Welcome
to the December 17,
2008 issue
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We are recommending a change in the specialty
allocation for Conservative investors. Specifically, we recommend the elimination
of the 10% allocation to a commodity fund for those investors. At the same
time, we are recommending an increase in the bond allocation by the same 10%.
For Conservative investors the new bond allocation is 30% and the specialty
allocation is 10%.
The bond funds we are recommending are investment-grade corporate bond funds.
In the MoneyLetter Conservative portfolio we will sell T. Rowe Price New Era
and purchase Vanguard Long-Term Investment Grade Bond (VWESX). For the Fidelity
Conservative portfolio we will sell Fidelity Natural Resources and purchase
Fidelity Investment Grade Bond (FBNDX). For the Vanguard Conservative portfolio
we will sell Vanguard Energy ETF and purchase Vanguard Long-Term Investment
Grade Bond.
The Fed took an historic step yesterday by effectively slashing its interest
to zero. The Fed has two goals: stimulating the economy and guarding against
deflation. We believe this interest rate move, and the Fed’s pulling
out all the stops, are moves in the right direction. They encourage us. Our
view remains that higher stock prices will be firmly in place by the end of
next quarter.
New Fund Ratings – For domestic stock funds, two funds are now
rated Buy: Intrepid Small Cap and Robeco Boston Partners All Cap Value. For
international stock funds, DJ Global Titans (ETF) is now rated Buy. Two funds
are rated Hold: Tweedy, Browne Global Value and Wintergreen Fund. Fidelity
International Discovery is now rated Sell.
Fidelity International Discovery is in the Fidelity Venturesome portfolio.
We will switch the fund into Fidelity China Region.
The Stock Market – The market’s reaction to the Fed move
was very positive. Today we saw some profit taking. Considering the economic
news, the market has been behaving well. Keep in mind that we are at year-end.
We will not have anything resembling a normal market until the middle of next
month.
The Bond Market –
The Select Portfolio – There is no change for this portfolio.
There will be no Hotline next week due to the Christmas holiday. The next Hotline
is scheduled for Wednesday, December 31.
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