» CLIENT LOGIN
Call for Complimentary Consultation:
Toll Free (866) 407-4320
Toll Free (866) 407-4320
Financial Events
Click here for information about our upcoming client events and educational seminars.
The Virtus View is a weekly to bi-weekly e-mail publication that Brian authors in order to keep you updated on the current market situation.
VIRTUS VIEW 9.26.08
9/26/2008
This is the second installment of “The Virtus View,” a weekly e-mail sent to you for informational purposes.
This communication is intended to add value to your life by helping you separate the real news from the white noise, understand the critical economic events that you read about every day and outlining alternative investments which might be advantageous to you in these times. We send this weekly e-mail to both clients as well as individuals we hope become future clients. Thus, to my valued clients, since we use many alternative investments in your portfolio currently, some of the e-mails might discuss assets that you already understand. It never hurts to review your knowledge of those investments.
Please feel free to forward these e-mails to any friends you have who you believe will benefit from learning more about finances and investments.
I want to start by discussing the white noise out there for a minute and then review an alternative investment many people are not aware of at this time. A client called me stating that they recently heard Suzie Orman on the television and wanted to get my thoughts. Now most of you know that I am not a fan of these media financial advisors, be it Orman, Scott Burns, or any other of the “experts” you can see on the television or read about in the newspapers. The main reason is because there are no tract homes to financial planning. I can’t think of a time that an advisor can give advice that fits everyone’s goals, risk tolerance, and current situation. There are so many variables involved that I must focus on your individual goals in order to give sound financial advice. With that being said, the other reason I am not a big fan is the lack of logic in some of the advice given. Per my client, Suzie Orman stated that everyone should move their money out of money markets because they aren’t safe. She also recommended that this is a good time to buy stocks. Let’s think this through. If money market funds are not safe, is the market really going to rise? If money markets fund start failing or losing significant money, are we not going to have significant problems with our economy, and thus the stock market? She might be right on either of those predictions, but I have a hard time understanding how both of them will work together. As a side not, a future Virtus View will focus on the money market issue. Please don’t let the “white noise” out there confuse you. It is best just to ignore most of what is on mainstream television in regards to finances.
I wanted to introduce a new investment to many of you. It is called an Absolute Return Note. This is not an offer to sell or a solicitation. This is for informational purposes only. They work like this:
The green box outlines where the range is for the absolute return. In this example, if the S&P 500 is anywhere between negative 20% and positive 20%, and has not breached during the life of the investment, the investor would receive the absolute number as a return. For example, if the index was down -14%, the investor would have a positive return of 14% if not breached. Likewise, if the index is up 15% over that time period, the investor would receive a 15% return if not breached.
Any breach outside that range during the life of the investment, including up more than 20% or down more than 20%, the investor would receive your principal back plus a return of 1.5% plus their principal back in this example. Again, the principal is FDIC insured but not the return. I also want to point out that even though this is a short-term investment ranging from 9 months to 24 months in term; it is not a liquid investment.
Let me address when this could be used in a portfolio. We want to have diversification in our portfolio and this is no different. It should be considered for a part of a portfolio but never too much of a portfolio. Each person’s goals and risk tolerance will determine the amount one should consider. Also, I would not recommend an investor consider this investment when the market is down significantly. For example the market is down anywhere from 25% to 30% over the past year (depending on the two dates you select). If you recall last week’s The Virtus View, I discussed us being at the bottom of a channel. I would wait for a rally and then consider these.
Investors should understand the risks of investing in the absolute return notes and should reach an investment decision only after careful consideration of the suitability of the notes in light of their particular financial circumstances. These risks include the possibility that the value of the notes will fluctuate, and the possibility that you will receive an amount less than your initial investment if the notes are sold prior to maturity.
I hope you found this Virtus View informative.
Please feel free to contact me if I can be of any assistance.
Best Regards,
Brian Tillotson
2435 East Southlake Boulevard
Suite 120
Southlake, TX 76092
817-717-3812
817-416-6585 FAX
www.virtuswealth.com
Securities & Advisory Services Offered through VSR Financial Services, Inc., A Registered Investment Adviser and Member FINRA/SIPC
To opt out of this weekly e-mail, please just reply to this e-mail with “Opt Out” in the subject line.
Please feel free to forward this to any friends you believe will benefit from this information.
To learn more about Virtus Wealth Management and how we may be able to help you, please visit our website or give us a call. http://virtuswealth.com
THE VIRTUS VIEW
Good afternoon to all.This is the second installment of “The Virtus View,” a weekly e-mail sent to you for informational purposes.
This communication is intended to add value to your life by helping you separate the real news from the white noise, understand the critical economic events that you read about every day and outlining alternative investments which might be advantageous to you in these times. We send this weekly e-mail to both clients as well as individuals we hope become future clients. Thus, to my valued clients, since we use many alternative investments in your portfolio currently, some of the e-mails might discuss assets that you already understand. It never hurts to review your knowledge of those investments.
Please feel free to forward these e-mails to any friends you have who you believe will benefit from learning more about finances and investments.
I want to start by discussing the white noise out there for a minute and then review an alternative investment many people are not aware of at this time. A client called me stating that they recently heard Suzie Orman on the television and wanted to get my thoughts. Now most of you know that I am not a fan of these media financial advisors, be it Orman, Scott Burns, or any other of the “experts” you can see on the television or read about in the newspapers. The main reason is because there are no tract homes to financial planning. I can’t think of a time that an advisor can give advice that fits everyone’s goals, risk tolerance, and current situation. There are so many variables involved that I must focus on your individual goals in order to give sound financial advice. With that being said, the other reason I am not a big fan is the lack of logic in some of the advice given. Per my client, Suzie Orman stated that everyone should move their money out of money markets because they aren’t safe. She also recommended that this is a good time to buy stocks. Let’s think this through. If money market funds are not safe, is the market really going to rise? If money markets fund start failing or losing significant money, are we not going to have significant problems with our economy, and thus the stock market? She might be right on either of those predictions, but I have a hard time understanding how both of them will work together. As a side not, a future Virtus View will focus on the money market issue. Please don’t let the “white noise” out there confuse you. It is best just to ignore most of what is on mainstream television in regards to finances.
I wanted to introduce a new investment to many of you. It is called an Absolute Return Note. This is not an offer to sell or a solicitation. This is for informational purposes only. They work like this:
- They are typically linked to an index, most often the S&P 500.
- They are usually short-term in nature running from 9 months to 24 months.
- They have a ceiling and a floor that can range between 15 to 50 percent.
- If at any time during the life of the investment the S&P 500 ceiling or floor is breached, you will receive the principal and possibly a minimal return, usually between 0-2%.
- If the S&P 500 shows a return between that range at maturity and has not breached the parameters, you will get that absolute number as a return. An example is given below.
- The notes are not liquid.
- The principal portion of the investment is FDIC Insured.
The green box outlines where the range is for the absolute return. In this example, if the S&P 500 is anywhere between negative 20% and positive 20%, and has not breached during the life of the investment, the investor would receive the absolute number as a return. For example, if the index was down -14%, the investor would have a positive return of 14% if not breached. Likewise, if the index is up 15% over that time period, the investor would receive a 15% return if not breached.
Any breach outside that range during the life of the investment, including up more than 20% or down more than 20%, the investor would receive your principal back plus a return of 1.5% plus their principal back in this example. Again, the principal is FDIC insured but not the return. I also want to point out that even though this is a short-term investment ranging from 9 months to 24 months in term; it is not a liquid investment.
Let me address when this could be used in a portfolio. We want to have diversification in our portfolio and this is no different. It should be considered for a part of a portfolio but never too much of a portfolio. Each person’s goals and risk tolerance will determine the amount one should consider. Also, I would not recommend an investor consider this investment when the market is down significantly. For example the market is down anywhere from 25% to 30% over the past year (depending on the two dates you select). If you recall last week’s The Virtus View, I discussed us being at the bottom of a channel. I would wait for a rally and then consider these.
Investors should understand the risks of investing in the absolute return notes and should reach an investment decision only after careful consideration of the suitability of the notes in light of their particular financial circumstances. These risks include the possibility that the value of the notes will fluctuate, and the possibility that you will receive an amount less than your initial investment if the notes are sold prior to maturity.
I hope you found this Virtus View informative.
Please feel free to contact me if I can be of any assistance.
Best Regards,
Brian Tillotson
2435 East Southlake Boulevard
Suite 120
Southlake, TX 76092
817-717-3812
817-416-6585 FAX
www.virtuswealth.com
Securities & Advisory Services Offered through VSR Financial Services, Inc., A Registered Investment Adviser and Member FINRA/SIPC
To opt out of this weekly e-mail, please just reply to this e-mail with “Opt Out” in the subject line.
Please feel free to forward this to any friends you believe will benefit from this information.
To learn more about Virtus Wealth Management and how we may be able to help you, please visit our website or give us a call. http://virtuswealth.com
CONTACT US: 2435 E. Southlake Blvd • Suite 120, Southlake, TX 76092 • (817) 717-3812
Toll Free (866) 407-4320 • Fax (817) 416-6585 • BTillotson@VirtusWealth.com
Toll Free (866) 407-4320 • Fax (817) 416-6585 • BTillotson@VirtusWealth.com
Securities & Advisory services offered through VSR Financial Services, Inc., a Registered Investment
Adviser and Member FINRA & SIPC. Virtus Wealth Management is independent of VSR.
Adviser and Member FINRA & SIPC. Virtus Wealth Management is independent of VSR.
