OUR FINANCIAL ADVISORS at WVRC on Jan 21st
PP RON LYSTER led the Pledge. DWIGHT HEIKKILA gave the Invocation: God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference…God grant me the senility to forget the people I’ve never liked anyway and the good fortune to run into those that I do like, and the eyesight to tell the difference. Good and pithy, DWIGHT. LENNY once again summoned the courage to come forward, this time to learn that he had been honored with a true Fireman‘s Hat. After what was perhaps not his best start, we finally rose, and provided You’re a Grand Old Flag.
We had one visiting Rotarian, Jim Snead from Santa Fe, which we learned is at an altitude of 7,000 feet. There were two Special Guests, both introduced by PP STEVE SCHERER. Abraham Caroms is sponsored by PP MIKE GINTZ, and he is with Morgan Stanley. Colby Smith is a dentist who works in the Village. SUNNY was of course with LENNY, while SHIRLEY accompanied PP PETER, and PAT was squired by PDG ANDY. KENCY NITTLER from Rotaract was there, plus another member, and PP MIKE NEWMAN introduced MASAKI NAKODA from Japan, who is our Ambassadorial Scholar. PP MIKE confirmed that MASAKI is indeed living at their home, and he seems to be getting early employment offers from Japanese banks which sounds like fun.
There were the usual announcements.
Haiti Earthquake Relief visit the R.I. Website, and Rotarians are encouraged to work with experienced relief organizations such as the Red Cross or Doctors Without Borders.
Ecuador 2010 there are 12 projects underway, plus the trip from March 18th to the 22nd.
Valentines Day Sweetheart Lunch, at Lawry’s on Feb. 13th Invitations are in the mail.
Note that we are dark on Thursday, Feb 4th two weeks from now, and will have a joint meeting with the Santa Monica Club. The Speaker will be John Dean, of Watergate fame. Note the location is the Doubletree Hotel, 1707 4th Street, between Pico and Olympic.
LEAH VRIESMAN had placed a Roster on each table, and she then asked us to write in our choice of which Avenue of Service Committee we preferred to be on. Historically, we have all been on one or another, but recently the level of participation is not nearly as high as it used to be. Obviously, all the Committees function better with more participation. LEAH also reminded us of our involvement with Angel Flight West. Some of our members fly their own planes, and others provide transportation between the Santa Monica Airport and the local medical facility as needed. For those with airline miles to spare, they can be donated for space aboard Alaska Airlines, which will be chartering volunteers to Florida who want to help in Haiti. Please call Leah for details on this, if you will.
PP STEVE SCHERER came forward to outline our Program today. He began by reminding us of what took place in the Market during 2009, which it turns out, was the best year since 2003. The DOW gained 18.8%, the S&P added 23.5%, while the NASDAQ soared 43.9%. One year treasuries remained relatively unchanged and the ten year rose 155 basis points. The year had a terrible start, with double-digit losses until March then the DOW jumped almost 4,000 points by year end. It went from about 6500 in early March to 10,400. It appears that our economy has recovered from recession to a hopefully sustainable recovery. Bernanke noted that “Virtually every major financial firm in the world was in significant danger of going bankrupt. I knew that if the basic financial system were to collapse, the impact on the global economy would be catastrophic. We would be facing a Depression of the severity and length of the 30’s.” In response, the Federal Reserve has created billions of new dollars and ‘blasted’ them into our economy. (YOE emphasis). By the end of 2009 the Fed had tripled the size of its balance sheet.
Does this mean we are also entering a new era of big government and national health care? What will happen to the worldwide war against terrorism? Will Israel use its military might against Iran? Will China eventually challenge U.S. military supremacy? Will the Internet eliminate the print media industry? And, will the U.S. and its trade partners refrain from protectionist measures? At this point, PP STEVE again asked PP ERIC what he thought, but the answer was not well recorded…
Here’s what we said at the beginning of 2009: WVRC members said the S&P would appreciate about 5 %, and the DOW & NASDAQ would each go up by 5 to 10%. We correctly predicted that long term bond rates would increase, but were incorrect in expecting short term rates to also increase. Our investment advisors some of whom are not present today (laughter) were more precise. DOW to close at 9,180 for 5% increase. S&P 500 to close at 945, also a 5% increase. NASDAQ to close at 1674, a 6% increase. Our long term interest rate was close, but the short term was not. Of the stocks selected, Johnson and Johnson, Hewlett Packard, Exxon, Vanguard Financials, Yingly Green Energy Holding Co, Heinz, Wyeth, and Montsanto, $10,000 invested in each of them would have resulted in a final value of $114,000. This nearly offset the 2008 loss!
WVRC predictions for 2010 are that the DOW will go up between 5 & 10%. NASDAQ up between 10 & 15%. S&P 500, up about 10%. One year treasuries, up, in general. 10 year up to 4.5 perhaps. These gems will be saved for repetition next year, of course!
This year’s group of experts includes the following - DONN CONNER and STEVE noted that both of them have been doing this for the past TWENTY years! The DOW was below 3000 then. DONN is a Principal in Reed, Connor and Birdwell. Next is JIM /CRAIN, who is a Financial Advisor with NY Life. DWIGHT HEIKKILA is a Certified Financial Planner. LEO TSENG is a Financial Strategist at Merrill Lynch. They will pick the closing on the DOW, S&P, NASDAQ, l and 10 year treasuries, and then pick one international stock.
DONN began by lodging a complaint some of us had been doing this for a long time, and we’ve never gotten paid! (laughter) We really do provide a heck of a lot of humor, as you know. We’re just as funny as Conan O’Brien, and you don’t have to stay up until all hours! Anyway, he tends to think that since the economy went down fast, it will come up fast. The banks ARE lending money the Cadbury deal will probably cost 3.5%, for instance. We really don’t know yet if we will be in an inflationary or deflationary mode. Thus he doesn’t expect too much of a change. The DOW going up 5%, S&P maybe 3% up, and NASDAQ about where it is now. The 1 year, up to a full 1%, and the 10 year about 4%. He likes Chunghua Telecom, a Taiwanese company. They are the dominant player in Taiwan in communications.
JIM CRAIN is a bit more positive. He thinks we should stay with the larger US companies. So he expects a 12% increase in the DOW, S&P perhaps 10% increase. NASDAQ, to 2511 a smaller increase. The 1 year, .71% and the 10 year, 4.4%/ He believes international equities are the way to go. When foreigners come here, they are thrilled, for instance, when they see vacuum cleaners they still have brooms. Dishwashers even automobiles everyone has one here. We have talked about the BRIC countries Brazil, Russia, India, China, the emerging countries. He prefers mutual funds, and picks the Van Eck Global Emerging Markets. He expects China to grow by 9%, India by 6%, Brazil by 5% and Russia who really knows? But if the rate in the U.S. is 1.5%, international looks much better.
DWIGHT HEIKKILA came forward with his dart board! Last year was his first chance at this, and he made perhaps his best prediction of all time. He missed the S&P by only 1%, and his energy stock went from $5.00 to $18.00. As he says, that’s a triple, even thought it did go way down to just $15! (laughter). He expects the 1 year to go to .8, the 10 year to 4.25, the S&P up to 1250, NASDAQ 2,600, and the DOW about 10% up. The markets will be very volatile, and most of the activity at this time is institutional. In other words, individual investors still have their money in banks. His stock is ABV, Alfa Bravo Victory is a manufacturer and distributor of soft drinks, etc as large as Coca Cola, but in Brazil. Since Carnival is in February, and beverages will be consumed, this might be the seasonal time to buy ABV.
LEO TSENG can always be depended upon to provide some humor. He threw his dart and hit Boeing! He admits he isn’t here to give advice, but to entertain. And as to last year, he is thankful that his performance wasn’t signaled out. He suggests that BILL EDWARDS’s attendance percentage is about 20%, which may have to do with money (laughter). He feels we aren’t out of the woods yet commercial properties, for instance, are not doing well their leases are being renegotiated, and space is being reduced. The unemployment rate is a real concern. Companies are repairing their balance sheets. The DOW around 11,000, S&P to 1250, and the NASDAQ up about the same amount as this year. The 1 year to perhaps .6, and the 10 year will go over 5%. He expects BRIC to do well.
PP STEVE SCHERER came back on with very little time left. His predictions DOW 11,600, S&P 1250, NASDAQ 2550, 1 year .75 and 10 year 4.1.
An offer was in the works to raffle off a bottle of Bogle Merlot, reputed to be the favorite of Scott Brown, who just won the Senate seat in Mass. but time ran out.
Closing comment: A pessimist is one who makes difficulties of his opportunities and an optimist is one who makes opportunities of his difficulties.