Morningstar Advisor - February/March 2009 - 13

“I use volatility measures such as beta and standard deviation, risk-adjusted measures like the Sharpe and Information ratios, and price ratios and investment concentration information. These measures help, but nothing Quick Poll (610 responses; poll taken between Dec. 15 and Dec. 31.) 1 Grade Barack Obama’s response to the crisis since he was elected president. 4 In general, what is the mood of your clients? prepared us for the magnitude of the market turmoil.” Mark Wallace Bay City Financial Services, Bellingham, WA “We use standard deviation, beta, Morningstar Risk. I believe no one was fully prepared for the crisis. We are asset allocators, not market-timers. We try hard to look forward six to 18 months and adjust our portfolios to where we think the markets will be the strongest. We have had to shorten that outlook over the past six months, but at a recent staff meeting, we decided to return to the longer time frame. We think that our flexibility and embracing change have made huge savings for our clients.” Scott Goodrick Sowell Management Services, North Little Rock, AR A B C F 27.6% 36.3% 26.0% 10.1% Remarkably calm. Concerned but not panicked. Fearful. 11.0% 76.4% 12.6% 2 The Obama stimulus package is… 5 The recession will end by… “We use standard deviation, beta, best/worst performance, alpha. Did these work? No. Too small to have much of an effect on the economy. More government spending is needed. Just right. Misguided; large-scale government intervention is the wrong policy. 10.3% June 2009 December 2009 June 2010 December 2010 Early next decade 24.1% 45.7% 17.0% 9.2% 4.0% The blowout in the bond market killed the deal.” William R. Sammons Wachovia Securities, Newport Beach, CA 41.8% 47.9% 3 What best describes how you currently have clients’ portfolios positioned? 6 What is your expectation for stock market returns in 2009? “We have used standard deviation and upside/ downside capture ratios. Unless the data went back to the 1960s for a particular investment, it had not experienced these levels of decline; therefore, none of us was totally prepared. The extreme increasing correlations of almost all asset classes during this downturn has been the most surprising and disappointing aspect for a All-out defense; nothing but cash and bonds. More conservative than normal but keeping a toe in equities. No significant adjustments made since crisis began. Stocks are bargains, and it’s time to buy. 4.2% 30.5% 50.9% 14.4% More pain; we haven’t reached the bottom yet. We’re at the bottom, but we’ll be here for a while. The worst is over; we should see positive returns. No idea. This market is too unpredictable. 12.6% 38.2% 34.9% 14.3% long-term focused, globally diversified, asset-allocation shop.” Barry Beach The Mason Companies, Reston, VA MorningstarAdvisor.com 13
http://www.MorningstarAdvisor.com
Morningstar Advisor - February/March 2009

Table of Contents for the Digital Edition of Morningstar Advisor - February/March 2009
