Ascendant Advisors, LLC

Ascendant Advisors, LLC

Ascendant 2011 Year End Portfolio Commentary

Dear Investor,

2011 was a volatile year, and I’m not only referring to the stock market. The merciless forces of Mother Nature as evidenced by the earthquake in Japan and the bitter divide of human nature as evidenced in Washington D.C. during the late summer budget battles created a series of events that were not only historic, but also catastrophic and tragic.

The financial markets were just as volatile, peaking in the spring in anticipation of the end of the second round of quantitative easing by the Federal Reserve then suffering severe draw-downs in August and September as fears of a U.S. recession mounted. Finally, we saw an impressive rally in the fourth quarter as those fears subsided and signs of “green shoots” started to appear. The year ended with economic data continuing to support growth in the U.S. economy.

  • The December employment report showed a gain of 200,000 jobs and an 8.5% unemployment rate, the lowest since February 2009
  • Weekly Initial Unemployment Claims data throughout December remained below 400,000, with last week’s reported claims at 318,000 and the four-week average at 375,000, the lowest level since June 2008.
  • In concert with the improving employment outlook, consumer confidence also increased as the Conference Board’s Consumer Confidence Index jumped to 64.5 in December from 55.2 in November. The increase brings us back to the level last seen in April and is well above the average level of the last four years (54). The much watched University of Michigan Consumer Sentiment Index also improved, rising to 69.9 up from 64.1 in November.
  • The most likely concern for consumers is personal income, which grew 3.9% year over year through November which is the slowest pace of the year (2011) and will most likely moderate overall consumer spending.

I still expect many of the issues that worried us in 2011 to continue to worry us in 2012.  Regardless, given our slow growth forecast (as opposed to recessionary) we maintain our bullish stance on equities and especially like higher dividend paying issues. As a result of this position, our Investment Committee has decided to begin 2012 by keeping our allocation to equities within our Balanced portfolio at 70% which is at the top of our equity exposure range.  However, within the equity allocation we are shifting 5% from Natural Resources exposure and moving that to high dividend stocks. Our current allocation model is below, which we will continue to fully review during our investment committee meetings.

I welcome you to contact me directly or visit our mutual fund website ( to learn more about our investment process or products.  From all of us at Ascendant Advisors have a safe and prosperous New Year.

Warm Regards,

James H. Lee, MBA
Ascendant Advisors, LLC