Previous Messages From the Desk of Michael McDaniel

(12/6/2011) Important Tax Reminder: - 1099's will not be mailed until February 15th. Please make your tax appointments accordingly. The IRS Moved 1099 Mailing Deadline to February 15. In 2009, Section 6045(b) of the Internal Revenue Code extended the deadline to furnish Consolidated 1099 Tax Information statements to customers from January 31 to February 15.    Michael McDaniel

(8/15/2011) Built For Comfort (Aug 2010) - I have been listening to the blues more often lately (surprised?). One of my favorite songs is “Built for Comfort” by Howlin’ Wolf. The chorus of the song is “I am built for comfort, I ain’t built for speed.” The same can be said for the majority of the portfolios I manage. My longstanding pessimistic outlook on the global economy and my disdain for losing money has directed me to have my portfolios “built for comfort.” My passion for capital preservation has led me to add diversification to my traditional investments (BEFORE THIS CRASH) by way of adding untraditional strategies and alternative strategies. These investments are helping manage risk in these difficult times. Keynesian central planning continues to fail the citizens of the world. As long as our leaders (and I use that term loosely) continue down the path of Keynesian economics and fiat money I will hold an eclectic allocation of investments, which are “built for comfort.” *The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.    Michael McDaniel

(8/15/2011) What does your Advisor Believe - I thank you for the referrals of your friends and relatives during these trying economic times. As you are aware I am very selective about the clients I accept; my existing clients deserve it! That being said, I enjoy meeting with prospective new clients to share my beliefs about the investment world and how to invest accordingly. As a manner of review here are some of the beliefs I hold which guide my investment strategy. ·Corporations that can execute will continue to be profitable. ·Fiat money (paper money backed only by the promises of politicians) will continue to be worth less over time. ·Natural resources will appreciate in value (albeit not in a straight line). ·The cost of living (inflation) will continue to rise. ·Global central planning (think Keynesian economics and fiat currencies) will continue to fail causing debt defaults, austerity and uncertainty. ·The currencies of countries with stable governments and natural resources will hold up better than the currencies of leveraged non-resource rich countries. ·US Government interest rates (yield on government treasuries) will rise in the coming years. ·Domestic real estate will remain a poor investment for the next decade. ·Municipalities will continue to be in dire financial shape. ·Worldwide unemployment will remain high for an extended period of time. ·Worldwide GDP growth will be under expectations for the foreseeable future. ·Taxes will rise. ·Growth opportunities exist for both domestic and foreign companies transacting business in growing countries like China, India and Brazil. =============================================================== *The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.    Michael McDaniel

(2/17/2011) World Wide Inflation = People Are Suffering - Last week something different happened. Ever day I wake up with the same professional goal; to grow and preserve my client’s wealth. I passionately sift through the daily news, charts and opinions to design and implement my investment strategy. For efficiency’s sake my work days are systematized, mechanical and generally void of emotion. For years now I have invested in investments which could benefit from our country’s money printing addiction. I continue to seek investments which might help my clients capitalize on the falling US Dollar and the resulting rise in worldwide inflation. As I sat behind my computer searching and monitoring ways to capitalize on worldwide inflation it struck me… fellow humans are suffering. Last week the numbers were so powerful that Julianne and I were forced by compassion to take it to heart and do something about it. Here are the 6-month price percentage moves in some of the things we all need to live (Hedgeye 6-month commodity index); consider that roughly 3 billion people live on less than $3/day: · Sugar = +82.6% · Corn = +59.0% · Coffee = +41.4% · Rice = +40.5% · Oats = +36.6% The past 6 months of painful worldwide inflation, which I expect to continue, provided the catalyst for Julianne and me to become team leaders for a fundraising effort to build a $28,000 new school in Adami Tulu Ethiopia which will EDUCATE and FEED orphaned Ethiopian children. The project is run by Lifesong For Orphans; a non-profit with years of experience in poverty stricken lands. If you are interested in this cause let me know (Michael.mcdaniel@lpl.com) or go here: http://akle.in/adamitulu-mcdaniel Thank you for your time and for allowing me to share my feelings. ______________________________________________________________ *The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. Lifesong for Orphans is not affiliated with LPL Financial.    Michael McDaniel

(1/27/2011) The balance between growth and capital preservation - My strategy remains: · Target economies with low sovereign debt and growing economies; for example, China, India, and Brazil. Noting that these growing economies can be conducive to earnings on domestic companies with global reach. · Investments managed for capital preservation and growth. Deploying eclectic strategies and manager freedom to 'go to cash' if/when needed. · Inflation protection via energy, food, gold/silver, etc. Capitalizing on weak US dollar pressures, stagflation (when both inflation and unemployment remain persistently high), growing world population through investing in oil/gas, gold/silver, and grains/beans/agriculture products. *The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. Stock investing involves risk including loss of principal. International and emerging market investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.    Michael McDaniel

(11/10/2010) Congratulations Investors - Good news for investors: = The Federal Reserve’s QE2 will continue to devalue the US Dollar and add momentum to a general market rally (in oil, commodities, stocks, etc). = What was once uncertain is now certain- the uncertainty surrounding the mid term elections have passed and balance has been restored to Washington. Bad news for investors: = The recent stock market rally has been fueled by near sited government manipulation not strong economic growth or projections for economic growth. Unemployment is still rampant and GDP growth remains weak. Detail: Congrats, the stock market (as measured by the S & P 500) just rallied back to the levels it hit last April; 6 months ago. At these levels the stock market is still 22% below the highs of 2007. What is fueling this rally back to April’s levels? On November 3rd, 2010 the Federal Reserve (FED) announced another round of “quantitative easing.” Quantitative easing is a confusing way to describe the action of the Federal Reserve to print money out of thin air which is then used to purchase US Government debt; like paying your mortgage with your credit card. This action knowingly hurts the value of the US Dollar versus other currencies, creates a foundation for high inflation, and punishes savers via pathetic yields on savings accounts. In the near term, as the US Dollar tanks as a result of the FED actions it pushes assets denominated in US Dollars (the worlds reserve currency) such as oil and the US Stocks higher; but, for how long? A rally based on near sited government manipulation is not a strong foundation for long term investors. With continuing high unemployment, pathetically low yields on savings accounts, emergency low interest rates set at the FED long term risk is still elevated. In summary, I do believe that the election results coupled with the near term government manipulation provides some short term investment prospects for investors with above average risk tolerance. *The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. Stock investing involves risk including loss of principal.    Michael McDaniel

(10/12/2010) Welcome Cathy to OUR Team - After over three years of service to McDaniel Wealth Management, Phyllis Jones has decided to retire in order to focus more time on the family business, Bobby Jones Concrete. I am grateful for Phyllis’ positive attitude, proficiency and friendship. I hope she is rewarded by the additional time she will be able to spend with her family. It has been a blessing to work beside Phyllis. To insure that my mantra of Integrity, Service and Performance is fulfilled, I have hired a personable, responsible and efficient administrator to serve you. Please help me in welcoming Cathy Grenon to the McDaniel Wealth Management team. Cathy lives in Nevada City with her family. With over 10 years of experience specific to the financial service industry and an infectious smile, I anticipate a seamless transition and I am eager to have you meet her. Nancy Wells will continue to offer some telephone support; however, she does not have access to your personal information or my calendar. In other words, Cathy Grenon is my assistant and your service contact at McDaniel Wealth Management. Her email address will be: cathy.grenon@lpl.com. Please contact me with any questions, comments or concerns.    Michael McDaniel

(10/12/2010) What do you do for a living? - What do you do for a living? The title of my position has evolved over the past 10 years. Originally I referred to myself as a “stock broker”. Just a few years later I described myself as a “wealth manager” or “investment representative.” Recently I have given myself the title of “risk manager.” These extremely volatile times have pigeon holed me into focusing on managing risk. Typically, I have long list of investments which I am eager to own. That is not the case today. Government involvement in markets is en vogue which drastically increases risk. Government banks around the globe are fueling fears by threatening to print more money to ‘save’ economies. In America, our Federal Reserve still maintains “emergency level” interest rates (0 to 1/4 percent) and is still printing money to purchase our own governments debt. Interest rates are at “Exceptionally low levels” because our economy is still very sick. Fears of future hyper-inflation, continued high unemployment, increasing taxes, crashing currencies and anemic economic growth rule the trading day. In light of such information I continue to be cautious. I expect continued weak economic growth in the USA, pressure on the US Dollar, and more government involvement (read more printing of money) in the coming quarters. I continue to look to alternative investments and investments in international markets to balance out the pathetic yields on our cash holdings. *The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.    Michael McDaniel

(8/18/2010) Low Interest Rates On Savings - Low Rates and A Foggy Conscience - For several months now I have fielded questions concerning this historically low interest rate environment. Namely, “What should I do with my cash?” As prudent investors it is wise to maintain an emergency fund, which is liquid and FDIC insured. The Federal Reserve has lowered interest rates to “emergency levels” for a prolonged period of time. This action has manipulated savings rates for our “cash” to extremely low levels. FDIC insured Certificates of Deposit (CDs) are now yielding 1% or less for 12 months maturities. The Federal Reserve manipulates rates as a means to control our actions. They lower rates to boost economic activity. When savings rates are low you are manipulated into spending your savings (“I am not making anything in cash, so I should just spend it”) or increasing the risk in your portfolio (“I am not making anything in cash, so I need to buy riskier investments like stocks or bonds”) or “I will just live with the fact that my savings is making nothing.” I have chosen to live with the fact that my savings is making nothing rather than spend frivolously or increase the market risk in my portfolio. The savings yields manufactured by the Federal Reserve are pathetic but at least I know I have my emergency funds intact. Note: CD’s are FDIC Insured and Offer a fixed rate of return if held to maturity    Michael McDaniel

(7/7/2010) BP - I continue to suggest that my clients hold BP stock. Why? 1.) I continue to like energy investments. Energy is a tangible item (think barrels of oil), energy is needed by all economies worldwide and energy has historically been a good hedge against inflation (which I believe is coming). 2.) I believe that the market has discounted BP stock too much. Today, June 30th, BP stock is trading at $28.75 per share. The value of all their assets (oil inventory, gas inventory, real estate, equipment, etc) is $33.25 per share [Yahoo Finance]. Please note that BP’s stock usually trades at 2-3 times the value of their assets (a.k.a “book value”). Meaning that if BP were forced to sell all their assets they would be worth more than what they are trading at today. Over the past few years BP’s revenues and profits were vilified. Now those revenues and profits will be needed to pay for clean-up and on going liabilities. BP’s 2009 revenues were over $265,000,000,000. It is my expectation that such a revenue stream will be able to handle the expense of the immediate clean-up costs and future liabilities. Among other things we need the well to be capped and BP needs another headline to take their place. I will continue to monitor this situation.    Michael McDaniel