The Alethea Group of Oppenheimer & Co. Inc.
The Alethea Group of Oppenheimer & Co. Inc.
The Alethea Group of Oppenheimer & Co. Inc.
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<strong>The</strong> <strong>Alethea</strong> <strong>Group</strong><br />
<strong>of</strong> <strong>Oppenheimer</strong> & <strong>Co</strong>. <strong>Inc</strong>.<br />
<strong>Co</strong>mmitted to making your life simple<br />
by delivering a pr<strong>of</strong>essional investment<br />
management and financial experience.<br />
Organization. Help you evaluate your assets and<br />
liabilities and manage them effectively.<br />
Establish clear goals and objectives. An important<br />
aspect <strong>of</strong> any financial strategy is understanding what<br />
you want to achieve both for the short and the long term.<br />
Create a financial program. Let our team <strong>of</strong><br />
experienced pr<strong>of</strong>essionals work with you step by step<br />
to create an integrated long-term wealth management<br />
strategy that coordinates all the elements <strong>of</strong> your life.<br />
Utilize our administrative support for your daily<br />
liquidity needs.<br />
Protect and grow your wealth. Allow <strong>Oppenheimer</strong>’s<br />
well-respected analysis <strong>of</strong> the markets trends, cycles and<br />
fundamentals to work for you. We will make decisions<br />
based on rigorous research and our best judgment,<br />
always making your interests our major priority.<br />
M. Trent Miller, CFP ®<br />
Managing Director - Investments<br />
OMEGA Portfolio Management<br />
(972) 450-3876<br />
Stephen D. Robinson, CIMA ®<br />
Managing Director - Investments<br />
OMEGA Portfolio Management<br />
(972) 450-3883<br />
Tony Hsu, CFP ® *<br />
Executive Director - Investments<br />
OMEGA Portfolio Management<br />
(949) 219-1072<br />
<strong>The</strong> <strong>Alethea</strong> <strong>Group</strong><br />
<strong>of</strong> <strong>Oppenheimer</strong> & <strong>Co</strong>. <strong>Inc</strong>.<br />
Galleria Tower Two<br />
13455 Noel Road, Suite 1200<br />
Dallas, TX 74240<br />
(877) 242-2999 Toll Free<br />
*Located in the Newport Beach <strong>of</strong>fice.<br />
620 Newport Center Drive<br />
Suite 1000<br />
Newport Beach, CA 92660<br />
(888) 876-1150 Toll Free<br />
We want to welcome you to this inaugural issue <strong>of</strong> the Investment Newsletter <strong>of</strong><br />
the <strong>Alethea</strong> <strong>Group</strong> <strong>of</strong> <strong>Oppenheimer</strong> & <strong>Co</strong>. <strong>Inc</strong>. We hope to issue our newsletter<br />
on a monthly basis, along with any “Newsbreaks” that may emerge. This<br />
month, we will focus on three areas. First, the economy: we think the going<br />
remains tough. Second, we will touch on a variety <strong>of</strong> investment themes from<br />
the fl ight to quality to defl ation and what types <strong>of</strong> managers we think might<br />
do well. Finally, we discuss overall asset allocation, including the importance<br />
<strong>of</strong> fl exibility, quality and conservatism in structuring a portfolio.<br />
Has the “Great Recession” been a normal recession that could lead to a<br />
V-shaped recovery? We think the answer is “no.” We expect tough going for<br />
the next several quarters on most economic fronts and potentially more pain<br />
to follow. But for now, we believe that we are in the middle <strong>of</strong> a statistical<br />
recovery. <strong>The</strong> following trends illustrate our claims.<br />
<strong>Co</strong>nsumers are spending less, saving more and trying to pay down debt. Retail<br />
sales for Christmas were up, but marginally from the very low numbers <strong>of</strong><br />
last year. We expect retailer pr<strong>of</strong>i tability to be muted at best. Unemployment<br />
numbers have started to normalize, and we will see job growth soon.<br />
However, unemployment will stay relatively high for quite some time. We<br />
have mixed signals, with auto sales looking surprisingly strong; China GDP<br />
growth increasing dramatically, but very weak pending home sales. <strong>The</strong> Fed is<br />
starting to slow down some <strong>of</strong> the massive stimulus. <strong>The</strong>y have stopped buying<br />
Treasuries and will stop buying mortgage-backed securities in the coming<br />
months. <strong>The</strong>n, we will have a better handle on the shape <strong>of</strong> the economy. We<br />
are keeping a very close watch on these indicators and will keep you posted<br />
concerning any material changes.<br />
After last year’s plunge into the “Great Recession” and the stock market’s<br />
subsequent rise <strong>of</strong> more than 60%, we know we are dealing with an extremely<br />
volatile market. <strong>The</strong>refore, we suggest you keep the following principles<br />
in mind:<br />
• Because markets can move violently, investors should stay informed, liquid<br />
and nimble to take advantage <strong>of</strong> asset dislocations.<br />
• Try to employ very little leverage.<br />
THE ECONOMY<br />
GENERAL INVESTMENT THEMES<br />
1<br />
Source: Urban Land Institute (Summary from conference as <strong>of</strong> November 23, 2009)
GENERAL INVESTMENT THEMES (cont’d)<br />
• In what we think is a stock pickers’ market, try to choose the best<br />
active managers as opposed to index funds.<br />
• This is also a time for a fl ight to quality. Sell high-yield bonds and<br />
lower-quality stocks and move to more conservative assets such as<br />
high-grade bonds and blue chip equities. Use domestic large-cap<br />
companies and top-notch global allocation money managers for<br />
diversifi cation. We are selecting Exchange Traded Funds (ETF) that we<br />
think have the least risk but the best chance <strong>of</strong> outperformance on<br />
the basis <strong>of</strong> relative strength.<br />
• We believe that we are going to eventually see rising short-term<br />
rates, while longer-term rates will not go up as much, causing a<br />
fl attening <strong>of</strong> the yield curve. We are very cautious about buying bond<br />
funds. Instead, we recommend buying medium-term, high-quality<br />
tax-exempt bonds.<br />
• Barring unforeseen changes in political and economic conditions,<br />
we expect long/short managers who can avail themselves <strong>of</strong> market<br />
swings and merger/arbitrage managers who will benefi t from more<br />
deals on the market to perform better than most in 2010 and 2011.<br />
ASSET ALLOCATION<br />
In these volatile times in the market, we advocate an active, nimble investment style as well as a careful determination <strong>of</strong> how much (if any) income<br />
is needed for each individual portfolio we manage. We recommend a conservative income stream, including bonds with strong credit ratings.<br />
We perform extensive due diligence so we can identify some <strong>of</strong> what we consider among the world’s best money managers, mutual funds, ETFs,<br />
individual stocks and hedge fund managers 2 in the categories listed below.<br />
We currently emphasize:<br />
Risk Reducers (cash, money markets, medium-term tax-free bonds, short-term government agencies): 50%<br />
<strong>Inc</strong>ome Generators (government bonds, corporate bonds): 5%<br />
Inflation Protectors (hard assets, commodities): 10%<br />
Market Exposure (consumer staples, telecom, healthcare, select country ETFs): 20%<br />
Return Enhancers (global macro, long/short, merger arbitrage): 15%<br />
Please contact us if you have questions about your portfolio or about the<br />
investment types and themes we’re recommending.<br />
2<br />
Alternative investments such as Hedge Funds and Fund <strong>of</strong> Funds are made available only to qualifi ed investors and involve various degrees <strong>of</strong> risk.<br />
© 2010 <strong>Oppenheimer</strong> & <strong>Co</strong>. <strong>Inc</strong>. All Rights Reserved. <strong>Oppenheimer</strong> & <strong>Co</strong>. <strong>Inc</strong>. is a registered broker/dealer and investment adviser. For further information about the products/programs available and<br />
their suitability for your portfolio, please contact your <strong>Oppenheimer</strong> Financial Advisor. Any discussion <strong>of</strong> securities should not be construed as a recommendation or an <strong>of</strong>fer or solicitation to buy or sell<br />
interest in any such securities. Securities products <strong>of</strong>fered or sold by <strong>Oppenheimer</strong> will not be endorsed or guaranteed by <strong>Oppenheimer</strong> and will be subject to investment risks, including the possible loss<br />
<strong>of</strong> principal invested. <strong>Oppenheimer</strong> does not provide legal or tax advice. However, your <strong>Oppenheimer</strong> Financial Advisor will work with clients, their attorneys and their tax pr<strong>of</strong>essionals to help ensure<br />
all <strong>of</strong> their needs are met and properly executed. <strong>Oppenheimer</strong> & <strong>Co</strong>. <strong>Inc</strong>. is a Member <strong>of</strong> All Principal Exchanges and Member SIPC. No part <strong>of</strong> this brochure may be reproduced in any manner without<br />
the written permission <strong>of</strong> <strong>Oppenheimer</strong> & <strong>Co</strong>. <strong>Inc</strong>.<br />
<strong>The</strong> OMEGA <strong>Group</strong> is a program through <strong>Oppenheimer</strong> & <strong>Co</strong>. <strong>Inc</strong>. It <strong>of</strong>fers a unique managed money program in which experienced Financial Advisors act as portfolio managers for their clients.