Allen & Co. News

From the Desk of the President & CEO

12/15/2009

As Americans, our investment philosophies have been shaken to the core due to the financial firestorm of the past two years, not to mention the earlier part of this decade. The fever pitched market panic of last fall has caused even the most experienced of investors to question their long term investment strategies andmost dangerouslyabandon their disciplined approach to take rash actions that may very well be regrettable.

I strongly believe that long-term, disciplined investing grounded in asset allocation, diversification and active management is in an investors financial best interest. This is based on rigorous and detailed study and experiencenot a haphazard guess. At Allen & Company our passion is to guide and protect our clients from an investors worst tendencies during erratic times in the market.

Behavioral finance teaches us that taking short term information and expanding it into the future can be harmful to investors especially during periods of maximum volatility. According to Strategas Research Partners data, the average holding period for stocks in 1960 was 8 years. In 1970, it dropped to 6 years, followed by 3.1 years in 1980, 2 in 1990 and 1.2 in 2000 and .7 years in 2007. This data would indicate we have become a nation of traders rather than investors which becomes even more critical during the historic volatility over the last two years.

A study of the markets reveals there are never normal returns. Historically, the equity markets return 10% annualized returns over several decades; however, the distribution of returns is never this easy. More than 50% of the time, market returns were up over 15% while 25% of the time the market was down significantly. Less than 10% of the time market returns were within several percentage points in a given year of the long term average. This data points to the difficulty and patience that is required to be a successful investor.

The unglamorous road to long-term investment success is that there is not a short cut. No quick solution, just discipline and hard work. We appreciate being able to work hard for you at Allen & Company.

As the year draws to an end we wish you and your family a wonderful holiday season and a New Year filled with happiness, health and prosperity.

Keith Albritton, CIMA, CFP is President and CEO of Allen & Company. For more information on Allen & Company or any of our team of professionals visit our website at alleninvestments.com