1 May 2012

April was a great month for Mitts. Finally, Mitt Romney outlasted his challengers to become the putative Republican candidate for president. Honestly, I can’t believe that it took this long… I had opined in December that the process would be a swift one. On the contrary, in a procession that went from musical chairs to ten little Indians to 99 (9-9-9?) bottles of beer on the wall, Romney outspent his competition to gain the nod. Rick Santorum mirrored the meteoric rise and fall of Michelle Bachman, Rick Perry, and Herman Cain. Newt Gingrich grudgingly gave up the ghost. Only Ron Paul doggedly hangs on… to what end I haven’t a clue, but he’s become the proverbial guest that wouldn’t leave. I guess that there still might be some intrigue at the convention, but now the race is on for November.

Perhaps as importantly (at least to me), baseball season also began this month. Seeing mitts in evidence on the field and in the stands is always a heartening sight. Certainly, for fans in central Ohio, watching the Indians and Reds is a welcome change from the foibles and pratfalls of the most inept franchise in professional sport, the Columbus Blue Jackets.

All mitts aside, April was a “comme ci, comme ca” month for the markets. A bit of volatility returned, as the VIX briefly rose over 20, but the waters soon calmed. From an overall performance perspective, it was gratifying to see that equities held the majority of first quarter’s gains. Bonds outperformed their stock brethren, as the 10 year note yield dropped from over 2.3% to under 2%. Commodities were a drag on growth, as oil and precious metals struggled. In short, not much to worry about as you await your statements. Our balanced approach has kept portfolios in the black this year with risk profiles that are decidedly conservative. Winning by losing less still feels good in this environment.

News flow in April could probably be described as balanced, with an overall negative tinge. Corporate earnings have remained solid, particularly in tech. Apple and Amazon were among many large caps that enjoyed sensational quarters. On the flip side, a few “bread and butter” companies, like Procter & Gamble and UPS, stumbled. According to Standard & Poor’s, over 70% of reporting firms exceeded street estimates. Hopefully, that positive trend will continue.

The equity markets showed great resiliency in the face of continued sobering macroeconomic news. The recently released GDP figure of 2.2% growth in 1st quarter was a disappointment. After a few months of over 200K job creation, March stalled with 120,000 new hires. My sense is that many equity managers are bullish because they feel that the Federal Reserve will have to inject further stimulus into the tepid scenario. The good news is that the US economy is growing and we’re hiring. The bad news is that the pace resembles molasses.

Europe’s woes continue. The Dutch became the latest major player on the injured roster. In the minor leagues, Romania stole the headlines as voters replaced a government that had a whopping two month tenure. The Italian and Spanish bond markets were in turmoil for much of the month, and it appears as though Sarkozy’s power in France is becoming more tenuous. The fragility of the Eurozone seems to be increasing after being out of the headlines for a couple months. Thus, we are in a classic power struggle between market bulls and bearish headwinds.

The coming month often heralds the adage “Sell in May, and go away”. I’ve been calling for a little pullback, and the time might be right for one here. However, April’s downturns were largely met with buying on those dips, and the same could hold true this month. Hopefully, the macroeconomic forces will remain calm.

A couple of important developments:

1) The progress on our move to Worthington continues. Permits have been issued, and our contractors are hard at work on plumbing and HVAC as we speak. We’re now getting a sense of what things will look like, and the excitement is building. It’s going to be beautiful when completed. We’re hoping to move in late June or early July. We’d love to sell our present location, so if anyone is interested, let me know!

2) We are thrilled to announce that the latest addition to the S & G Co. team, Ken Lubker, has passed his insurance, Series 7, and Series 66 exams. He’s now ready to work with us on the financial services side. Ken has had a long successful career in media, and decided to become a financial services professional after a mid-life epiphany. He is a very smart, top-drawer guy, and we couldn’t be happier to have him on our team.

In closing, let’s sing what we’ll be seeing and hearing soon enough on the airwaves… Hit it!

“99 Super-PAC ads on the tube… 99 Super-PAC ads… you take one down… pass it around… 98 Super-PAC ads on the tube… 98 Super-PAC ads on the tube… 98 Super-PAC ads… you take one down… pass it around… 97 Super-PAC ads on the tube… 97 Super-PAC ads on the tube… 97 Super-PAC ads…”

I’m getting nauseous already.

Thanks as always for your trust and support… I look forward to seeing you soon… keep on singing!

Sincerely,

Bill Schiffman
Registered Representative

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The opinions expressed in this letter are those of William Schiffman and should not be construed as specific investment advice. All information is believed to be from reliable sources; however, no representation is made to its completeness or accuracy. All economic and performance information is historical and not indicative of future results.
Diversification cannot assure a profit or guarantee against a loss.