Value Investing Blog Releases Series on Stock Valuation and How to Value Company Shares

Value Investing Blog Releases Series on Stock Valuation and How to Value Company Shares

Economic Update – The Challenges We Face

By Ken Faulkenberry

The economy continues to go through profound changes in efforts to absorb the shock of two bubbles in one decade. Our nation currently faces high unemployment, large and growing deficits, and a ballooning national debt. Instead of implementing sound fiscal and monetary policies, government policies of the past decade have and are compounding our long term problems. The economy lurches between deflation and inflation as the policies of the government vacillate depending on what the current objective of politicians and the Federal Reserve are at the moment.

In addition, an aging population of 80 million retiring baby-boomers promises to put a severe strain on entitlement programs for decades to come. Unlike any time period ever faced, we will have a shrinking number of young productive taxpaying workers as compared to older people who need the entitlement programs far beyond their projected resources.

The bottom line is we are going to face much slower growth in the United States than we have faced in previous decades. This decade was a prelude to the kind of investment environment we may face going forward. The result is a buy and hold strategy will produce subpar results due to its lack of ability to adapt to a tough and unsteady environment. More than anytime in the past, diligent research, and adaptation to a constantly changing environment are required to build wealth. Diversification, asset allocation, and regular re-balancing are necessary for a successful investment plan.

Unfortunately, very few mutual funds have adapted to the new reality resulting in very poor investment returns. Much of this poor performance is due to over-diversification. The current environment produces more struggling companies and fewer winners; bringing down the average performance. The very broad diversification typical of most mutual funds means less money is allocated to the best investments. While under-diversification is a deadly mistake, over-diversification leads to mediocre returns or worse?

Because of today’s environment investors should consider managing their own investments. With low discounted commissions, investors with a minimal size portfolio can efficiently put an asset allocated portfolio together and stay in control of their own destiny. Investors who need help with the research, or putting together a properly diversified portfolio can hire a service such as the Arbor Investment Planner. The AIP provides a properly diversified asset allocated model portfolio and specific buy and sell recommendations to its online subscribers. Check out the excellent 10 year record of the Arbor Asset Allocation Model Portfolio (AAAMP) here: www.blog.ArborInvestmentPlanner.com/?page_id=141

Wells Fargo Bank Supports Community with Renewal of Spring-Klein Chamber Membership

 

Toni Richard, SKCC president, presents Wells Fargo Bank, Kuykendahl branch, with their 2009 Membership Plaque.

Wells Fargo Bank, Kuykendahl branch, recently renewed their membership with the Spring-Klein Chamber of Commerce (SKCC) in November 2009. Sam Avery, branch president, continually exhibits support of the community where the Wells Fargo branch is located by actively involving himself and his branch with their customers in a very customer-service oriented way. The SKCC proudly welcomes their faithful support of the Spring and Klein areas and looks forward to a long-term partnership with the branch and the other wonderful banks that invest their time and finances into the community.