Kathleen Adams QTR2 11 NL Revised .pdf

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IN T H E C O M M U N ITY…Next Step Fitness
Throughout the year we have been working closely
with NextStep. NextStep is an organization that
brings the latest in fitness, health, and wellness to
individuals living with paralysis and other physical
disabilities in Southern California.
In August of 2006, a tragic accident in Manhattan
Beach left Janne Kouri paralyzed. Doctors told him
that he would never walk again. Three years later,
he took his first steps which were documented on
ABC’s “Good Morning America.”
With over 6 million people in the US living with
paralysis, we all know someone, a brother, sister,

friend, neighbor, or colleague, struggling with a
disability who deserves better, and that story
reminds us that everyone should have the same
chance Janne did.
While many might call this a miracle, his recovery
has not been the result of chance. He was lucky
enough to have access to the best doctors and
therapeutic techniques. Yet for most victims of
paralysis even the most basic care is too costly.
In June of 2008, Janne opened NextStep Fitness
and dedicated his life to helping others have
access to the latest, most progressive, non-invasive
rehabilitation regardless of cost.

On July 26th, we
are helping to
host an event
with NextStep to
raise money and
awareness for this
great foundation.

www.nextstepfitness.org

If you would like
to join us for this
special evening
or would like to
donate to this
great cause,
please visit

Waddell & Reed, Inc. is not affiliated with any companies, organizations or individuals mentioned herein and does not endorse or recommended
any services provided.
Links to third party websites:The links are being provided for informational purposes only.Waddell & Reed, Inc. makes no representation as to
the completeness or accuracy of information provided at these third party sites. Nor is the company liable for any direct or indirect technical or
system issues or any consequences arising out of your access to or your use of third-party technologies, sites, information and programs made
available through this site.When you access one of these sites, you assume total responsibility and risk for your use of the sites you are linking to.

Financial Advisor
Waddell & Reed, Inc.
1141 Highland Avenue
2nd Floor, Suite 211
Manhattan Beach, CA 9026
T: 310.545.7234
F: 310.545.7231
E: kathleen@wradvisors.com
www.kathleenadams.wrfa.com

THIS ISSUE
Note from Kathleen......... P. 1-2
Japan’s Disaster Generates.......
Energy Innovations.............. P.2
Market Performance in the
First Half............................. P.3
What’s New With Us............ P.3
In the Community................ P.4
ISSUE

2

1

The information contained in this newsletter is for informational purposes only. It is based on data gathered from what we believe to be reliable
sources. It is not guaranteed by Waddell & Reed, Inc. as to accuracy, does not purport to be complete and is not intended to be used as a
primary basis for investment decisions. It does not constitute a solicitation for the purchase or sale of any security. Please discuss any financial
matters with qualified professional prior to making financial decisions.

4

Securities and Investment Advisory Services are offered through Waddell & Reed, Inc., a Broker/Dealer,
Member FINRA/SIPC and Federally Registered Investment Advisor.
Waddell & Reed is not affiliated with Adams, Swift & Associates

JULY 2011

K AT H L E E N A D A M S , C F P ®

q u a r t e r l y
n e w s l e t t e r

NOTE
FROM
KATHLEEN…
As we hit the midway point of 2011 the market is finding it
difficult to stop and take a deep breath. The last few months have
been incredibly volatile and continue to react to market headlines
with little to no idea of what the future political and economic
landscape will be. Currently, Greece and Europe appear to be the
source for the majority of market fluctuations. Last quarter it was
Japan.
Two Critical Investing Lessons
“The only certainty is that nothing is certain.”
-Pliny the Elder
“It ain’t what you don’t know that gets you into trouble. It’s what
you know for sure that just ain’t so.”
-Mark Twain
These are two quotes written 1,900 years apart that highlight two
important lessons for investors from the recent events in Greece.
One is that portfolios need to be constructed to expect the
unexpected and anticipate the unanticipated. The other relates to
trying to avoid a very costly trap that ensnares investors.
...cont. on page 2

Securities and Investment Advisory Services are offered through Waddell & Reed, Inc.,
a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor.
Waddell & Reed is not affiliated with Adams, Swift & Associates

1

NOTE FROM KATHLEEN CONT.
LESSON 1
The only way to try to deal with the
uncertainty and manage the impact of
unforeseen events is to keep risk management
as much of a priority as performance. In
our practice, we focus on diversification,
long term perspective, an intense manager
selection process, and maintaining long
term plans though short term adversity1.

LESSON 2
Avoid overconfidence. There will always
be someone who has made a big bet that
has paid off and is doing better than you
as a result. A risk-controlled investing
approach seldom gives you bragging rights
on the golf course. “Big bet” investors
typically have a high degree of confidence
as their investment soars, right up until
the next disaster catches them by surprise.
Research done by University of Chicago’s
Richard Thaler has demonstrated that
overconfidence is among the mostly costly
traits an investor can have. The key to risk
control is to not let a single unexpected
event cause permanent damage to your
portfolio due to lack of diversity1.
Enjoy the rest of your summer!
Warm regards,

Investing involves risk and the potential to lose principal.
Diversification and other investment strategies do not ensure
a profit or protect against loss in declining markets
1

2

J A PA N ’ S D I S A S T E R G E N E R AT E S

E N E R G Y I N N O VAT I O N S
Japan’s devastating earthquake and tsunami,
which destroyed a quarter of the powergeneration capacity near Tokyo and adjacent
regions, might ultimately boost energy
innovation. The government is asking
households and businesses to conserve energy
during the summer months and may offer
incentives for energy-saving technologies.
One idea is to promote solar power by paying
businesses and homeowners to feed energy
into the grid. This would encourage increased
use of solar panels, which are standard on
most newly built houses, and would result in
an estimated 80 percent energy savings.
A government proposal to subsidize the
cost of LED lighting in place of traditional
incandescent bulbs could mean energy savings
of 50 percent. Even though the cost of a LED
bulb is pricey – about $60 compared to a $1
incandescent bulb – the LED is said to last 40
times longer.
Another proposal would subsidize large,
rechargeable batteries for use in home power
generation. The batteries would draw from
the grid overnight and, when used during the
day, would reduce peak daytime demand for
power.
At the moment, these are nothing but
proposals and insufficient to compensate for
the energy production lost due to damaged
nuclear plants. But Japan’s first disaster-relief
bill included about 7.7 billion yen (about $95
million) for energy conservation/innovation,
and more is possibly on the way.
(Source: The Economist)

M A R K E T P E R F O R M A N C E
I N T H E F I R S T H A L F
Developed markets registered solid gains in the first
quarter, despite the setback from March’s earthquake
and tsunami in Japan.
The second quarter was a different story, with concerns
arising from growing inflation threats in emerging
markets, sovereign debt worries in Europe and a
downgrading of growth forecasts for the global economy.

“Money will
always flow toward
opportunity and
there is an abundance
of that in America ....
Human potential is
far from exhausted and
the American system for
unleashing that potential
... remains alive and
effective.”

Given the recent concerns about European debt and
uncertainty about economic growth, in this quarter’s
newsletter I am sharing quotes from three of today’s
most respected stock market observers: Warren Buffett;
Morningstar fixed income manager of the decade Bill
Gross; and Wharton researcher Jeremy Siegel, considered
today’s leading stock market historian.

“In terms of the stock
market, there are amazing
opportunities ... (compared
to US government bonds)
there’s a huge gap and a
huge differential.”

--Warren Buffett
Berkshire Hathaway Letter to
Shareholders, February 2011

WHAT’S NEW

WITH US:
B E V E R LY H I L L S

--Bill Gross,
Morningstar Fixed Income
Manager of the Decade
CNBC - June 7, 2011

“We’ve almost never seen
valuations (on the US stock
market) this low when
interest rates are as low as
they are today .... relative
to bonds today, I’ve almost
never seen such
compelling values.”
--Professor Jeremy Siegel,
Wharton School
Author: Stocks for the long run
Business News Network
- June 28, 2011

We continue to look for ways in which we can
provide the highest level of service to our clients
and associates. Towards the end of this year we
will be opening an office in Beverly Hills to help
accommodate current & future Westside clients.
Our Manhattan Beach office will continue to be
our main office and your source of contact.

Securities and Investment Advisory Services are offered through Waddell & Reed, Inc.,
a Broker/Dealer, Member FINRA/SIPC and Federally Registered Investment Advisor.
Waddell & Reed is not affiliated with Adams, Swift & Associates

3


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