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.

Creating Retirement Income

Generating Income
We spend the first part of our life accumulating assets and earning income. When retirement arrives we shift to a strategy designed to generate income from our investments to support our lifestyle. Moving from the accumulation phase to the distribution phase creates additional challenges and may require a change in the way investors manage their portfolios. The most recent bear markets of 2000-2002 & 2007-2009 is a good reminder of just how challenging financing a comfortable retirement can be.

The added complexity created by drawing down on savings raises the stakes for making good financial planning and investment management choices. Once in retirement you cannot count on long-term averages to correct mistakes because you now depend on current returns from your portfolios to support your income distributions.  While some investors will shift to conservative investments, the returns they generate may not be sufficient to support the desired lifestyle.

Some key risks to consider when planning your retirement income include:

Longevity Risk - We are living longer healthier lives then previous generations.

Inflation Risk - Long-term our money loses purchasing power.

Asset Allocation Risk - There is a balance to strike between how our investments are allocated and market conditions.

Withdrawal Risk - The amount of money you plan to withdrawal will have a direct impact on how long your money will last.

Health Care Expense Risk - Longer life spans, rising medical cost, a decrease in medical coverage, and possible shortfalls with government programs are likely to pose a significant challenge to retirees.

Our investment services focus on managing risk by lowering volatility and potentially improving compounding.  When your money is working effectively, the retirement risks listed above may become less of a concern.