Our intention, which has been backed by our action, has been rather straightforward all year long and will remain that way in our current investment model. We are moving from baskets of stocks to individual companies that we feel have market support, economic strength and demographic rational following what we said we would do back in the late 1990s as we discussed the "S‐curve" and the economic cycle of innovation. Individual companies are bought and held until there are material facts that change that holding. The change can occur within the company, the political process including protectionism and globalization, and it can be based on market trends changing within that particular holding. Each asset is now judged on its own independent merit. This must be the future course of equity holdings for the next few years and perhaps even longer.

Within areas where mutual funds or separate accounts are required, the amount of equity funds used must be minimized to as few as managers as possible. We work diligently to find managers who seem to be following the same course of action discussed above. Obviously this is more difficult but it is also why we have the team in place that we have working and watching.

On the other hand, fixed income investments must move from individual holdings when possible to baskets. Never before has liquidity in fixed‐income been so dramatically relevant. We are watching enormous price confusion and asset shifting form municipals, treasuries, high yield and even good corporate paper. We must make certain that we can adjust as politics and economic conditions adjust. This is critical to each and every one of the asset models we have discussed.

In summary, we have been slowly wading out of the equity market and wading into the fixed income market. The wade has been to individual companies and baskets of bonds. The wade will progress until the tides change and suggests a different action. We would clearly not encourage anyone to jump in at this point any more than we would encourage you to jump out. That is not a mandate to stay the course but rather an understating of our fluid allocation process. As you can see by the changes mentioned above, we are anything but sitting still. What we are unwilling to do is to move simply to move, or sit still simply to say we gutted it out.

These markets will prove for years to come that the ability to react will be more important than the ability to predict. This will not change until the economic distortions are removed and asset prices settle. In the meantime, expect change! Change in the policy of governments - not just ours. Change in asset prices quickly and swiftly. Change in where and how consumers choose to spend their money, regardless of the apparent economy we find ourselves.

Our team feels very blessed to be in this industry and to offer our guidance in these challenging times. We apologize for the time it may have taken to absorb the information in this letter, but we cannot apologize for the length. We are in a period of time where communication is paramount and second only to the ability to move as dictated.

Have a great spring!

--Big Joe and the FEG Allocation Team

Joseph “Big Joe” Clark is a Certified Financial Planner and the Managing Partner of the Financial Enhancement Group, LLC. He is a Registered Principal offering Securities through World Equity Group, Inc, member FINRA/SIPC. Registered Investment Advisor Services offered through World Equity Group, Inc.  Big Joe can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or (765)-640-1524.

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