CEO Report -03-31-09

CAM Posts Small Gain

CAM posted a modest gain for the week ending 03-27-09.  The year-to-date portfolio advance is +1.748% and remains ahead of last year’s pace when the company posted a +23.9% increase.   Read GM & Chrysler Below    

 

GM & Chrysler Get The Word

Prepping for this weekend’s critical G20 summit meeting, President Barack Obama delivered a pointed message to U.S. automakers General Motors and Chrysler.  The administration signalled the end of taxpayer assistance to the two struggling behemoths.

The governement’s auto panel advisory board sent GM CEO Rick Wagoner packing and advised Chrysler CEO Richard Nardelli the company had 30 days to conclude their anticapted merger with Italian automaker Fiat SpA.  GM received a commitment for government financing until the end of May.  The pressure now falls squarely on the UAW and the company’s bondholders or the government will force GM into Chapter 11.

Additional banking problems in Spain, England and Germany sent world markets tumbling on Monday.  The DOW lost 254.16 points and ended a string of robust weekly gains that had raised the market by 20% in March.

On Monday, President Obama flatly rejected restructuring plans submitted by  GM and Chrysler.  Wagoner is replaced by current GM President Fritz Henderson.  Henderson acknowledged that bankruptcy was an option.  John  Murphy, of Bank of America reported that GM’s total debt now approaches $100 billion.  “This is the major reason we believe that Chapter 11 is the likely outcome for GM, despite the best efforts of the auto task force to avoid court.”

Obama emphasized the administration’s commitment to the success of U.S. auto manufacturing.  However, he stated that GM and Chrysler were “not moving in the right direction fast enough.”  The bottom line is that taxpayers have had enough.  With only $135 billion of the stimulus package remaining, the time has come to step up or get out.  In the case of these two tired pillars of the American auto industry, it is a case of too little, too late and the administration delivered a staggering blow to the busines as usual approach by previoulsy deemed “too big to fail” companies.      

 

CEO Report 03-24-09

CEO Report 03-24-09

On Tuesday evening, President Barack Obama followed earlier Congressional Subcommittee appearances by Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke with a vigorous defense of his economic recovery plan in a nationally televised news conference.  The administration continues its media assault to counter criticism for its public-private partnership as a remedy to turn back the recession.

The President attempted to diffuse the public and political outcries about the AIG bonus scandal by seizing the offensive in describing his quantitative easing policies and sweeping regulatory proposals.  Obama pointed to jobs saved through his $875 billion stimulus package, referred encouragingly to the National Association of Realtors surprisingly active February home sales report, the administration’s proposed regulatory plan to prevent future “too big to fail” entities and his startling $3.6 billion budget proposal as steps necessary to re-grow the U.S. economy.

“It’s a strategy to create jobs, to help responsible homeowners, to restart lending and to grow our economy over the long term,” the President declared.  The optimistic tone smacked of a gut check as he acknowledged there is no “quick fix” for the existing issues. 

Republican and conservative Democratic critics believe the Obama recovery program places the taxpayer at risk in the public-private plan.  On Monday, the global markets entered the debate as world markets soared.  The DOW posted a resounding 7% one-day gain. 

As of 03-24-09, CAM year-to-date gains now stand at +1.593% as the S&P 500 reflects a -10.739% loss during the same period.  The company remains well ahead of the 2008 pace which captured a remarkable 23.9% profit.

The response to CAM’s transparent proprietary strategy has been even more encouraging.  Accounts Under Management now stand 87 and mark a 372% increase in the past 12 months.  Custodio Asset Management clients are no longer surprised by the company’s stellar +184.59% gain since the October 2005 inception.  While not a time for amateurs, this volatile marketplace poses profitable opportunities for experienced, transparent investment professionals. 

If you, or someone you know, would like to learn more about CAM’s strategy and straightforward business practices, please call 410-988-2511 or contact the company by e-mail at info@Camtrading.com for a confidential discussion.  Thank you!

 

 

CEO Report 03-10-09

What Professional Money Managers See

Turn on the news and you will come away with 20 differing well articulated critiques of everything that is wrong with the economy.  Every network has panels of experts that have cures for the country’s economy and solutions for the global recession.  Monday morning quarterbacking is not exclusive to football.

As professional money managers, Custodio Asset Management does not act upon impulsive rhetoric spewed out by TV talk shows.  CAM applies their proprietary investment strategy and enters the marketplace when the indicators are in place.  Tuesday was one of those days.

Tuesday’s Big Moves

The much maligned Citigroup announced that it had turned a nifty $8.3 billion profit during the first two months of 2009.  Citigroup shares rose 23% while Bank of America forged ahead gaining 25% in early trading.

On the New York Stock Exchange, advancing issues outdistanced the declining issues by 13 to 1.  While these gains are the characteristic of a bear rally, there was a sense of relief on Wall Street, where any good news is quickly embraced these days.

The markets seemed to respond favorably to Federal Reserve Chairman Ben Bernanke’s proposal to reconfigure the financial regulatory system that would limit the risk taken by “too-big-to-fail” corporations.  Also, on Tuesday the U.S. Commerce Department announced that wholesale inventories were reduced by 0.7% in January as compared to 1.4% in December.  Additionally, the Federal Reserve bought $1.8 billion of Fannie Mae, Freddie Mac and the Federal Home Loan’s debt. 

CAM – Year-to-Date

As the day unfolded, the doomsday quarterbacks were pulling back from their rampant criticism.  While this recession will be with us for a while and dominated by swings, there remain good opportunities to increase wealth.  The professional portfolio managers at CAM are pleased that the year-to-date gain now stands at +2.568%.  During the same period, the S&P has fallen -20.332% and the DOW is down -21.078%.

If you are like most investors and caught in a spiraling downturn with big losses to your net worth, please contact CAM at 410.303.3451 or by e-mail at info@camtrading.com to discuss the advantages of opening an account.

 

Non-Farm Payrolls & The Markets

Watch it – The Non-Farm Payroll – February payrolls fall

The non-farm payroll release from the United States Bureau of Labor Statistics, a key factor on the Business Cycle Indicators, was closely watched by national and global markets today.  The non-farm payroll report has become a connecting point that closely bonds the banking sector, Wall Street, housing, household income and household spending together.  The Obama stimulus package is directly responding to the non-farm payroll report.

Business Cycle Indicators are components of the economy that are used to reflect economic levels of activity.  During this recession, the non-farm payroll report has correctly warned of the severity of this recession.  Other Business Cycle Indicators are housing starts, the Consumer Price Index, and the gross domestic product (GDP).

The Obama stimulus package is expected to provide more than 3 million new jobs. The January report was the biggest downturn in unemployment since December 1974.  Since January, the payrolls have fallen by an increased annual of 5.3%.  This rate is the most severe decline in the past 50 years. 

Compounding the problem is that fact that non-farm payroll hours have decreased by 4.6% in the past 12 months.  The average workweek in the U.S. is now 33 hours.  Many economists translate this data to reflect a horrific alternative unemployment rate of 16.9%.

Gut-wrenching job reality shows that December and January downturns touch virtually every sector of the economy. Job losses like the 35,000 jobs lost at Bank of America and the 9,200 lost at JP Morgan in December are startling.  Circuit City announced its closing and reduced employment by 34,000 in January.  Even steadfast pharmaceutical giant Pfizer blinked contributing 19,000 January layoffs. 

The Skinny

The news was as bad as expected as 651,000 jobs were trimmed in February.  Previous unemployment numbers were upgraded and reached new highs.  The net result is an 8.1% unemployment rate, the highest sine December 1983.

Construction continues its downturn shedding another 104,000 jobs on top of January’s 118,000 job losses.  Manufacturing trimmed another 168,000 and service industries eliminated 375,000 jobs.

World markets were prepared for the worst and opened on the upside.  Some experts believe the Obama stimulus package will soon kick in and neutralize job losses.  Markets absorbed the information in anticipation that the bottom has arrived.

CAM Newsletter – February

The recession is real.  The recession is national.  The recession is global.  The effects of the recession are confronting investors, homeowners, employers and employees throughout the country and around the world.  When January household income and consumer spending performed better than expected, the markets hardly blinked because big layoffs continue as banks teeter and insurance giant AIG reported the biggest quarterly loss in American economic history.

Custodio Asset Management understands investor concerns.  As major indices fluctuate, the national and global markets seem unable to stabilize. The reality is that protecting and growing wealth in these difficult times is serious work, not suited for the feint of heart and truly an endeavor for professional money managers.  CAM addresses these market conditions with steadfast discipline, complete transparency and with a proven track record of success.

CAM’s goal is to use every available resource and our proprietary hands-on investment strategy to continue to build our wealth management services.  We understand that investors are skeptical about the markets.  We understand that market conditions are volatile.  However, CAM is committed to applying the same strategy that saw our portfolio gain +179.988% between October 2005 and December 2008.

Prospective clients are now calling every day.  These clients are shaken and searching for answers.  Most have seen their investment funds decrease by 40% or more.  The lingering questions are “what has happened to my hard earned money” and “how much will this recession cost me in the long run?”
 
Perhaps this unedited summary says it best:

***

By:  E.W., USA
Thu Oct 09, 2008 at 01:45:27 PM PST

“I receive a 401k from my employer and have consistently been putting money into it for several years. I knew the 401k would be hit hard, but I chose to ‘ignore’ it because I was a little scared.  Anyway, I just wanted to share this with everyone because I don’t think people really understand how much this financial crisis is hurting normal people.

Me and my wife are still relatively young, so we’re not as hard hit as most people are. We still have plenty of time before I retire, so I’m not too concerned about myself. What surprises me is that I chose all of the recommended mutual funds, just like most people probably did.

Here is what my Fidelity 401k looked like today when I finally decided to take a peek. “Personal Rate of Return from 01/01/2008 to 10/08/2008 is -39.7%.”

All I can say is… WOW.  40% of my hard earned savings for retirement down the drain. It’s really hard for me to put the 5% aside from every paycheck and I’m just shocked at how badly I’ve done.

The worst thing is the companies that pick my stocks made tons of money while I’m out so much.

Anyway, just thought some would be interested in an average person’s retirement account. Talk about a shock! I just feel badly for the 60-70 year olds that were looking to retire.”

 ***

 Since E.W wrote this in October 2008, the market has faltered even lower.  The sad reality to this common story is that most investors are experiencing financial paralysis.  

This bear market still provide opportunities to build wealth, but conditions dictate experience and prudence and a willingness to have an open mind.  In today’s marketplace, traditional buy and hold strategies have proven to be ineffective and laden with extremely high risk.

During the time (01-01-08 – 10-08-08) that E.W. lost -39.7% of his portfolio, CAM investors actually gained +5.435%.  By 12-31-08, CAM had used the market turbulence to record a +23.986% annual gain.

Through February this year, CAM has produced a positive +1.452% YTD while the S&P has lost -16.653% and the Dow runs negative for the 6th straight month at -18.166% and has dipped to twelve-year lows.  CAM investors actually gained +0.032% in the month of February as the Dow shaved -10.993% of its value.

This is a time for investor action.  This is a time for change and proactive investment strategy.  The prudent investor will grow while the conventional investor will falter and spend decades trying to recoup losses.  At CAM, we stand ready to help.  

Regards,
Ace Custodio
Almond Custodio

DOW Continues Slide

Dow Continues Slide

As American International Group (AIG) prepares to release the largest quarterly loss in U.S. economic history, the company’s board labored to negotiate for help from the government who has indicated a willingness to extend another $30 billion lifeline to the beleaguered insurance giant.  As part of a multi-level program, the ailing company has agreed to offer 20% of the property and casualty units publicly.

Meanwhile, the Central Bank’s efforts to lower their interest rates to zero have stirred strong responses from the gold market.  Major indices around the world generally reflect uneasiness.

As U.S. indices faltered at the end of February, CAM reported a slight loss of -0.355% for the week ending 02-27-09.  The year-to-date gain now stands at +1.452% as the S&P 500 fell to -16.653 and the DOW closed at its lowest levels since 1997. 

As February markets closed, some positive news was reported as consumer spending exceeded expectations in January and household income rose to higher levels than anticipated.  Custodio Asset Management continued to increase its client base.  Since January, 11 new clients have opened investment accounts. 

If you or someone you know would like information about CAM or about opening a new account with the company, please feel free to call 410-988-2511or e-mail info@Camtrading.com.