ROCK CLIMBING & CAVING

Portland CEO Tim Phillips Discusses the Markets Moving Higher in Spite of Negative Global Headlines

Once again world events were the focus of the headlines last week:

• Japanese nuclear issues
• Unrest in the Middle East and Northern Africa (MENA), specifically Libya and Syria
• The European Debt Crisis, specifically Portugal, Ireland and Greece

The equity markets overcame some serious headlines this week to post nice gains.

The “Mad Dog”, Muammar Qaddafi, has continued threating his citizenry which may lead up to a massive exodus into Egypt and Tunisia and further destabilization in the entire region. Other regions to continue to watch are Syria and Jordan as the 2010-2011 Middle East and North Africa Protests continue to unfold.

The important fact to understand is that according to the CIA World Factbook, the combined GDP of Libya, Jordan, Egypt, Tunisia and Syria amount to less than 1% of global GDP.

From this perspective the wall doesn’t look so high, however, if you look at it from the perspective of a global disruption in oil supply it becomes an entirely different “wall of worry” to climb.

Adding to this wall, Japan now has over 300 billion in damages and counting as radiation leaks into the sea. This could have a material impact on global shipping and supply chain management because ships that become radiated will no longer be allowed into any foreign ports. Imagine owning a 200 million dollar ship that becomes radiated. You can almost feel the desperation and worry.

On top of all that is the European Debt Crisis. It’s clear from past research on countries that the pattern seems to be once a defaulter always a defaulter. Portugal is one such nation; it has defaulted 6 times since its independence in 1139. Add to this Germany’s upcoming election and lack of desire to back a new €80 billion bailout fund for the Eurozone. The implications of a non-unified European Union are certainly big concerns.

So what is driving equity investors to push the markets higher?

The answer is actually something quite rational: The world’s largest economy, military and best educated enterprising population is improving.

The United States Real GDP was revised up to 3.1% from 2.8% in the fourth quarter of last year. Corporate profits increased 29.2% in 2010, which is in contrast to the 0.4% decrease in 2009. That’s a huge swing in profitability.

So it seems investors have looked rationally at the United States’ economic growth and determined that these future cash flows matter more than the contaminated ships, food supply bottlenecks, crazy dictators, and completely insolvent countries when valuing an asset. Let’s hope these future cash flows continue to be strong enough to withstand the stresses around the world. In reality there is always a “wall of worry”, it just happens to be center stage right now.

About the Author

Chief Executive Officer

EXPERIENCE
A recognized leader in the area of wealth management, Tim Phillips previously served as board chairman for the Willamette Family of Funds, which raised over $500 million in assets. But it is at Phillips and Company where Tim has made the biggest impact. With over 8,000 clients nationwide, it has quickly become one of the largest locally-owned wealth management firms in Oregon. Phillips and Company has been recognized for their unique 401(k) engagement model, which was highlighted by The Oregonian. 

RESPECT
Tim Phillips ran for Congress in 2004 and was also was appointed by the Governor of Oregon to help manage a fund that makes venture capital and private equity investments on behalf of the State. He also has been quoted in The Chronicle of Philanthropy, Private Wealth Magazine, Wealth Manager Magazine, and on MSN Money as an expert in wealth management. In 2008, he was named by Worth magazine as one of the Top 250 Wealth Advisors in America.

COMMUNITY INVOLVEMENT
Phillips served as the board chairman of the Children’s Cancer Association and also serves on the OHSU Cancer Council. He is a member of the Associated Oregon Industries board which focuses on strengthening the Oregon economy and issues facing Oregon businesses. He is also a Regent at Pepperdine University and serves on their endowment committee. 

As an enthusiastic advocate for community involvement, Phillips has encouraged volunteerism within his company. He encourages employees to volunteer with their favorite organizations and directs the company to support such causes as Elevate Oregon, YMCA, Portland Art Museum, CCA, OHSU Foundation, and Orphans Overseas.

PERSPECTIVE
Phillips has earned a reputation for having a diverse perspective on wealth management and for utilizing his experience to create a competitive advantage for his clients. 

Combine Tim’s experience, respect, community involvement and perspective with a thoughtful, measured approach to problem solving and refined leadership qualities and you have the ideal executive for a company that delivers in both face-to-face relationships and high-capital investments.

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