Dightman Captial Group
We manage adaptive investment strategies, as part of a comprehensive planning environment, designed to protect capital in sustained market contractions and grow capital during market expansions.

Protect...Grow...Repeat

Market & Economic Brief

March 4th, 2010

GLOBAL STOCKS
Stocks are making a recovery attempt from the pullback that developed in the middle of January but remain vulnerable, in our opinion.  We will not be surprised if stocks reach new highs in the current rally but have become more alert for another, potentially more significant, correction. 

WORLD ECONOMY
Leading economic indicators by ECRI are starting to point to a slowdown in the U.S. economy toward the middle of the year.  Debt issues in Europe, the Middle East, and some U.S. states continue to pose potential problems.

INFLATION DATA
Inflation generally appears to be contained and continued deflation concerns appear to be off the table for the time being.

U.S. RESIDENTIAL HOUSING
The housing market has stabilized but weakness has started to reappear in parts of the market.

PLANNING
New conversion rules for ROTH IRA's in 2010 may present a unique planning opportunity.
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About Index Investing

Index investing has been around for decades, and today it is herald as one of the most efficient ways to invest your money. Well known investors like Warren Buffet, Charles Schwab, John Bogle (founder of Vanguard), and Peter Lynch (famous Fidelity Magellan Fund manager) and many others have publicly endorsed index investing as a very efficient method for investors to expose themselves to stock investments.

Some of the more notable advantages to index investing include:

  • Low Cost
  • Near Market Rate of Return
  • Pure Asset Classification
  • Low Tax Exposure
  • Investment Transparency

THE ROLE OF INDEX INVESTING

The world of index investing has expanded rapidly.  Still, many advisors/consultants are not deploying them fully.  Initially index investments were limited to traditional indexes like the S&P 500 and NASDAQ 100.

Today many exchange traded funds (international, small company, industry sector, investment style, real estate investment trusts, commodity, and other asset-classes) have been introduced, offering tremendous utility for those investors seeking exposure to a broad representation of the investment universe.

OUR APPROACH

For the portfolio manager, the advantages of using indexes can be tremendous. Today the ability to pin point a group of stocks based on dividend yield, market capitalization, industry sector, fundamentals, geographic location, or other characteristics has improved immensely. This capability provides the portfolio manager with the ability to be very specific about what assets are held in the portfolio at any given time.

At Dightman Capital we place our portfolio construction emphasis on determining which indexes should be included and how much weight each one should represent in the portfolio versus which mutual fund or seperate account manager is going to beat their investment benchmark this year (most don't, and those that do rarely repeat).(1)

(1) Journal Of Financial Planning, “The Difficulty of Selecting Superior Mutual Fund Performance” February 2006