Message From CEO

Message from The CEO

These are serious times.  The economy, the recession, banking, automakers, equity markets and currency markets are operating feverishly.  As serious as are the times, nothing is more serious than our health.

The Swine Flu or H1N1 has been elevated to a level 5 pandemic crises by the World Health Organization (WHO).  Anyone suffering flu symptoms should contact a physician as soon as possible.

Swine flu symptoms are similar to those of seasonal influenza and include a sudden fever, coughing, muscular aches and fatigue.  H1N1 may also be accompanied by diarrhea and vomiting episodes.

While the seasonal influenza vaccine may help protect against the virus, the CDC advises that there is no specific vaccine for the H1N1 strain.  A vaccine is being developed at this time. 

CAM recommends that concerned persons visit the Center For Disease Control and Prevention (CDC) website at http://www.cdc.gov/swineflu/ for information.

We extend healthy wishes to all!

CEO Report 04-29-09

CEO Report 04-28-09

For the week ending 04-28-09, Custodio Asset Management posted another modest gain of  +0.536% net of fees.  The 2009 year-to-date gains now stand at +3.814% net-of-fees.  Growth remains steady.

The equity and currency markets remain volatile.  CAM monitors all indices each day.  The company policy is to proceed responsibly and with caution.  There are profits to be made but there are no quick fixes.  The market is saturated with risk.  At CAM, we rely on our proven investment strategy.

We appreciate the continued support and loyalty of our valued clients.  CAM continues to add more Accounts Under Management each month.  We remain confident in our ability to grow client portfolios and navigate through these turbulent times.

Since CAM was founded in October 2005, the portfolio has gained + 190.67% net-of- fees.  During this same period, the S&P 500 shows a -30.41% performance.

We welcome all questions and inquiries at info@Camtrading.com or at 410-988-2511.

 

CEO Report 04-22-09

Geithner Moves The Market

Who could have guessed it!  Treasury Secretary Timothy Geithner, once regarded a podium liability, took the bull by the horns and delivered his best public performance to date on Tuesday.  And, investors liked the message.

It seems that the further Geithner gets away from the Bush administration and his predecessor, Bush Treasury Secretary Hank Paulson, the better he does.  It helps to have a President who has media awareness and addresses investor concerns.

Geithner is emerging as a driving force in the U.S. recovery.  The global perception is that the U.S. will lead then world out of the recession.  Everyone would like to see the trend continue.  Obama and Geithner have gained some international support with their transparency and regulatory message.

Custodio Asset Management rode Geithner’s message to the bottom line and captured a solid + 1.454% gain.  CAM portfolio year-to-date gains now stand at +3.278% net of fees.

For information about CAM services, please call 1-410-988-2511 or e-mail info@Camtrading.com

CEO Report – 04-21-09

At BOA the Good News Turns Bad

World markets were looking for the country’s biggest lender to post a big first quarter.  Bank of America came through topping last year’s first quarter by 350%, but it was a tarnished gain.  Chairman and CEO Ken Lewis reported a robust $4.2 billion quarterly profit, but warned of looming credit issues and troublesome valuations for the bank’s troubled asset portfolio.

Lewis finds himself fighting for his job over the bank’s acquisitions of troubled Countrywide Financial in 2007 and the 2008 takeover of Merrill Lynch.  Additionally, BOA has received two government infusions.  When the bank purchased Merrill, the government agreed to limit the bank’s exposure on $118 billion of troubled assets.  Bank of America also received $45 billion in TARP funding. 

Despite the first quarter results, shares in BOA fell 24% or $2.58 to $8.02.  $2.2 billion of the profit was created by the decline in the value of the bank’s debt.  This same accounting practice has contributed to the first quarter profits posted by other banks and generally does not reflect a bank’s performance or a bank’s exposure to the true market value of its troubled assets.

Bank of America’s credit card division lost $1.8 billion while the mortgage component lost $500 million.  Meanwhile, the bank wrote off $7 billion in bad loans and added $6.40 billion to reserves for future losses.

In the wake of strong market performances over the past month, profit seekers sold equities on Monday.  The DOW Jones Industrial Average lost 3.6% falling 289.60 points to 7841.73.  The S&P 500 lost 4.3% and Nasdaq tumbled 3.9%. 

Bank stocks fell across the board Monday as Citigroup dropped 19%, Wells Fargo 16% and JPMorgan Chase lost 11%.  All this took place as Bank of America’s profit outpaced last year’s first quarter by 350%.

Custodio Asset Management reported a modest year-to-date loss of 0.999% for the period ending 04-20-09.  Since January 2009, the portfolio stands at +1.824% net-of-fees.  Since the company’s inception in October 2005, CAM’s portfolio gain stands at +185.10 net-of-fees.

Custodio Asset Management welcomes all inquiries about performance or enrollment at info@Camtrading.com or by phone at 410-988-2511.

 

CEO Report 04-17-09

Today marks the 20th birthday of CNBC.  The financial media resource deserves a big happy birthday.  The network provides a variety of opinions, presents interesting and diverse interviews and has a good mix of traditional and contemporary strategists.

At CAM, we also feel very fortunate.  We are especially grateful that our hard work and our business practices continue to garner attention and new clients.  Our Accounts Under Management now approach 100.  Since January 2009 Custodio Asset Management has gained 24 new accounts.  That represents a 32.8% gain.  Those are numbers of which we are very proud.  We interpret this support as an endorsement of the retail and institutional acceptance of our transparent platform and strategic success.

Yesterday, it was announced that Wall Street firms cut 3100 jobs in March.  The center of the country’s financial activity now provides employment to just 169,200 workers.  Unemployment really does affect all sectors of the economy. 

To facilitate new client enrollment, we have posted five useful forms on our blogroll.  These are forms CAM used by clients who want to open secure CAM accounts at Rydex.  Once accounts are opened, your CAM representative will walk you through the security setup.

The forms are:

Rydex for 403(b) – Custodial Kit

Rydex AFP – Appointment of Financial Professional

Rydex Retirement Kit

Ryex New Account Agreement

 CAM Client Agreement

 We welcome all questions at info@Camtrading.com or by phone at 410-988-2511.

 Once again, thank you for your continued support.

CEO Reports Strategy Move

Custodio Asset Management is pleased to notify our valued investors of a fundamental adjustment to our trading strategy.  This adjustment is designed to counter the current market environment.  We have closely monitored the daily rate of returns of the US GOVT MONEY MARKET – INV fund.  In the past, CAM has relied upon this fund to shelter client assets from the sharp market volatility.  

This fund has further served as our source of liquidity.  The fund’s relatively modest rate of return has provided a good countermeasure against inflation.  However, due to Federal Reserve rate cuts, the daily return of the fund has not produced enough profit to justify parking 100% of client assets while CAM waits for more opportunities in the market.

Our research indicates that the GOVT LONG BOND 1.2x STGY – INV fund would work well in the CAM strategy.  This fund produces a higher dividend than the money market fund.  The current yield on the bond fund is 2.85% annually versus the money market fund of less than 0.5%. Clients should view the bond fund as an “additive” rather than a replacement.  

The downside risk is that fluctuations in the market will have an effect on its NAV (Net Asset Value).  In turn, this could have an adverse result on principal values.  CAM intends to offset the market risk by supplementing the Long Bond holdings with a simultaneous INVERSE Bond purchase with equal allocations on a percentage basis.

Below is an example account allocation for periods when the company is in a market neutral (neither Long or Short) position:    

          

       *  US GOVT MONEY MARKET – INV 50%

       *  GOVT LONG BOND 1.2x STGY – INV 25% 

• INVERSE GOVT LONG BOND STGY – INV 25%

When the economic environment improves and interest rates rise again, we will adjust accordingly.  As usual, clients will be informed of any strategic change.  Be assured that the purpose of the adjustment is to achieve a better rate of return for our investors than is now yielded by the Money Market fund.

 Should you have additional questions or comments, please do not hesitate to call 410-988-2511 or e-mail to info@camtrading.com.

Thank you,
Ace Custodio
Custodio Asset Management

Cellular: 410.303.3451

Office: 410.988.2511

Fax: 410.988.2417

 

CEO Report

CAM Continues Climb

 Custodio Asset Management’s portfolio continued to climb last week.  As of April 3, 2009, the company’s year-to-date gain stands at +2.219%.  Since the company’s origination in October of 2005, the CAM fund stands at + 186.20%.

In these extraordinary times, clients continue to respond favorably to the performance and transparent platform at CAM.  Accounts Under Management have more than doubled in the past 12 months as the company captured a hefty +23.9% gain in 2008.

 Too Big To Fail – Not so for GM

 The world is watching anxiously as another “too big to fail” U.S. corporation prepares to file for bankruptcy protection.  And, the world markets do not like what they see or hear from acting GM CEO Fritz Henderson.   

 In the wake of a record setting March sales increase of 24.6% in China, Henderson continued to entertain bankruptcy as GM’s only option.  A General Motors bankruptcy will cost suppliers, bondholders, unions, auto dealers and may endanger the reorganized GM survivor. 

 World and national markets are braced for the bankruptcy as shares fell by 12% on Tuesday and closed at $2.00.  GM bonds were mixed as GM’s benchmark 8.375% note rose less than $0.01 to 11.75 cents, yielding more than 70%.

 GM must submit a reorganization plan to the government by June 1, 2009.  The Obama administration is reluctant to use any more taxpayer money to sustain the ailing company. 

 GM has been in intense negotiations to reduce unsecured debt by two-thirds, convert half of its remaining union cash payments into a healthcare equity trust and substantially cut hourly wages.  In March, GM offered bondholders $0.08 on the dollar in cash, $0.16 on the dollar in new unsecured debt and a 90% equity stake in the company.  Despite the threat of bankruptcy, the proposal has not been accepted.

 The Bankruptcy

The GM bankruptcy will be complex but the plan is basic.  The company will unload its unsecured debt, cast aside the unprofitable entities and rebuild itself with the profitable parts.  A reorganized GM will carry the current secured debt and certain other debt. 

GM has borrowed $13.4 billion from taxpayers since January.  In lieu of more money, bankruptcy will allow GM to renegotiate and restructure existing agreements with the United Auto Workers, the company’s dealers and with the company’s suppliers.  The impact on unemployment could be severe and especially devastating to the Michigan economy. 

Obama is unwilling to put more good money after bad.  The administration no longer views GM as “too big to fail” and sees advantages to a GM bankruptcy.  The market is watching.

 

CAM Close March on Up

CAM Closes March on Up

Despite early week volatility, CAM posted another gain as the markets closed on Tuesday March 31, 2009.  The gain boosted the portfolio’s year-to-date growth to +2.090%.  During the same time period, the S&P 500 has declined by  -11.617%.

In the wake of the G20 summit and on the verge of the much-anticipated mark-to-market reforms, world markets soared on Wednesday evening.  Overall World Stocks gained 2% as Europe rose 3.5% on the strength of the proposed European Central Bank rate cut and the 40% increase in auto registration in Germany.  Japanese markets surged a hefty 4.4%.

The G20 seems ready to jump-start the International Monetary Fund with a 300% capital injection.  Wall Street and American lenders are ready to respond to the Mark-to-Market revisions.  There is speculation a Bear Market rally is underway.

Meanwhile, Custodio Asset Management continues to grow its portfolio and accounts under management.  Account representatives stand ready to answer any questions at 410-988-2511 or at info@camtrading.com.