Looking for Growth

“Growth,” that is what we all want when it comes to our money.  That is not an unreasonable expectation, is it?

No, that is not an unreasonable expectation; however, when a market is range bound as this one seems to be and there are world events influencing its daily performance then “Growth” needs to be redefined into realistic expectations.

“Realistic Expectations,” not a word game, but a reality check.  Yes, growth is available today, but at what risk level?   Is it worth the risk of losing principal to have the opportunity to have a double digit gain?  Most would say no, and those that say yes probably have more money than they need.  We all want our portfolios to have a double digit gains, but in order to even attempt to accomplish this return today, one must invest in things he or she cannot even pronounce, or understand, such as “swaps, shorts ,hedges, etc.,” all betting on a specific directional swings in the market to capture that “Growth Opportunity.”  Or, one must be willing to take that HIGH FLYER chance, overweighed in the magic position that will “Hit it Big.”  But if the bet is wrong, well you know what happens.

So where is the growth coming from?  The old Tortoise and Hare story comes to mind.  Instead of Tortoise, let’s let “Quality” run this race’s leg.  Let’s look for dividends.  Let’s grab yield while seeking to protect the nest egg.  Folks this is not sexy, it’s not glamorous, but it is a volatile market right now and prudence calls for a balance.

It just might be in this coming year that if Europe does not get its fix on, the housing market is still down, and unemployment does not start to turn around that a good performance year will be again captured pursued through dividends, yield, and quality positions with the potential to add 1-3%.

If that scenario plays out, then there is a potential that a total return could be in the 4% – 5% range.  Again, we all want more, but if this is what the market presents, then let’s grab it and look for stronger days ahead.

I am convinced that the growth we all are seeking – that double digit return – will come back.  I am just not sure when.  What I am sure of is that Growth today is found in quality investments that provide solid yields and that the correct investment approach balances capital protection with growth management.

 

* There is no assurance that the states returns will be achieved.  Investing involves risks including possible loss of principal.

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About John Hardy

Vice-President
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