Market Update – October 4, 2011

The start of the 4th quarter is decidedly bearish, with the first two days seeing significant market losses. Our managed portfolios continue to hold extreme cash and bond positions which is helping to significantly limit the amount of deterioration seen in the first few days of the quarter. Click here to access our current view of the markets – our five-year ETF charts with their respective short- and long-term optimal trend-lines.   Both our Appleton Group PLUS and Appleton Group Portfolio core strategies hold 90% cash, with the balance being invested only in U.S. Commercial Real Estate (a nice dividend payer). This position was cut in half last month (from 20% to 10%) but is barely supportive enough for us to hold at the present time. This final position may also be eliminated in the near future if it cannot find it’s footing soon. Our Tax Managed Growth Portfolio is our most assertive at the present time, but holds an extreme 70% cash with the balance in commercial real estate and dividend-paying U.S. equities. At the present time, we hold no exposure to the NASDAQ, the S&P 500, international equities, commodity-based equities nor to high-yield bonds. Right now, this allocation makes sense.

For clients that invest in any of our asset allocation portfolios (moderate or conservative), the equity exposure is even lower due to permanent bond and cash positions. At the present time we don’t hold any bear market securities in our PLUS or Tax Managed Growth Portfolios, although they may once again return. These positions have been a challenge to own during the past two months due to the massive amount of volatility have forced us to make more adjustments than we would prefer. However, they represent in our opinion the best values in the market right now, and if a sustained market decline does take hold they have the potential to grow nicely in value.

The economic challenges facing the global marketplace are real, they are significant, and they have the potential to create tremendous opportunities for us both in the short-term and in the long-term as well. The current environment requires flexibility, discipline, and even a bit of courage. Right now, cash is king and if the current downtrend continues to run its course the outcomes for our portfolios could be considerably more positive than we’ve experienced in the past few months. Stay tuned…

By | 2011-10-04T09:55:00+00:00 October 4th, 2011|Market and Portfolio Commentary|Comments Off on Market Update – October 4, 2011

About the Author:

Mark’s commitment to objective, independent wealth management led him to establish The Appleton Group LLC in April of 2002. With over 19 years of experience in the financial services industry, Mark serves as portfolio manager for our private client group, and co-manages all assets held in our suite of portfolio offerings. His responsibilities include risk analysis, asset allocation, market research, and institutional client development. Mark also serves as both Principal and CEO of The Appleton Group LLC. He earned his Accredited Investment Fiduciary (AIF) designation in 2016