Phillips File

October 26, 2011

Barron’s Selects Top Women Advisors for Summit

Lynn Phillips-Gaines, CFP, is one of 400 financial advisors that have been selected to attend the sixth-annual Barron’s Winner’s Circle Top Women Advisors Summit at The Breakers in Palm Beach, Florida from November 30 – December 2, 2011. Entry is by invitation only, which is non-transferable.

The agenda for the conference is designed to generate provocative and in-depth, peer-based discussions examining the most highly sophisticated approaches to asset management. The sessions are led by the “Top 100 Women Financial Advisors” as ranked and published in Barron’s June 7, 2011 issue. The goal is for attendees to share experiences, share advice and share problems about the issues that are facing the nation’s top financial advisors.

Lynn Phillips-Gaines, CFP is a registered principal and offers securities through Raymond James Financial Services, Inc. Member FINRA/SIPC. Lynn is the owner of Phillips Financial Wealth Management, an independent firm in Starkville MS.

October 20, 2011

Running in Place

September’s employment report was higher than anticipated with 103,000 jobs added to U.S. payrolls. The significance of this report not only fills in the economic picture for third quarter 2011, but also provides guidance for fourth quarter 2011. Despite higher revisions for July and August’s numbers, the unemployment figure remains at 9.1 percent. "Jobs and the economy are critical factors in the political outlook. "The president’s hands are tied at this point and the risk of a renewed downturn remains," says Raymond James Chief Economist Scott Brown, Ph.D.

Not regaining the ground lost during the recession, businesses are reluctant to hire until they see a sustained increase in demand for goods and services they provide. Referring to one of a growing list of political concerns is the White House’s $447 billion jobs package. "Payroll tax reductions in the portions businesses pay should help increase hiring. If passed in its entirety, the jobs package might add 2.5 percent to GDP growth," Brown says in this edition of Professionally Speaking, hosted by Larry Pugliese.

You can access this audio presentation by visiting the Raymond James website at www.raymondjames.com/experts/brown.htm.

To listen, you may have to download and install Quick Time, Windows Media Player.

If you would like to discuss the content of this edition of Professionally Speaking, or if you have questions about your portfolio or the markets, please feel free to contact me.

August 31, 2011

A set of encouraging economic reports on Wednesday propelled stocks to their fourth straight winning session as one of the market’s wildest months ever came to a close. The reports showed an increase in private-sector hiring, better-than-expected manufacturing activity in the Chicago area and an increase in factory orders nationwide – all good signs for investors who have alternated between fear and hope throughout the month. However, stocks were negatively impacted after the Justice Department sued to block AT&T’s proposed $39 billion takeover of T-Mobile USA Inc. and the Greek parliament said a worsening recession will weigh on the country’s debt.

Investors were rocked by a string of bad news early in the month as Washington’s brinksmanship over the debt ceiling was followed by Standard & Poor’s historic downgrade of the United States’ credit rating. Those events intensified an ongoing market correction that by August 8 saw the S&P 500 down 18% from its late-April high point. The market gyrated wildly all that week, with the roller-coaster ride continuing until August 22, when stocks finally settled down and began a recovery that left them essentially unchanged for the year but down for the month, as the chart below shows.

	8/31/11 Close	7/29/11 Close	Change	Gain/Loss
DJIA	11,613.50	12,143.24	-529.74	-4.36%
NASDAQ	2579.46	2,756.38	-176.92	-6.41%
S&P 500	1218.89	1,292.28	-73.39	-5.68%

Investors who had been hoping for additional stimulus from the Federal Reserve Board were disappointed last week when Fed Chairman Ben Bernanke, who one year ago announced the monetary stimulus known as QE2, this year said only that the central bank would keep interest rates low through 2013 and consider additional measures. With unemployment remaining high, investors are now looking ahead to September 7, when President Obama has scheduled a major speech on jobs, and to the Fed’s next meeting, which has been expanded to two days and takes place September 20-21.

The market continues to be torn between two opposing viewpoints. Many investors fear that feeble U.S. economic growth could turn into another recession and that the eurozone’s debt problems could escalate, damaging the global economy. Others point to the reality that corporate earnings and balance sheets are very strong and note that authorities are clearly aware of the risks to economic growth. Two important economic indicators come in later this week, a national manufacturing activity survey on Thursday and on Friday, the Labor Department’s August employment situation report.

I am continuing to pay close attention to the economy and the overall investment environment, but if you have any immediate concerns about your financial plan, please give me a call.

August 10, 2011

The intense volatility that has recently gripped U.S. and global stock markets was much in evidence this week. Stocks staged a broad retreat Wednesday after rallying strongly Tuesday when the Federal Reserve Board pledged to keep interest rates near zero through 2013. Tuesday’s advance followed a dramatic selloff on Monday, the first day of trading on U.S. exchanges after Standard & Poors announced it was stripping the U.S. of its AAA credit rating.

The sharp swings in stock prices – the Dow Jones Industrial Average dropped 5.5% on Monday, rose 4% on Tuesday, and fell more than 4% Wednesday – demonstrate the uncertainties plaguing investors. The Fed said it was prepared to employ its policy tools “as appropriate” – a reference some investors took to mean additional monetary stimulus inthe form of QE3 might be on the table. However, the central bank also acknowledged that U.S. economic “growth so far this year has been considerably slower” than it had expected, a reminder of the difficulties besetting the economy.

While economic uncertainty and market volatility seem likely to remain with us for the foreseeable future, it’s also important to remember some key facts:

Although the S&P downgrade was of course unwelcome, investors worldwide still regard U.S. government debt obligations as safe and highly attractive. For example, the Treasury sold $24 billion worth of 10-year notes Wednesday at an extremely low yield of 2.14%. If investors were truly worried about a U.S. default, they would be demanding much higher yields. While much criticized, the recent agreement in Washington raising the debt ceiling ended the immediate question of default.
Corporate earnings are robust, with some 61% of S&P 500 companies reporting so far beating their second-quarter earnings estimates, and 68% exceeding their revenue estimates. Corporate profit margins and balance sheets are also very strong.
While U.S. economic growth has slowed, as yet there is no solid evidence that the country is sliding into recession. This view is reinforced by the fact that long-term interest rates remain well above short-term rates. Every U.S. recession in the past 50 years has been preceded by an inverted yield curve (short-term interest rates above long-term interest rates).
Markets often overreact in times of uncertainty, and investment decisions made in haste during periods of anxiety are often regretted later on.

It’s normal to be concerned during periods of extreme market volatility. However, while investors must always be alert to changes in the economic and investment climate, market fluctuations are not a valid reason for abandoning your long-term financial plan. This is a time for calm, for close communication with your financial advisor, and a time to remember that while stocks may fluctuate sharply in the short term, they have generally rewarded patient investors over the long term.

The ongoing volatility in the markets is obviously something I am watching very closely. In times like this, we must strike a balance between vigilance, which is certainly warranted, and emotional response, which is not. If you would like to discuss the current investment environment or have any concerns about your individual holdings, please give me a call.

July 29, 2011

Yes, I am paying close attention to the debt ceiling and the possible downgrade to the US treasury ratings. Here are my thoughts, not company written boiler plate materials. I am happy to elaborate, but not by email. I would rather talk by phone to truly address any issues you might have.

For most of the people who have been around investing for any length of time and these issues, they are treating this as a non-event. We all understand brinkmanship is the way things get done in Washington. Unfortunately, this means our elected officials are playing chicken with something they ought not...ever. But it is what it is.

Remember, you do not hire me for my political advice. What you hire me for is my understanding of your goals and objectives and the most suitable portfolios and managers to help you met your goals. I am confident in the professionals I have chosen to surround my investors, and their forward looking market assumptions and the specific companies selected by your managers.

This could get ugly over the next week. It goes back to my basic premise: there is no such thing as true security, but simply managing risk. The whole reason you have a diversified portfolio and cash reserves is to keep you from reacting to short term hysteria. You will continue to receive/reinvest your dividends. If you are taking dividends, you will continue to receive them. You are not invested “in the market”, but a thought out portfolio designed for you. And if you are investing monthly, well good for you, you are picking up some good buys during times like this.

Turn on some music, go visit a friend, take a walk, but turn off the TV.

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