and Certified Financial
Planner (CFP®) designations.
Thank you for your continued business,
trust, and referrals. Please feel free to forward this information to
friends and colleagues who can benefit from information about investing
and financial planning. If I can be of any assistance to you or anyone
you know, please do not hesitate to contact me.
