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

______________________________
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.

“And the lamb shall lie down with the lion”…

This particular line is quite possibly one of the most referenced, but generally misattributed lines in English speech. The lion and lamb juxtaposition is often quoted with regard to March weather, i.e. “in like a lion, out like a lamb”. Many folks seem to believe that the line was used by the legendary poet and philosopher William Blake. Although he wrote poems entitled “The Lamb” and “The Tyger” (close to the king of the jungle anyway), there is no interface other than asking in the latter poem about the “tyger”: “Did he who made the lamb make thee?”

The vast majority of people are of the opinion that the line is a direct quote from the Bible. Preachers use the phrase on many an occasion, and it has entered our own popular lexicon. However, there is actually no direct quote from scripture that mentions the alleged coupling. In Isaiah 11:6, we see “The wolf also shall dwell with the lamb, and the leopard shall lie down with the kid; and the calf and the young lion and the fatling together; and a little child shall lead them.” Later in the same book, we encounter “The wolf and the lamb shall feed together, and the lion shall eat straw like the bullock; and dust shall be the serpent’s meat.” Close, I guess, but no cigar…

You’re doubtless wondering why I’m parsing this quote in a letter about investments. You might be saying “Gee, Bill, has tax season finally gotten to you?” While the latter may indeed be true, it’s not the reason for the topic.

I headed in this direction today because I’ve sensed a bit of peace over the past month. Our weather in central Ohio, albeit punctuated by a few nasty storms, was by and large benign. We had the warmest March on record, and vegetation is three weeks ahead of itself. Lawns are lush, and the birds are out in force. It was wonderful for our heating bills, and it’s terrific to see so much green. Speaking of green, March was also a placid month for equities. According to Standard & Poor’s, the first quarter of 2012 was the strongest one since 2009, and your statements will reflect that fact. The lion roared a bit from time to time, but it was mostly a lamb-like tableau. On the world stage, conditions were calm as well. Can the proverbial lamb and lion continue to exist in harmony, or will the second quarter upset the applecart?

From an equity market perspective, I think that we need a breather. We’ve experienced nice gains based upon a mix of hope and slightly improving reality. The next round of earnings will flesh out the story. They should be solid once again, but I feel that there could be some sizable disappointments. The most interesting facet of March’s action was in the bond market. Long-term Treasuries fared quite badly, as the 10 year rate rose from roughly 1.8% to over 2.2%. This rise in interest rates, though not alarming in and of itself, could prove to be so if rates continue to go up. As I’ve opined many a time, the bond folks are usually closer to the truth, and perhaps they’re seeing more halcyon conditions ahead for our economy.

While things have been non-volatile of late, we’re only a major event away from bonds being the flight to safety again. Gas prices could certainly slow down growth if they get much over the $4./gallon mark. We’re getting closer to the November elections, and there sure isn’t much lion and lamb reconciliation talk between Republicans and Democrats. Many of us still believe that Iran is the ultimate wild card. Any incursion in the Middle East would almost assuredly throw a monkey wrench into the proceedings. We also can’t forget Europe. The biblical characters may be in the same room for now, but perhaps not for long. Moody’s downgraded five large Portuguese banks on Friday, and I’m not sold on the European Union remaining peaceably intact.

The bottom line is that I’m still cautiously optimistic, but not ready to abandon fixed income or commodities. We live in an uncertain world. Any de-coupling of the lion and the lamb could prove deleterious to equities. I continue to be more protective than aggressive in my outlook, and I feel that it’s wise to leave risk exposure at lower levels. Broad allocation of assets has helped us through difficult times, and it should continue to be a tenet of prosperity for the future.

As always, I thank you for your support, faith, and trust. I also appreciate your interest in our monthly musings. Let’s hope that the story of the lamb and the lion, although often misused, holds fast on a number of levels. I look forward to seeing you soon.

Sincerely,

Bill Schiffman
Registered Representative

______________________________
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.

“Come on and take a free ride (free ride)… come on and sit here by my side… come on and take a free ride!”

We’re really going back into the classic rock chestnuts for this one by the Edgar Winter Group. Not exactly my style, but extremely appropriate for the performance of the markets thus far in 2012. On the heels of a marvelous January, February (according to S & P) showed the strongest gains in equities since 1998. Bonds, particularly high yield, and commodities also did splendidly, so you’ll be quite pleased with your statements again this month. Volatility remained low, with the possible exception of yesterday (more on that later). There appears to be little reason at this juncture for March not to come in like the proverbial lamb. Why all the optimism?

My feeling is that the markets began 2012 with three major concerns: the threat of default in Greece, the possibility of a hard landing in China, and ever-growing tensions centered on Iran. Equities have responded positively to the supposition that the first two perils (at least for now) seem to be off the table. Greece hasn’t defaulted yet, although the likelihood still exists. The stronger countries in the Eurozone at minimum kicked the problem down the road a bit. Sounds familiar, I know, but let’s not forget that the Euros have excellent teachers in America. China’s phenomenal growth also appears to be gradually lessening, and that’s a good thing, especially for inflation hawks. Iran’s another matter, and only time will tell what will happen on that front.

Our own economic news continues to improve. Unemployment is ever so slowly abating. Housing is beginning to turn the corner in selected cities. Other than last month’s durable goods number, most other metrics for growth are ascending. The Chicago PMI (purchasing manager’s index) hit a multi-year high on Tuesday. The subtle sense that we’re maybe starting to escape our malaise persists. Despite these facts, retail investors have not embraced this rally with any conviction, and volume remains low. That’s not a terrific sign moving forward, nor is the fact that per Birinyi Associates, over 80% of large-cap stocks were above their 200 day moving average as of 29 February. The mathematical law of regression to the mean would infer that this might be a temporary bearish sign.

All in all, we’ve had the mythical Land of Oz for a few months. Yesterday, though, the man behind the curtain (cue Fed Chairman Ben Bernanke) roiled the markets by intimating that a third round of quantitative easing might not be in the cards. His comments to Congress were a tad disjointed in my opinion. He repeatedly stated that our domestic growth is fragile, but said little in the way of further stimulus should conditions warrant. In a virtual nanosecond, the markets reacted violently. Treasury bond yields rose and commodity prices plummeted. Both gold and silver lost over 5% in minutes. As an aside, even with that drop, the gold exchange-traded fund (GLD) is still ahead by 9% this year, and silver (SLV) has gained by a whopping 26%. Simple month end profit-taking could also have been the catalyst.

Our gentle equities zephyr could certainly encounter headwinds at any time. Iran is the largest wild card. Any military incursion would almost assuredly send investors back into the safety of bonds in a big way. Gas prices might also be a significant thorn. We’re at levels not ordinarily seen in early March, and the summer driving season at this rate could be expensive. The reality of $4.50 or higher per gallon would shred disposable income for the majority of American families. Europe’s cauldron of tempestuous debt may be only simmering now, but more heat on the fire would likely presage a Eurozone recession.

It’s difficult for me as an advisor to whole-heartedly embrace this run in equities. It’s marvelous while it’s here, but I’m too much a student of history to think that we’re out of the woods. Simple math would dictate that we’re potentially oversold at these levels, and a pullback would frankly be healthy. If we get a 4-7% haircut in prices, thoughts of re-allocation might come into play. I’m still cautiously optimistic, and we’ve had positive results by staying invested. That being said, I still believe that diversification is the key to any portfolio. We really never know where the sources of alpha might lie.

Let’s hope that Edgar’s “Free Ride” continues… we all know what his other chart-topper was… “Frankenstein”… let’s not go there…

BIG ANNOUNCEMENT! We closed on a new location for our offices yesterday afternoon. We’ll be moving from Clintonville about nine minutes north to Worthington. We’ll have almost twice the space, and three times the parking. Since we’re all getting older, we’ll be on one level. No more climbing the steps to my office. Our three associates who have been working in the basement (aka executive dungeon) will be most happy indeed. The move itself will be in early summer… we’ll keep you posted. In the meantime, back to taxes! Thanks as always for your continued faith and support… see you soon.

Sincerely,

Bill Schiffman
Registered Representative

__________________________________________________________
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.

Securities offered through ValMark Securities Inc., Member FINRA, SIPC; Investment Advisory Services offered through ValMark Advisers Inc., an SEC Registered Investment Advisor 130 Springside Drive, Suite 300 Akron, Ohio 44333-2431 1.800.765.5201

SG Financial Services, LLC is a separate entity from ValMark Securities Inc. and ValMark Advisers Inc.

On the contrary, we’re actually going to be moving to Worthington. We’ve simply outgrown our current space, and have finally gotten tired of feeling like the old woman living in a shoe. Our new office will be on Proprietors Rd., and will be as easy to find as our current location. It’s only about eight minutes away from where we are now.

The actual move will take place in early summer, and we’ll keep you posted on its progress. In the meantime, it’s business as usual for Schiffman Grow & Co.

And, if you want to buy our Clintonville home, we’re happy to entertain your offer!!

Green… green, green, green… green energy… Green Bay Packers… green light… greengrocer… the green, green grass of home… green flag for racing… Dr. Seuss’ Green Eggs and Ham… Mr. Green Jeans… greenbacks…

When you think about it, the word green generally has a favorable connotation. I’m not really sure why, since green is a combination of yellow (cowardice) and blue (sadness). Be that as it may, the first month of the New Year has done nothing to dispel this notion. You’ll be quite pleased with your portfolio performance in January, as almost every asset class had a positive result. It’s rare to see stocks, bonds, and commodities all in the green, but that’s what happened. You may remember that last January was strong, with the S & P 500 showing a gain of 2.3%. We’ve done even better than that on the equities front this month. January can be a harbinger of good things to come. Birinyi Associates has an interesting statistic in this regard: over the past 100 years, when January is positive, the year will be green 61% of the time. 2011’s January gains did not lead to further growth. What will this year bring?

We should probably begin this month’s discussion with the possible reasons for the good vibes. Most importantly, there is often strong money flow into the market in January. This can be an offshoot of a “Santa rally”, or simply pre-funding of yearly retirement plans. Even though volumes on Wall Street haven’t been fabulous, they’ve been decent enough during this rally mode. We also had a benign news cycle. The Eurozone appears to be edging away from the Greece default precipice. After Mitt Romney’s solid win in Florida, the uncertainty about the 2012 Republican nominee seems less cloudy. Corporate earnings for the most part have been positive during this reporting period. All has been quiet on the Middle Eastern front.

There may be another factor in the mix. I don’t know about you, but I’m getting the impression that Americans overall are becoming a bit less fearful. Yes, there’s anger, rancor, and puzzlement about government ineptitude. Negativity will continue to abound through Election Day since the “Super PACs” see little value in virtuous television ad messages. However, there has definitely been some stabilization in our country, albeit at unwelcome levels. Unemployment has abated from its highs. Home prices, which still show slight decline, are no longer in free fall. Various economic indices (manufacturing, service industries) bottomed in 2011. The volatility index (VIX) is at its lowest levels in quite some time. Perhaps most powerful is that we thankfully haven’t experienced many thoughts about terrorism as of late. Could our collective domes of angst, dread, ennui, and malaise be lifting? If so, getting our mojo back wouldn’t be a bad thing.

Does this mean that we’re really heading out of the proverbial woods? Absolutely not. At best, this subtle burst of relative positivism is tenuous. Any underpinnings that we’re building aren’t sealed in concrete. It’s interesting that January’s rally was almost exclusively institutionally based, with little retail customer participation. This would lead me to believe that movement on the fear-greed continuum is still minimal. In my opinion, it will be difficult to sustain this positive momentum without the American populace widely embracing more risk.

How does the rest of the winter shape up? Honestly, I’m not too sure. I’ve been both surprised and pleased by the upward bias across the majority of asset classes. The antacid-enticing gyrations of 2011 have not been evident this month. But, as I’ve stated many a time in these missives, I’m basically a bond guy at heart, and I tend to trust their acumen more than stock jockeys. With the 10 year Treasury Bond at 1.80% and the 30 year at around 2.95%, the bond market is telling us that there is still something rotten in Hamlet’s Denmark. Fed Chairman Ben Bernanke extended his “no interest rate hike” mantra through 2013 into 2014. That decision doesn’t exactly speak of unbridled confidence in our economy’s healing process. Obviously, as we discussed at length last month, there’s no shortage of uncertainty out there. The overriding macro perspective isn’t going to change overnight.

I am, though, retaining my cautious optimism unless events prove otherwise. There is no reason to deviate at this juncture from our gospel of diversification. The equities world in January said “Giddy-up!”, while fixed income said “Hold your horses!” Even though it’s pleasurable when they both rise in tandem (lower bond yields mean increased value in the bonds we hold), the pattern cannot last for too long. Since I’m still not certain which camp will prove correct, it’s critical that we invest our portfolios across a broad allocation spectrum. Even though the spectre of fear may be lifting, a significant amount of safety still seems prudent.

As always, I welcome your comments, and look forward to hearing from you. I greatly appreciate your continued faith and support. Let’s hope that we continue the momentum!

Sincerely,

Bill Schiffman
Registered Representative

__________________________________________________________
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.

Securities offered through ValMark Securities Inc., Member FINRA, SIPC; Investment Advisory Services offered through ValMark Advisers Inc., an SEC Registered Investment Advisor 130 Springside Drive, Suite 300 Akron, Ohio 44333-2431 1.800.765.5201

SG Financial Services, LLC is a separate entity from ValMark Securities Inc. and ValMark Advisers Inc.