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Press Release

FOR IMMEDIATE RELEASE

Collins & Company Wealth Managers Receives 2011 Best of Larkspur Award

U.S. Commerce Association’s Award Plaque Honors the Achievement

NEW YORK, NY, September 5, 2011 — Collins & Company Wealth Managers has been selected for the 2011 Best of Larkspur Award in the Investments category by the U.S. Commerce Association (USCA).

The USCA “Best of Local Business” Award Program recognizes outstanding local businesses throughout the country. Each year, the USCA identifies companies that they believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and community.

This is the first year that a business has qualified as a Four-Time Award Winner. Various sources of information were gathered and analyzed to choose the winners in each category. The 2011 USCA Award Program focuses on quality, not quantity. Winners are determined based on the information gathered both internally by the USCA and data provided by third parties.

About U.S. Commerce Association (USCA)

U.S. Commerce Association (USCA) is a New York City based organization funded by local businesses operating in towns, large and small, across America. The purpose of USCA is to promote local business through public relations, marketing and advertising.

The USCA was established to recognize the best of local businesses in their community. Our organization works exclusively with local business owners, trade groups, professional associations, chambers of commerce and other business advertising and marketing groups. Our mission is to be an advocate for small and medium size businesses and business entrepreneurs across America.

SOURCE: U.S. Commerce Association

CONTACT:
U.S. Commerce Association
Email: PublicRelations@uscaaward.com
URL: http://www.uscaaward.com

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Please click here to read the Web version of the full Press Release.

Please click on the link above to view the webinar.

I’ve found it’s much easier to work through these details and be prepared in the event of an emergency. Also, in many cases, resolving financial affairs can be complicated, so the sooner you begin getting organized, the easier it will be when the time comes to transition responsibilities.

I hope you find this document helpful for you and your family. Please feel free to contact me if you have any questions.

Bruce Raabe
President

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As a result, Raabe learned from the beginning the importance of properly managing the firm’s relationship with its clients—from the family with $10 million in assets to the $300 million foundation. His father–in–law, John Collins, is now retired and Raabe has taken over as president of Collins & Company, but the firm’s core ethos has remained the same: “The business is built on giving clients the world–class service they deserve,” says Raabe.

Delivering that service has meant understanding the needs of each set of clients, which Raabe accomplishes by taking clients through a detailed discovery meeting that identifies their specific personalities, histories, financial situations, values and goals. Raabe acknowledges that there are some similarities between managing the wealth of families and foundations. Foundations, however, also carry unique challenges. For example, he says, foundations are largely designed to be philanthropic engines, awarding a portion of their assets each year. From an investment perspective, that means the time horizon of a foundation is considerably longer than that of the average individual or family client. “There’s less emotional attachment to the assets,” he says. “And since the time horizon is forever, a foundation’s asset allocation can be much more aggressive.”

Managing foundation assets is a key market niche and differentia–tor for Collins & Company, which oversees $450 million in assets for more than two dozen affluent families and the same three foundations that John Collins brought into the firm in the 1980s and 1990s. One of Raabe’s key initiatives is to grow the foundation side of the business more aggressively in the coming years. “There are thousands of private foundations in California alone,” he points out.

That said, pursuing foundation business is a challenge. Simply getting in front of a decision–maker at a foundation can be difficult enough. Public contact information typically includes just a post office box or the address of the foundation’s attorney, and there often is no easy way to lobby for a sit–down with the board chair or investment committee. Raabe’s solution has been to work his way inside the industry and position the firm as an expert in the field of foundation asset management. His team—which includes a portfolio manager and two client relationship managers who handle account administration and other back–office functions—has represented Collins & Company at events put on by the Council on Foundations, a nonprofit group that includes as members thousands of foundations and other grant–making organizations. The firm also is a member of the COF’s Philanthropy Advisory Network, a group of legal and financial advisors with expertise serving foundations and other philanthropic organizations.

Additionally, as part of his efforts to enhance his credibility among key members of his niche, Raabe has written a white paper for Collins & Company that addresses the unique challenges that small and midsize foundations face. One tip Raabe shares is the importance of creating a clear investment policy for the foundation. “An investment policy statement serves as a road map for making investment decisions, ensuring that the investment portfolio is properly aligned with the foundation’s goals, investment time horizon and tolerance for risk,” Raabe notes in the white paper.

Raabe is leveraging technology as part of his business development strategy. Because it can be difficult to get foundation heads to find the time to attend meetings, he’s producing a streaming video for Collins & Company’s Web site that outlines the firm’s approach in working with foundation clients. Raabe also champions the role that technology can play at a foundation. For example, he helps coordinate efforts between foundations and third–party providers to set up virtual office services that allow the foundations to receive grant proposals on–line and streamline their administrative functions, reducing the amount of time foundation employees need to spend on paperwork and other time–consuming tasks.

Raabe doesn’t see his firm’s efforts to attract more foundation clients as just a grab at additional business. Instead, he says Collins & Company’s experience serving foundations can bring significant benefits to how a foundation is run. “Historically, foundations spend too much time worrying about things like administration, compliance and investment management and less time focusing on the mission of the foundation and looking for the best charities to support with those annual grants,” he says. “There’s a lot of value in working with an expert.”

Weathering Multiple Shocks – Will the Stock Market Push On?

Since our last Review, the financial markets have faced a litany of global shocks. The tragic disaster in Japan, not only created incredible anguish on a human level, but its potentially harmful effect on the global economy also worried investors.

The ongoing social unrest in the Middle East triggered a sharp upward move in oil prices that has only recently shown signs of abating. While here at home, slow job growth, a weak housing market, and rising government debt continue to keep investors awake at night.

Despite these shocks and nagging concerns, we believe the US economy continues to grow at a slow, but healthy pace. Our positive view is bolstered by several encouraging metrics including: a labor market that is beginning to show material signs of improvement, nine straight months of improvement in Leading Economic Indicators, continued capital investment strength, strong personal consumption growth, and expanding retail sales. The final metric that supports our optimistic view is perhaps the most important. Corporate earnings, which are near record highs, have formed a rock solid foundation for the stock market to continue to build upon.

In this Quarterly Review, we discuss the complexities of a few developments we see today and how they could affect financial markets. We also discuss the benefits of adding international equities to a diversified portfolio.

Your Portfolio—What We’re Watching Today

One of the benefits of working with a financial advisor is that you have a professional money manager watching the markets on your behalf and responding accordingly. We generally don’t make short-term changes in your portfolio based on current world events because studies show that market timing rarely works. A better approach is to create a long-term strategy and stick with it. However, we do closely monitor political, economic and financial events around the world in order to continually fine-tune our long-term strategies, monitor potential risks and look for new investment opportunities as they emerge.

Middle East and Northern Africa Social Unrest

As we mentioned above, the situation in the Middle East and North Africa and its impact on oil and other energy prices is on most investors’ minds today. While prices have come down recently, Americans are still paying an average of $4 a gallon at the pump (Source: AAA). While economic growth has marginally added to energy demand, the political and social unrest in the Middle East is fuelling speculation and driving prices up. The outcomes from these social uprisings are impossible to predict, but the region does appear to be in a volatile transformative cycle. Thus far, the turmoil has been in the marginal oil producing nations such as Libya, Egypt, Morocco, and Bahrain. However, if these social uprisings begin to gain momentum in major oil producing countries like Saudi Arabia or Iran, the impact on oil prices and global economic growth could be severe.

The Upcoming Federal Reserve Policy Change

The Federal Reserve’s second round of monetary stimulus often referred to as quantitative easing (QE2 for short) is scheduled to conclude on June 30. This program, which will have injected $600 billion in liquidity into the economy when complete, was intended to lower interest rates and spur lending by actively buying longer-dated Treasury debt and mortgage-backed securities. The question on investors’ minds is whether or not our economy can stand on its own without the added support of the Federal Reserve and the US Treasury. While today’s economic momentum remains healthy, only time will tell if the recovery is strong enough to go it alone.

How will the QE2 expiration effect interest rates? Over the past five months, the Federal Reserve has purchased approximately $100 billion in securities every month. When this purchasing stops, it leaves a void in the market. Who will fill this void? Japan has been a big buyer, but they must now focus on reconstruction. China continues to be a large buyer, but it has recently announced intentions to increase non-dollar foreign exchange holdings. The US credit markets remain the largest and most liquid in the world, so buyers will ultimately pay for this liquidity – but this short-term supply/demand imbalance may require higher interest rates to entice buyers. While we don’t know exactly how this will unfold, we do believe it warrants a cautious approach to fixed income investing and we have positioned our portfolios to better withstand or moderately benefit from an upward move in interest rates.

Corporate Earnings Resiliency

The equity markets have been rising steadily for some time. In fact, the S&P 500 Index has experienced only one monthly decline (as measured by total return) in the past ten months. As such, it is natural for investors to view stock prices as expensive and the market as over-extended. Currently, we do not share this view.

Although the possibility of market weakness based on negative investor sentiment or shock factors always exists, as wealth managers it is our job to take an objective view of the investment landscape. Currently, earnings of S&P 500 companies are expected to reach a record level of $97 per share – a 15% improvement over 2010 levels. What’s important is that this figure is trending upward not downward. Priced at just under 14x earnings, today’s equity market, even after doubling from its March 2009 lows, represents a compelling opportunity for risk tolerant investors.„

The Debt Ceiling and the Sinking Dollar

Every day, the federal government spends more money than it takes in. It makes up this difference by borrowing money. So every day, the US Government’s debt increases and sometime in the next month this figure will rise above $14.3 trillion. There is a law in place – first passed in 1917 and amended many times since – that caps the federal debt ceiling at $14.3 trillion. According to Treasury officials, our nation’s debt will hit this figure any day.

Since the debt ceiling’s introduction in 1917, Congress has never failed to raise it in periods such as this. In fact, as the chart shows, Congress has raised the limit ten times in the last decade. However, now in the midst of a heated spending debate, some members of Congress are threatening to vote against raising this debt ceiling without some evidence of substantial cuts in government spending. It is likely that after significant posturing and negotiating from both sides, the ceiling will be adjusted once again and the US will not default on its debt. That said, this clearly reflects the growing negative attention given to our country’s ballooning debt levels, and while equity and credit markets have prospered as this debt has rapidly increased, the value of our currency has not.

As the chart shows, the trade-weighted value of the US dollar is near a 3-year low. While this benefits many of the large, globally focused companies we currently favor, currency devaluations like this one can reduce consumer spending as inflation becomes a concern. Today, inflation remains subdued, but the rate has been slowly increasing. Because of this, we are watching the value of the dollar closely and positioning our portfolios prudently. We continue to believe exposure to broad-based commodities, large US equities, and tactical positions in attractive international markets are opportunistic ways to invest in this falling dollar environment.

International Investing —Adding Growth Potential and Diversification

We believe including international equities in a well-diversified portfolio makes sense for the growth-focused investor. In addition to providing access to faster growing economies, international equities may offer attractive diversification benefits for U.S. investors. As your financial advisor, Collins & Company may recommend an allocation to international equities within your overall portfolio, but only if it is a good fit for your time horizon, risk tolerance, and investment objectives.

Diversification is the Key

The most obvious advantage of investing internationally is portfolio diversification. One of the lessons we learned from the Great Recession of 2008 was the Global Economy is now interconnected more than ever before. That said, investing overseas remains a very prudent strategy for managing portfolio risk. International markets, both emerging and developing, will often display widely different sets of economic circumstances at any point in time. For instance, if the United States suffers a slowdown, economies in Asia or South America, due to drastically different local forces acting upon them, may continue to post meaningful growth rates. Because of these economic differences, equity markets in these countries may exhibit non-correlated returns with those of the United States – potentially lowering overall portfolio volatility.

Accessing Faster Growing Economies

Investing in certain international markets also allows an investor to capitalize on higher relative growth rates. Driven by growing middle classes, responsible government stimulus, and strong natural resource bases, many countries such as China, South Korea, and Australia are displaying economic growth greater than the US and other developed countries.  Outsized economic growth generally leads to similar growth in corporate profits – the life blood of a healthy stock market.

Expanding Opportunities Abroad

According to Standard & Poor’s, more than 70% of the world’s publicly traded equities are located outside the United States. Many of these firms no longer dominate just their home country, but now compete on a global scale. For many years, investors were unable to invest in many of these companies due to a lack of liquidity and high trading costs. Now, mainly due to the growth of Exchange Traded Funds (ETFs), investors are able to freely invest in most international markets and take advantage of these opportunities with a security that offers daily market trading (like a stock) with minimal fees.

Positive Currency Effects

The three major global currencies (the US dollar, the euro, and the yen) are all facing significant challenges. While each currency faces specific issues, investors tend to focus on the high debt levels of each currency bloc and the demographic challenges each faces. Investing directly in international markets (via ETFs) allows investors to not only participate in the growth opportunity of the market but also provides exposure to the market’s home currency. This currency exposure further adds to the diversification benefits and also provides upside potential given a further decline in the US dollar.

Looking Ahead

We remain optimistic regarding the health of the US and global economies. We recognize there have been recent disappointments in economic data, but believe the positives (record corporate earnings and an improving labor environment) more than outweigh these. We also recognize that this investment environment remains fluid and complex, and you can rest assured that we continually monitor risk within portfolios and adjust accordingly. 

As always, we are available to discuss the content of this review anytime. We sincerely thank you for your ongoing confidence you place in Collins & Company and look forward to helping you achieve all that is important to you.

Important Disclosures

Collins & Company’s Quarterly Review does not provide individually tailored investment advice. It has been prepared without regard to the circumstances and objectives of those who receive it. We recommend that investors independently evaluate particular investments and strategies, and encourage investors to seek the advice of a financial adviser. The appropriateness of an investment or strategy will depend on an investor’s circumstances and objectives. This is not an offer to buy or sell any security/instrument or to participate in any trading strategy. The value of and income from your investments may vary because of changes in interest rates, foreign exchange rates, default rates, prepayment rates, securities/instruments prices market indexes, operational or financial conditions of companies or other factors. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. Member SIPC, FINRA.

Better Late Than Never

US Economy Expanding
The US economy is no longer recovering—it is actually expanding!  US Real GDP has now climbed above the pre-recession high of Q4 2007. While this was generally expected by leading economists, it seems the trend is now set to continue throughout the year. We believe there are a variety of other factors that also bode well for US investors, including:

• Quantitative easing boosts stock market and economy

Over the past three years, the Federal Reserve has instituted a form of loose monetary policy called Quantitative Easing. The goal of this policy is to help banks become better positioned to loan more money to businesses and individuals. We expect this ongoing stimulus to improve investor confidence, aid consumer spending, and revive credit for small business. This should ensure our economy continues to at least inch higher.

• Strong earnings likely to support equities in 2011

2010 earnings for the S&P500 companies totaled approximately $84 (Index adjusted). This represents a gain of nearly 40% over 2009 results and is nearing the $87 peak reached in 2007. For 2011, consensus expectations are for record earnings of $95 (+13% over 2010). Revenues, an important indicator of the strength of the earnings recovery, should also grow due to improving domestic demand and robust international growth. This growth, coupled with below-average equity valuations, is good news for equity investors.

• Public companies in great financial shape

Since 2008, businesses have been reluctant to increase capital spending. Therefore, the profits generated during the last two years have accumulated on the books of most public companies. As of December 31, approximately $24T in cash sat on S&P500 company balance sheets. Some of this cash has been used to pay dividends and to make acquisitions. Most remains available for future deployment. We believe companies will continue to deploy their capital in response to an improving economic environment and better growth prospects.

• Significant tax relief for next two years

The recent agreement on tax policy between the Obama administration and Congressional Republicans provides significant tax relief for the next two years. Not only were the Bush tax cuts extended through 2012, but a $120B reduction in payroll taxes was approved. This clarity is welcome to investors and businesses as they make plans for 2011 and beyond.

• International markets offer robust growth potential

Strong demographic trends within international markets, especially emerging markets, should support record levels of growth and spending. Many emerging market governments realize they must continue to spend on infrastructure to meet their populations’ surging demands. With approximately 50% of S&P500 company profits originating overseas, this robust international growth offsets our sluggish domestic recovery. This is a major reason why these companies should grow their profits 13% this year.

• Interest rates remain low

In an attempt to revive economic growth, the Federal Reserve has kept short-term rates near 0% for over two years. Because of the ongoing weakness in our housing market, we expect this accommodative policy to remain throughout the year. Inflation on the other hand is likely to gradually increase. However, high unemployment and excess manufacturing capacity, will likely cause any increase in inflation to be gradual.

• Demand for commodities remains strong

Growing global populations, industrial and investment demand, and signs of emerging market inflation should continue to support commodity prices in 2011. Because of this, we believe investing in a broad-based basket of commodities is prudent. Gold remains a core portfolio holding due to its low volatility and defensive characteristics.

Potential Challenges for Investors
While there are a number of positive trends in the global economy, there remain some challenges as well.

In addition to the frequently mentioned problems of high unemployment and weak residential real estate in the US and abroad, escalating sovereign debt is a real concern. The problems of Greece and Ireland are well chronicled, but other countries like Spain, Portugal, Japan, and the US (including state and local governments) are all servicing historically high levels of debt. This growing burden will not disappear and may ultimately require reduced government spending and higher taxes – both negatives for economic growth and corporate profitability. Fortunately, low interest rates make this condition tenable for the time being.

Other concerns include commodity inflation and geopolitical uncertainty. Commodity inflation may be offset in the US by a slack labor market, but remains a key issue for the faster-growing emerging markets. Countries like China are attempting to dampen inflation through tighter monetary policy. These efforts, if conducted correctly, will slow price inflation, while having a minimal effect on global economic growth. If not conducted properly, this could stunt growth in emerging markets, leading to weaker global growth. Geopolitical uncertainty has always been a concern in countries like Iran and North Korea. Now we can include previously stable countries like Egypt, Tunisia, and Bahrain. Escalating conflicts could result in increased volatility in financial markets worldwide.

Mixed Picture for Fixed Income Investors
The current economic climate, characterized by a slowly recovering economy, low inflation and low interest rates, is challenging for investors seeking income. Identifying attractive opportunities for our clients, at a time when longer-term rates may begin rising, can be especially daunting. Fortunately, we have developed a diversified approach to fixed income investing that we expect will rise to the challenge. Our goal is to manage credit and interest rate risk through sector diversification, while seeking opportunities for enhancing yield across client portfolios.

We continue to favor investment-grade US corporate bonds. Strong balance sheets and record profits have supported this market since 2008 and the spread, or the additional yield a lender earns over comparable US Treasuries, remains attractive. Another area we currently favor is floating-rate loans. This type of bond offers the benefit of higher yields if interest rates do rise. The interest earned on these bonds is periodically reset, which will be beneficial should rates begin to climb in 2011. Preferred stocks, high yield corporate bonds, and mortgage REITS make up the balance of our diversified fixed income strategy. In total, we have blended six different strategies that, in combination, yield approximately 7% per year.

The Importance of Asset Allocation
Asset allocation is the mix of stocks, bonds, cash and other investments in your portfolio. Studies have consistently shown that asset allocation is the single most important factor in determining your investment success. At Collins & Company we take asset allocation very seriously. When developing asset allocation strategies for individual clients, we consider traditional asset classes, such as stocks and bonds, as well as commodities and alternative investments. Our ultimate goal is helping you develop and maintain an investment strategy that best suits your individual needs, time horizon, risk tolerance and objectives. The benefits of a well-diversified portfolio include lower volatility over the short term and the potential for enhanced performance over the long term.

How are asset allocation strategies created?

In determining a prudent asset allocation, we consider your:

• Financial needs and resources
• Investment goals
• Time horizon
• Income and liquidity needs
• Personal tolerance for risk

If you have a long time horizon (10+ years), a portfolio with a higher allocation to stocks may be appropriate. Historically, this has provided higher returns. As your time horizon decreases, migrating away from aggressive investments into more conservative alternatives such as fixed income securities or cash is more appropriate.

The next step:  Diversification within the asset class
Once an asset allocation is set, the next step is to diversify the portfolio within the selected asset classes.  Diversifying across a wide range of investments can further reduce risk and enhance performance over time.  Within an equity allocation, for example, we consider both US and International securities in a variety of sectors. For fixed income and commodity investments, we utilize a similar approach with the overriding goal of reducing specific risk.

Keeping you on the right track
As long-term believers in the importance of proper asset allocation, we set specific targets for each of our clients based on their unique needs and circumstances. This remains a cornerstone of our wealth management process and is integral in helping our clients achieve their goals. We’ll review your asset allocation strategy with you at least annually and may potentially recommend changes over time as your needs and goals change.

Looking Ahead
We expect 2011 to be a good year for our clients. Global economies are recovering. Corporate earnings are likely to reach an all-time high. We believe there are attractive investment opportunities in all market environments, including our current one. At the same time, we appreciate the delicate nature of our investment climate and actively seek to manage risk in client portfolios. We continue to monitor macroeconomic trends, developing world events and specific holdings in our clients’ portfolios, taking advantage of both tactical and strategic investment opportunities when prudent and appropriate.

As always, we are available to discuss the content of this review anytime. We are optimistic about the long-term health of the financial markets and look forward to helping you achieve all that is important to you.

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