Posted on: Sunday, February 1, 2004
How would you invest $100,000 in today's market?
Investment Profiles
David Butts
Assistant Business Editor
The Advertiser asked six of Hawai'i's financial professionals to create $100,000 investment portfolios for a theoretical client starting on April 1, 2003.
Today we report on how the portfolios have performed as of the close of the market on Friday and what the professionals who built them have to say about the market.
The professionals were asked to invest for a fictitious client who is 50 years old, a woman, married (husband is also 50 and both want to retire at 65), with a joint income from all sources of $150,000.
They have a net worth (including their home) of $1.3 million, and their assets owned for investment total $400,000. They are in the 31 percent tax bracket and want this $100,000 to be invested for growth.
These portfolios should not be viewed as recommendations. Selecting the right investment depends on your current situation, goals and tolerance for risk. Before investing you should consult with a professional and read all relevant prospectus. The theoretical portfolios were limited to purchases of U.S. stocks, mutual funds and certain bonds. A flat $25 commission is charged on most trades and cash balances earn interest of 3 percent. Below we list a sampling of each professionals' holdings as of last week.
If you have any questions or comments, please contact: David Butts, assistant business editor, 535-2453 or dbutts@honoluluadvertiser.com. • • • FUND NAME and TICKER SYMBOL FUND NAME and TICKER SYMBOL FUND NAME and TICKER SYMBOL FUND NAME and TICKER SYMBOL
The U.S., Japan and China are leading the global economic upturn, with Europe and Latin America lagging behind. Efforts to stimulate the U.S. economy appear to have been successful: the below-trend recovery has begun to accelerate. Meanwhile, interest rates remain low and inflation is in control. This is also generally the case internationally, where fiscal and monetary policy is stimulative. Improving conditions in the U.S. and Asia should flow through to other regions over the next 12 months. Now is the ideal time to evaluate your assets and to position them for the year to come.
Have you noticed that the election cycle is in full swing? Primaries and debates can have us wondering just what is going on with the economy. President Bush says that the economy is great and the challengers tell us that there is doom just around the corner. Tax packages and budget plans are being talked about ad naseum. I am watching the Fed. Their recent
meeting ended with a statement that is quite positive for the broad market economy.I am also watching the jobs numbers and looking for them to pick up. I may be compelled to move back into tech stocks.
And so it begins: the election year and the year interest rates complete a bottom, after a 20 year decline. Alan (Greenspan) has spoken. Rising rates aren't necessarily a negative for the stock market. Interest rates are the cost of capital. As economic activity increases, demand for capital increases and prices go up. A modest rise in interest rates, not caused by inflation, often indicates a growing economy and can mean continuing corporate profits. But bond prices may suffer, especially long term, high quality corporate bonds and US Treasuries. However, no need, yet, to make big changes. Enjoy the Super Bowl.
With the stock market continuing to rise, it’s safe to start looking at your statements again. Now’s a great time to check your overall diversification and position yourself accordingly. Are your stock mutual funds growth or value or a nice mix of both? Do you know how much value you’ll be losing in your bonds as interest rates rise? Are you getting enough income from your investments, or if you are still in the accumulating phase, are you investing enough? Are you using tax advantaged IRA/Roth/SEP/Simple IRA accounts. See your adviser soon.
