2010 somewhat surprised on the upside. Although we were conservatively positioned, we participated fully in the average market gains due largely to good stock selection and lucrative option premiums.
We continue to see anecdotal indications that our economy is gradually mending. At the same time stock valuations do not appear excessive on average, and some can be considered cheap.
These are positives for further gains in 2011. On the other hand, option premiums are near their lowest ebb and will reduce our expected returns. Housing and unemployment will continue to be a drag on the economy. Dividends are good and improving slightly. We still do not see fixed income as viable investments as yields are near all-time lows.
Therefore, net, net, the coming year looks promising but not as lucrative as 2009 or 2010. We cannot expect every year to bring double digit returns and we want to keep preservation of your assets first among our priorities.
Since Uncle Sam is tightening the regulation of income tax preparers, we will work with Rick Carlson who will go through the headaches of compliance and prepare the returns. We will assist Rick and review the completed returns but he will sign them. If you are a tax client, it’s time to start accumulating your documents for submission in February.
Very truly yours,
Michael F. Cantlon
Thomas E. Guyett