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Our Thoughts

Our Thoughts

March 6, 2009 by Lesjak Planning

The current market spiral we are experiencing is being driven by a loss of confidence in our financial markets and our country’s leadership. Job losses lead to decreased consumer spending while tight credit markets and reduced consumer spending lead to reduced capital expenditures and layoffs by businesses. These are basically feeding off of each other at this time. Shares of quality companies are being sold in an attempt to try to sidestep further declines in value.

We continue to feel that money lent and credit provided to the banks, financial institutions, and now the mortgage holders will work its way through to provide eventual stability to the system. We do not know exactly when this will happen or at what level, but we are confident it is in motion.

Small businesses and the men and women who lead them, have brought this country all of the great products and services that we enjoy today. When given the opportunity they will once again provide the growth and leadership to return to prosperity.

The Lesjak Planning Team

As we have stated numerous times previously, it is futile to try to time not only the duration of this decline, but also the coming resumption of the long term uptrend.

Even in the decline of the Great Depression, people who held on to the stocks of quality companies saw their value return and go on to reach new highs. The money in your portfolio allocated to the more conservative fixed income funds and to cash is there by design. These areas of your portfolio provide stability and liquidity in turbulent environments. In fact, many of the fixed income funds are at or near all-time highs. These are the areas we currently turn to fund your withdrawals for living expenses or the occasional expense. In doing so we are not forced to sell the stock funds at these current levels, allowing time for a recovery. For most making regular withdrawals the fixed income and cash portion of your portfolio may provide for several years worth of expenses. That will allow you to weather the current storm and give time for the current financial dilemma to stabilize and return to normalcy.

While the duration of this downturn has proven to be longer and more severe than anyone expected, the allocation of assets in fixed income to meet these needs works as intended. Having the cash available and trying as best as possible to reduce your expenses should get us through this. We have spoken to many of you personally regarding this and reiterate our belief that by staying with quality companies we will reap the benefits when attention turns back to valuations and future earnings potential and away from the doomsday scenarios we have bombarding us today.

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Lesjak Planning

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