Archive for January, 2009

A Step Forward

Friday, January 16th, 2009

We are pleased to announce that as of January 1, 2009 Mark D. Reitsma and Andrew M. Aran have partnered to form Regency Wealth Management.

As we manage through the current economic weakness we recently reflected on the advice that a successful executive recently gave us. He reminded us that perspective, prudence, and perseverance are keys to success in any worthwhile endeavor.

As children, most of us were afraid of the dark. Did you sleep with your bedroom light on? A night-light? A light, somehow, helped us feel safer. We couldn’t understand why we were scared or why the light alleviated those fears. It seemed prudent to turn the light on. But even when we had that fear it didn’t stop us from sleeping – we persevered. Eventually, the vast majority of us outgrew that fear and had a better perspective.

Investing in the current volatile and weak markets amid ongoing economic uncertainties is not easy. There are few, if any, guarantees. We are fresh from the September-November down draft that many of our investments were caught up in. Some of us may have grown worried or fearful about our finances and perhaps even lost sleep over it. But fear of the unknown shouldn’t keep us from gaining perspective, making prudent, long term investment decisions that will hopefully benefit us, our families, and our communities.

  • Are we headed for another serious leg down in stock, credit, and real estate markets in 2009 or will markets stabilize and rebound, perhaps strongly? The varied and extraordinary government programs and drastic interest rate reductions by the Federal Reserve enacted in late 2008 along with the stimulus programs yet to be enacted by the new administration are attempts to cushion the current housing and financial system’s weakness and pave the way for renewed economic growth. Together, these efforts should help economic duress.
  • Will these government programs be enough to allow an overleveraged consumer to renew spending and for corporations and banks to expand their businesses? We certainly hope so but we continue to carefully weigh the global financial challenges and look for signs of progress relative to these structural challenges. Already, housing affordability is approaching record highs reflecting both lower mortgage rates and lower housing prices. Mortgage availability seems to be modestly improving.
  • Did you or any of your relatives experience the great depression of the 1930s? Those were hard times that impacted that generation’s spending and savings patterns. Our country went into this recent soft patch with optimism and debt. It is hard to gauge how severe this “correction” will be but we are heartened by the size and scope of our government’s efforts to address these complicated problems. In contrast to the 1930s, our financial system has structural supporting pillars – deposit insurance and significant government loans and capital investments.
  • Am I better off with all my money in the bank? Probably not over the long term. While you get a guaranteed return at the bank and forgo any losses in a down stock market, you also forgo any potential for a rise in stock prices. Moreover, bank rates are unlikely to beat inflation for a prolonged period of time.
  • Will we lose sleep over how our hard earned savings and investments rise or fall? Hopefully not. A reassessment of our risk tolerances and the time horizons underlying our financial goals to reaffirm, or change, our portfolio allocations may be in order. Prudent long term financial planning has seldom, if ever, been more important.

We, at the newly formed Regency Wealth Management, don’t have a crystal ball nor do we pretend to know, with certainty, how markets will perform over the near term. However, we do have conviction that our country’s financial and economic system (with regulatory and government support) will most likely survive. Home prices will, eventually, stabilize and even rise; yes, rise. Unemployment may increase in the near term but jobs will again be created for productive purposes. Consumer spending will resume, but hopefully in a more prudent fashion (less debt). Over time, the growth in the value of the stock markets should parallel the real (net of inflation) growth in the economy. A fresh perspective, prudent planning, and perseverance should help.

Thank you for your past confidence in the Reitsma Financial Group. We will continue to work hard as Regency Wealth Management, to maintain your trust and assist you in navigating these volatile markets. Feel free to call us at any time with any questions. Oh, and feel free to turn the lights off when you go to bed tonight (it saves energy and money).

We wish you a Happy, Prosperous, and Blessed New Year!