LWA NEWS

Kathrin Gschwend retired at the end of August.  We celebrated her more than eight years of service with us at a special luncheon this past month at the Ironwood Restaurant at the Basking Ridge Country Club.  We have some great pictures of the occasion in the Special Honors and Occasions section of our website.  Please be sure to take a look!

Jodi Cirignano, CFP®, our new financial planner, joined us in August.  Previously, she was a Senior Manager with Ernst & Young, LLP in their Financial Services Office.  She is also a member of the National Association for Executive Women and the Executive Women’s Golf Association.

We regret to tell you that Alan Lo has left us to pursue other interests.  We wish him well and will miss him.

Diahann was a panelist at the National Association of Personal Financial Advisors (NAPFA’s) recent 2002 National Conference in Nashville, Tennessee.  The seminar that she participated in was entitled “What We Learned from the Bear Market of 2000 – 2001.”

Diahann will be profiled in an upcoming issue of the Florida State University Annual Business School Magazine. Also, the September issue of Schwab’s “On Investing” magazine contains an article on “The Family-Friendly Trust” which was authored by Diahann.

Suzanne Low appeared before the Collier County, Florida, Commissioners last month to accept a Proclamation as President of the Financial Planning Association of Southwest Florida, naming October 7 – 13, 2002 as Financial Planning Week.  Suzanne was also recently quoted in the Naples Daily News Business Section on the downward trend in the stock market.

Diahann is scheduled to appear on CNBC’s “Make Your Money Work” segment of Power Lunch on November 4th and January 7th.  We hope you tune in!

Looking At the Worse Case

by Diahann W. Lassus, CFP^®, CPA

I have spoken to many people over the last few months.  I have discussed the market and the current economy.  I have listened to alternative scenarios and possible longer term outcomes, and I have spent many hours reviewing and analyzing what is happening and what may happen.

One important change in our culture in the last year has far reaching implications as we look forward to the future.  The events of September 11th have expanded our ability to imagine horror.  This has thrown our ability to judge risk and to act on that judgment into chaos.  We could not have imagined a worse-case scenario that included the events of September 11th.  Everything that occurred that day was “impossible” to us.  It simply could not happen. Since it was impossible and still happened, it leaves us with an ongoing sense of unease.  We live with a constant question of what’s next, now that we are unable to automatically rule out anything in “impossible worse-case scenarios.” 

This change in our culture has affected our views of investing.  We now review and analyze scenarios that last year we would have discounted out of hand as impossible.  We seriously consider those words “this time is different.”  We have changed on an emotional and on an intellectual level.  We are all dealing with this “different view of the world” in our own way. 

Since the impossible might be considered possible, let’s look at some of the doom and gloom scenarios that are being discussed. 

Could We Be Another Japan?

The short answer is probably not.  One of the issues with Japan’s economy is that banks have continued to hold up companies that are not competitive.  This means that they have continued to provide loans to companies that continue to lose money while the Japanese government props up the banks.  This is just one part of the problem, but it is a big part of it.  In the US, we do not have that kind of patience.  If a company (like Enron) is in financial trouble, the company is literally run out of business.  We wring out the excesses in our economy pretty quickly. 

Our financial markets weed out the inefficient, the ineffectual and the unnecessary.  It is a painful process but it will help keep us from going down the road that Japan has gone down.

What If Consumer Spending Dries Up?

There has been much speculation about consumer spending going into the fourth quarter.  Since the holiday season is the biggest spending period, it is certainly an important period for our economy and especially for the retail industry.  I don’t know how we can scientifically predict whether this season will be bad, good or great except by talking to people we know and looking around.  I would expect that it won’t be great since most of us are not going to go out and spend everything we have.  There are many things that continue to drive spending, including falling mortgage rates that are encouraging refinancing and stabilizing unemployment.  But I also believe that this holiday season will be an important one for many of us as we celebrate our families and give thanks for what we have.

Will There Be A War With Iraq?

If we were to start a war with Iraq, there are many potential repercussions.  The first would be a move up of oil prices which could have a negative impact on the economy.  If it were a prolonged war, there could be other effects such as a movement of capital out of our economy to the war effort.  If the war were short-lived, oil could flood the markets, causing a drop in the price of oil which would be positive for many industries that are oil-dependent.  Longer term it could definitely be negative for the oil industry.  We all hope we don’t have a war because regardless of economic impact, the really important issue is the human cost.   

Our focus is in determining what this means in terms of your investment program and your overall financial planning for the next 20-plus years.  I don’t have a crystal ball, but I believe very strongly in our strength as a country, and in our ability to make things work under any conditions.  The American people have never given up and we won’t start now.  Our economy is moving even though it is growing at a slow rate.  Our unemployment rate has started to inch downward which is certainly a good sign.  Companies have cut employees and costs to the point that they will have to begin to go back the other way in order to grow.  Interest rates are at a historic low. 

Is the worst over?  Probably, but if it isn’t, it will be soon.  We have survived wars.  We have survived depressions and recessions.  We have survived runaway inflation.  We have survived terrorists . . . . .  and we will survive this bear market.

ENJOY THE FALL…  ENJOY THE HOLIDAY SEASON AND KEEP IN TOUCH.  YOU ARE WHY WE ARE HERE AND WE REALLY DO LOVE TO HEAR FROM YOU! J

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