Investing Newsletter – Jan 2013
In spite of all the unhappy headlines, stocks quietly rewarded patient investors with double digit gains.
Emotional control, acting in a slightly contrarian manner and maintaining a balanced approach to portfolio construction are three keys to successful investing.
The GMO forecast graph on page 3 of our newsletter predicts that stock returns will outpace bond returns over the next seven years. In general it also predicts that international stocks will out perform domestic stocks.
The “P/E 10” Ratio indicates that US stocks are currently at the higher end of their historical valuation range.
For the above reasons we continue to feel good about including international stocks in our client portfolios.
Higher future inflation remains a risk. We invest in a high quality first trust deed investment to help counteract this risk.
The inclusion of lower risk hybrid investments serves to reduce portfolio risk and volatility should equity markets disappoint.