Double Dip Recession?

The economy’s sluggish rebound is still topping financial news. Consumer spending is flat, unemployment is up, and as I’m writing this the Dow is down.

What are we to conclude from these trends? Will we continue to slowly make headway, or will we lurch backwards into a double-dip recession?

These are certainly interesting questions, and the one thing that we know for sure is that there are no shortages of opinions on this subject.

The truth of the matter is that sometimes we need to get worse before we can get better. We have been addicted to debt and leverage for too long, and we are having to slowly ween ourselves off it as we adjust to a life of not being able to keep pace with the Jones’. Our society is “deleveraging,” which means many people are selling assets to reduce debt.

It is painful to go through, but the result is a happier citizen whose monthly note isn’t so overwhelming anymore.

I find that most of us can go through our homes and find a slew of things we regret having purchased. Recessions are about cleaning out old drawers and selling the things that we do not really need.

On a macro level it is much the same. Just as we are forced to analyze which expenses are truly discretionary and which ones are not, corporations find themselves in a similar situation. Since labor costs make up such a large component of corporate expenses the downsizing of labor forces is a typical side effect.

While workers are forced to adapt in an ever-changing economic envoironment, consumers benefit from the cost savings this provides to essential products and services.

Our economy is going through a renewal process. Companies are typically the first to adjust, and workers follow in suit. The process may be painful, but America always comes through on top – and this time will be no different.

Knowing where you're going

You have likely encountered companies that provide easy ways to grade investments using various ranking systems. While the convenience of these services appeals to many people, I just finished reading a white paper by Thomas Huebscher, Phd that should cause investors to think twice before relying on such ratings. One popular company claims that their research models provide a quick summary as to which investments are worth keeping, but Huebscher’s study revealed that this ranking system was actually a terrible predictor of a given investment’s future performance.

The investing public clamors for help in making sense of today’s seemingly nonsensical financial world. Companies naturally capitalize on this demand, but they fail to deliver for one reason. They are not forward thinking. We would never dream of navigating our cars by only looking through the rear view mirror, but many people do not think twice about parking their money in whatever vehicle seemed “safe” or profitable yesterday. There is something about money that makes reasonable people behave in ways they never would otherwise.

Since ranking systems have proven unreliable, here is some advice you can count on. Learn from the past so as not to repeat mistakes, but be sure to look forward when planning for the future.

It's all about perspective

It seems as though the news cycle this past month has been filled with one bleak story after another. Last week, according to some government figures, BP’s oil leak surpassed all previous spills to become the largest ever in the Gulf of Mexico. Even the lowest estimates say that at least 70 million gallons of oil are now in the Gulf, and the amount continues to climb every day. The long-term environmental effects of the spill are still unclear, but the hardships it has wrought on our region are only too obvious.

Unfortunately, recent predictions about the health of the national economy are not much brighter. Key indicators suggest that the recovery is slowing, and economists fear a double-dip recession. New jobless claims were higher than expected, and the housing sector is suffering now that the homebuyer tax credit has expired. While some politicians are calling for additional stimulus spending, others are concerned about the ballooning deficit. Meanwhile unemployment benefits for millions of laid off workers have ended, and many others fear for the security of their jobs. Consumer confidence has dropped considerably in June meaning consumer spending is likely to remain low in the coming months. Traders watch for every morsel of information, so even seemingly insignificant news can bring a reaction in the stock market. With so much uncertainty, it is more important than ever to focus on the fundamentals to avoid making unwise, impulsive decisions.

With so many gloomy forecasts, I would like to take a moment to consider the positive. As demonstrated time and time again, in Louisiana we know how to weather a storm. We have the resiliency to survive whatever catastrophes come our way and emerge from the wreckage stronger than ever. Historically the economy is cyclical. Eventually it will likely improve, I believe the financial markets will stabilize, and those individuals who followed a disciplined financial strategy will reap the benefits. Hopefully they also will have gained some wisdom and fortitude to withstand the next downturn with even more confidence.

Fortier president wins national award

SAN DIEGO, CA – May 5, 2010 –Brad Fortier, CFP®, president of Fortier Financial, was presented the Charlie Eisenmann Client First Award by Dunham & Associates Investment Counsel, Inc. during a ceremony today.

The national award is given annually to the investment professional who works with clients in a manner that best exemplifies Charlie Eisenmann’s client first philosophy. Mr. Eisenmann, the former Chief Operating Officer of Dunham & Associates, died in March 2007 after battling cancer.

Mr. Fortier received the award for his dedication to his clients in the wake of Hurricane Katrina. He set up a temporary office in his home to help clients through the crisis and went well beyond what would have been professionally expected to assist in many other areas of their lives.

Jeffrey A. Dunham, founder and CEO of Dunham & Associates Investment Counsel, Inc., presented the award during the 2010 Dunham Institute at the Lodge at Torrey Pines in La Jolla, California. Mr. Fortier is an independent Financial Advisor with LPL Financial in the Greater New Orleans Area and was chosen by the Dunham & Associates award selection committee.

The event’s keynote address was made by Nobel Laureate in Economics Dr. Harry Markowitz.

"Brad Fortier represents a client first attitude that is both unwavering and focused on his clients' needs,” said Jeffrey A. Dunham. “Like Charlie, Brad demonstrates the noble pursuit of genuine service to his clients. This was magnified when confronted with Hurricane Katrina but is also evident when working with his clients in the more normal circumstances of everyday life.”

Brad is also a prominant community leader in the recovery of New Orleans. He served as the president of the Lakeview Civic Improvement Association, the director of capital development for the Beacon of Hope Resource Center, the chairman of the Finance Committee for the District 5 Neighborhood Recovery Group, and on the District A President’s Council, which was established to advise on the city’s budget process.

“We received many deserving nominations from around the country, which made our selection challenging,” noted Salvatore M. Capizzi, Chief Sales & Marketing Officer of Dunham & Associates Investment Counsel Inc. “In the end, we felt Brad's exemplary client first service philosophy and his dedication to community service are the attributes that would best carry on Charlie Eisenmann's legacy. We are honored to recognize Brad for this year's award."

“I am honored to accept this award for client service, which is at the center of my business philosophy,” said Fortier. “Financial planning is a means to an end. Helping my clients realize their dreams is really what I do; it’s what drives me. That is why I take a holistic approach to finance that extends far beyond a person’s portfolio to really get at the heart of what they want to achieve.”

About Fortier Financial
Fortier Financial is one of the most highly regarded wealth management specialty boutiques in the Gulf region. The name has become synonymous with professionalism and trust, which is why Fortier Financial's exclusive clientele consists mainly of successful professionals seeking a high level of personalized advice. Despite the firm's growth, it continues to deliver one of a kind customer service that addresses the needs of each client on an individual level. To maintain this key strength, Fortier Financial limits the number of new clients taken on and is selective when choosing who it serves based on criteria that extend beyond the size of portfolios.

Fortier Financial is independently owned and operated. It is a branch office of one of the nation’s leading diversified financial services companies and the largest independent broker/dealer in the nation.* Through LPL Financial, Fortier Financial is able to offer access to a wide variety of products and services, all of which can be tailored to suit clients’ specific needs.

*As reported in Financial Planning magazine 1996-2009, based on total revenues.

Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC