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.

Effective Portfolio Design

Discipline
A fundamental shift is underway in the investment management and financial planning professions with the goal of enhancing Modern Portfolio Theory (MPT), developed in 1959, is hardly modern. This change has led to a more rigorous analysis of projected investment returns, a wider selection of financial instruments, and enhanced investment techniques by portfolio managers.

  • Investments available today offer an opportunity to customize the asset mix, manage cost and control risk which may improve performance for investors.
  • New investments have been complemented with an array of readily available tools to track and analyze financial information
  • Behavior finance has gain credibility and has brought a challenge to the theory that all markets are efficient

MPT is still used widely today and incorporates assumptions that present difficulties in current markets. Normal distributions do not accurately match historical return patterns and the frequencyt of rare events (extreme negative returns) are underestimated. Over long time frames (decades) these limitations have less impact, but within shorter time frames these limitations can be examined and potentially addressed in the construction and/or management of an investment portfolio.

Portfolio Composition
At Dightman Capital Group, we utilize broadly diversified portfolios but offer investors an ability to go beyond a traditional mix of U.S. stocks and bonds in the construction of their portfolio. We also believe in the utility of indexing and many of the investments we recommend are indexed based.

We offer portfolios from conservative to aggressive and shift allocations between asset classes for changing conditions.

Controlling Cost
Investment expenses are assessed in a variety of places: management cost, investment expenses, brokerage commissions, and service fees just to name a few. Keeping cost low in each of these areas means you have more money to grow.

We also pay attention to investment cost in the form of taxes. Taxes can be generated in a taxable investment account at a couple of levels. By using tax-efficient investments, we try to minimized the "shared" tax burden associated with some investments. We also use different tax strategies in an attempt to minimize the tax events generated directly in the portfolio.