Financials

 

Investment Information

Economic statistics in the second quarter of 2009 turned "less bad" and fears of the US sliding into another Great Depression faded. The labor market remains an impediment to recovery. Recent housing data suggests home price declines may be moderating. There is little near term risk of inflation. Since the March 9th low, the S&P 500 surged 39.3% through June 9th resulting in the strongest three-month recovery off of a bear market low since World War II. International developed markets rose 25.4% signaling a potential synchronized global recovery may be underway. Treasury yields rose in all but the shortest maturities. Corporate bonds exhibited strong performance in recent months. The unprecedented steps taken by the Federal Reserve, Treasury, and FDIC to help get credit flowing again have largely been successful. Oil prices remain volatile.

 

The Investment Committee of the Board of Directors of the Community Foundation of Central Wisconsin oversees and guides the management of invested assets.

 

 

 

 

Investment Notes

 

By any measure, this has been an incredible twelve-month period in the financial markets. The near collapse of the banking industry last September, the mind-numbing multiple emergency stimulus packages, and the precipitous decline in economic activity developed quickly into the most severe bear market since the Great Depression, with stocks down nearly 60% from the 2007 peak. Almost before it could all be absorbed, the market roared off a mid-March low and set new records for a 50% gain in an amazingly short period of time. Although there is now consensus that the financial crisis has passed, there are critical issues still to be resolved, such as the shape and strength of an economic recovery and the potential consequences of all the liquidity the Federal Reserve pumped into the monetary system to stave off disaster. Unemployment, a weak housing sector, unprecedented government deficits, and tight-fisted consumers are expected to be significant drags on future growth. The positives are that inflation is under control and credit markets and international trade have stabilized and essentially returned to pre-crisis levels. A consensus of leading economists now believe the economy will return to growth in the third quarter and, although the road may be bumpy, many companies have slashed their operating expenses and are therefore better positioned to generate improved profits, which should provide key support for both equity and bond markets. Given what we've all experienced in the past twelve months, reality should still rule the day, but we are all entitled to be cautiously optimistic.

 

The current allocation is approximately 60% equities and, as in the prior year, a more conservative allocation allowed the portfolio to perform relatively well. Although the absolute return for the June 30th fiscal year was at -14%, that was 3.5% above the benchmark.