Dear Friends and Family,

“There are two times in a man’s life when he should not speculate: when he can’t afford it and when he can.” — Mark Twain

One of the cardinal rules of successful portfolio construction is staying invested. The main reason individuals do not stay invested is the presentation — or spin — of news in the media. Good examples include headlines from this week’s papers: “Banks’ Health Questioned.” Nowhere in the article did it say that only seven banks have failed, compared to the 1,000 failures during the financial problems of 20 years ago. We survived and prospered.

“Housing Sales Kill Rally. Home Sales Dip to 10-Year Low in June.” One bad day killed the rally? That’s not worth discussing. But the implication that this is current news — that this is June data — just isn’t true. Sales of existing homes data are based on settlement date. Most of these contracts were signed in March and reflect the opinions of possible buyers at that time. Where is the data showing that visits to open houses picked up substantially since then? Where is the data showing that new home contracts were down only 0.6% in June? Or that half the country saw new home sales go up in June? Or that inventories are down? Or that May figures were revised upwards?

I am not saying the turnaround is definitively here, but clearly, some individuals did not stay invested based on data they did not understand. For the media, bad news sells. You never read that a little girl didn’t fall down a well today. And remember — the news you read may not be worth what you paid for it.

Safety: Freedom from danger; quality of not causing injury or loss.
We touched on this in a previous letter, but we want to reiterate this important aspect of safety for your accounts. In addition to SIPC coverage, Fidelity also carries CAPCO (Customer Asset Protection Company), a licensed Vermont insurer. This covers your Fidelity accounts 100%. SIPC coverage comes first, and the rest is covered by CAPCO.

The excess protection (sometimes referred to as “Excess SIPC”) would be triggered in the event of financial failures and liquidation of a participating securities affiliate — and if customer securities are not returned. If you would like additional information on this, please contact Vicki at vicki@katzfamilyfinancial.com or call any one of us. We would be happy to get you the information you need.

Teamwork: Cooperative effort by the members of a group or team to achieve a common goal.
Teamwork is very important to our firm and how we conduct our business. We strive to make sure that our clients have confidence in — and are able to contact — each one of us. We believe in our one-team approach, with three generations of perspective, experience, and expertise in assisting our families to reach their financial goals.Please contact any one of us  and don’t be surprised if any one of us contacts you. As always, Vicki Callaghan is available to address any client service requests you may have.

Consumer Sentiment: An index to measure consumer optimism.
Consumer sentiment rebounded in July from a 28-year low, and business investment rose unexpectedly last month  showing a rare sign of resilience in the U.S. economy. Data from the struggling housing market also contributed to the less gloomy picture. New home sales in June were not as weak as expected, and the index of confidence rose to 61.2 in July, from 56.4 in June.

Sincerely,

Katz Family Financial