Tuesday, April 14, 2009

Our 1st Quarter Client Letter

“May you live in interesting times.”
- Chinese proverb…and curse

As we complete our first year as Harvest Financial Partners we have thought about that proverb a lot. We have seen largest financial market and home price declines since the 1930s, government intervention in the economy on an unprecedented scale, and the demise or near demise of such financial behemoths as Fannie Mae, AIG, Citigroup, Bear Stearns and Lehman Brothers. Even GE has had to go hat-in-hand to Warren Buffett and use government debt guarantee programs to sell its bonds. Unemployment is fast approaching early 1980s levels, and world trade is declining for the first time in decades. Very interesting times!

A few weeks ago, when we last wrote you, the pessimism and anxiety were at an extreme. People were really nervous and scared. Today, the market is up over 1500 points, and all seems fine. We believe that the reality is somewhere in the middle. There are still many problems with the economy, but the unprecedented level of fiscal and monetary intervention should soon start to have an impact. This will not necessarily put an end to the recession, but it should improve the financial system and benefit other parts of the economy.

So where do we go from here? Well, we are not economic forecasters; rather we are analysts of companies. To our way of thinking, owning stock in a company at a price of $25/share has less risk than owning stock in the same company at $40/share, assuming the fundamentals have not markedly changed. We are finding many more of these “sales” in the market and, as investors that gets us very excited. We have talked often about the need to upgrade quality and focus on dividends, and we continue to believe that makes sense for investors. We have talked often about patience, and while it has been seriously tested, we still believe this is the correct course of action. So we will continue to proceed with your investment plan. We still are comfortable that this approach will yield you attractive returns over time.

To see how we are implementing our investment approach, we suggest you periodically visit our blog (there is a link on the website or you can visit it directly at www.plantingforyourfuture.blogspot.com). It contains our thoughts on the markets, investing and some of our favorite stocks.

In closing, another quote, “It was the best of times; it was the worst of times”. Even with the worst financial markets in decades we have loved every moment of building Harvest Financial Partners. Most importantly we have enjoyed getting to know you and the rest of our clients. Working with you is why we started the business and what keeps us energized every day. Of course, there are growing pains along the way, so if you have any suggestions or concerns, please let us know.