1st Quarter 2014
March 31. 2014

Thank you once again for your support over the last few months as we transitioned to Waterway Wealth Management. We hope you see a positive change in the time we can now spend working with you and providing comprehensive advice into all aspects of your financial life. We also enjoyed seeing many of you at our Client Appreciation lunch and dinner in February. It was one opportunity to meet Dan and hear more about the philosophy of Waterway. We look forward to scheduling some additional events later in the year.

Spring has finally arrived! The first quarter of 2014 was dominated by the weather in many parts of the country and especially in the financial markets, with the term “polar vortex”. This weather condition is when polar air drives straight down the center of the country and keeps the south and east in a cold weather pattern. The slowdown in the economic activity from items such as car sales, home sales and manufacturing have all been blamed on the polar vortex. Markets struggled at the beginning of the quarter, but eventually shrugged off any negative news and set an all-time high. This overly optimistic sentiment continues to overcome the proverbial “wall of worries” such as Ukraine and the Fed’s tapering. We do believe the tapering will eventually allow us to better understand how the economy is performing, but we might not see a clear picture until later this year.

How are we working through this period at Waterway? We still think it is prudent to keep a well-diversified portfolio. We believe interest rates will rise this year and have reduced exposure to long term bonds from all portfolios. For the bond funds we continue to hold, the duration (measure of average maturity) is kept short so values are not eroded by an increasing interest rate environment.

We look forward to seeing you in your next review meeting and always welcome a call if you have any questions you have along the way.

David Michalk, ChFC®