V E S T M E N T S . . . F I N A N C E . . . R E T I R E M E N T. . . C U R R E N T E V E N T S . . . I N S U R A N C E . . . S T O C K S . . . I N V E S T M E N T S . . . F I N A N C E . . . R E T
MONEY MATTERS DOMINICK LOMBARDI Director, Investment Management & Trust IDB Bank
LONG-TERM OPPORTUNITIES IN A FRAGILE MARKET
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nities? We believe there are. While Quantitative Easing has inflated equities, the program has also provided liquidity for bank lending and reduced borrowing costs for many consumers
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Banker Paul Warburg was an early advocate of the U. S. Federal Reserve System.
L I B R A RY O F CO N G R E S S ; I D B B A N K
THE CALENDAR SAYS the financial crisis of 2008–2009 should be a faded memory, relegated to an economics class discussion or some other historical reference. After all, the recession officially ended four years ago. Yet, for many, the pain lingers. There have been many comparisons to the Great Depression of the 1930s, and while the similarities are few, one holds true. Deleveraging is a slow process with long-lasting effects. Eventually spending and growth will accelerate and the economy will gain momentum. With the benefit of hindsight we know the Great Depression eventually passed and was followed by three decades of strong growth. Of course, World War II, including the post-War recovery, played a significant role in that growth phase and we certainly hope for a different catalyst this time. While no one is forecasting three decades of growth we do believe economic growth will accelerate and, over time, you will profit from a sound investment strategy. Given the current fragile economy and volatile stock and bond markets it’s easy to focus on near-term events and lose sight of long-term opportunities. Growth is sluggish, unemployment remains stubbornly high, and the Federal Reserve is talking about ending its massive Quantitative Easing (QE) stimulus program, which among other things has artificially boosted asset values. So, are there long-term opportu-
and businesses. Both should provide the fuel for increased consumer spending that will translate into increased hiring and higher corporate profits. And, ultimately, it is higher corporate profits that drive stock prices higher. Five years after the worst financial crisis since the Great Depression, many questions and challenges remain, but these risks bring opportunities. While the outlook for some asset classes is far less optimistic—namely for bonds and fixed-income securities—we believe that a well-diversified portfolio should produce attractive returns during the remainder of this economic cycle. X