Nestlerode & Loy, Inc.: Investment Management & Consultation Services

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Investment Management & Consultation Services

What is Investment Management?
Investment management is the utilization of professionals to guide your portfolio towards your financial goals. If you own mutual funds you are already employing professional management to guide part of your portfolio. At Nestlerode & Loy, Inc., we have expanded investment management beyond the utilization of impersonal mutual fund managers to provide a more tailored and specialized management of our clients' financial concerns.

Investment management at Nestlerode & Loy, Inc., involves asset management. We are not and do not provide financial planning. Nor do we allocate client assets to various mutual fund portfolios or managers. As asset managers we research the economy, various industries, particular companies, successful business executives, new technologies and changing human practices. From these studies, we commit our clients' funds into those investment situations which we believe will be profitable in the future. While there can be no guarantee that our efforts will be successful in the future, we have enjoyed substantial success in the past.

Pennsylvania Investment Observer (investment articles)
Our Philosophy
Who We Associate With

Pennsylvania Investment Observer

Will future economic development be ÔdrivenÕ by natural gas?
We are in the first stage of the development of what seems to be a very large natural gas find in western New York, Pennsylvania and West Virginia. The Marcellus Shale is a 37 million acre natural gas bearing layer that is geologically similar to the Barnett Shale in Texas. The Barnett Shale, in development for a number of years, was the proving ground for the horizontal drilling and fracturing techniques that are making the drilling of the Marcellus Shale economically viable. A number of drilling companies are investing hundred of millions of dollars in leasing, preparing, drilling, fracturing and running pipelines to develop this Pennsylvania ÒplayÓ. Yet, there are many pitfalls ahead that need to be addressed if central Pennsylvania is going to effectively benefit from our newfound resources.
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Passing the Baton
The investment markets are trudging through a period of malaise with gurus and financial commentators lined up on all sides of the question, "where do stocks go from here?" The markets are fraught with volatility as disappointing earning cause stock prices to plunge (as investors flee these issues) and others fail to rise because just exceeding analysts expectations is not enough any more to get investors to commit their excess cash. If you follow stocks carefully, you can't help but be affected by the somber mood of the markets and the dire combative issues that are facing the civilized nations in a world populated by a group of constantly dissatisfied terrorists. I suspect that many people are turning off the television and radio and ignoring the investment markets to avoid the daily barrage of negative news and declining investment markets.
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A Change in Direction
After nearly two years of rising interest rates and much higher commodity prices, the stock market finally reacted, ending the bull market rally that began last October. On or about May eleventh, the stock market peaked at near record highs and started retreating with a vengeance. While some averages made record highs, other major indices never got back to their former highs from six years ago. You can argue whether we were in a bull market since 2003 or a bull market rally in a bear market that started in 2000. Both interpretations are correct, depending on the stock market average or index you use to illustrate your point. The more interesting issue is: where do we go from here?
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Exit Strategy
Wall Street is well known for recommending investments for their clients to purchase. Historically on Wall Street, buy recommendations have exceeded sell recommendations by 10 to 1 or even more. Clearly, Wall Street investment firms do not like to tell people to sell investments and move to cash. They do like to convince people to sell something in order to buy something else (think: two commissions), but their research is not published in that manner. So, if you listen to Wall Street, they will tell you what to buy. However, there is almost never any research done on an exit strategy, or when you should sell the recommended investment. Selling strategies are largely ignored.
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Key Performance Indicators
The first quarter of 2006 is now in the record books. From Wall Street's perspective, it was a terrific three months to be an investor in stocks. As usually is the case, the markets started to perform better in November and have show continued good returns right through the end of March, 2006. This is consistent with an investment strategy that dictates investing in November and selling by the end of April of the following year. Historically, this strategy has done very well, compared to a strategy of buy and hold or, worse yet, one of buying at the end of April each year and selling your portfolio on the first of the following November. Historically, stocks perform better in the fourth and first calendar quarters than during the second and third calendar quarters.
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Interest Rates
The Federal Reserve, under the new leadership of Chairman Ben Bernanke, raised interest rates a quarter of one percent today. While the move was widely expected and probably would not have been any different if Alan Greenspan had not retire
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Our Philosophy

After more than fifty years as a full service investment brokerage firm, Nestlerode & Loy, Inc., expanded its services to include investment management. We decided to offer investment advisory services to our clients because it represents a distinctly different business arrangement than that of investment brokerage.

While brokerage firms hope that their clients become wealthier through investing, brokerage firms are primarily interested in maximizing the number and size of transactions from each client. To this end, brokerage firms produce investment research which the Securities and Exchange Commission has ruled is merely material designed to induce people to make transactions. Brokerage firms meet their objective if their clients enter into buy and sell transactions. Investors meet their objective generally if their account grows in value over time. To this extent, the objectives of brokerage firms and their clients are in conflict.

Nestlerode & Loy, Inc., as an investment advisory firm, has dissolved the conflict in client and brokerage firm objectives by linking the firm's income to the success of their clients' investment portfolios. Because the primary income from investment management clients is fee based on the value of the client's holdings under management, the firm can only earn more from an individual client if that client's account grows in value. To this end, our business objectives of the client and our firm coincide rather than conflict. To reduce the costs of managing an investment operation, Nestlerode & Loy, Inc., trades each managed account at discounted brokerage rates, thereby saving client's substantial transaction fees over regular full service brokerage transaction fees. Our investment management agreement also allows each client to select any brokerage firm (discount brokerage firms are preferred) he or she desires for the execution of transactions. We believe it is in both our interests to minimize transaction fees wherever possible.

Nestlerode & Loy, Inc., realizes that in any investment management operation investments will be made that are not profitable. To minimize the impact of these occurrences, the company invests only in those situations where an active, liquid market is expected to be maintained. In this manner, clients are not locked into situations that turn out to be disadvantageous. We, therefore, do not invest in limited partnerships, real estate, collectibles and other investments which have severely limited resale possibilities. Our investment management is generally limited to stocks, mutual funds, closed end funds, bonds, federal government bonds & municipal bonds and bank savings and certificates of deposit. To further minimize risk, we do not buy investments with borrowed money on margin. We do not use options, nor do we invest in commodities, futures or currencies.

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Who We Associate With

Investment Management & Consultation Associates
Dan Nestlerode	Judy Loy
Brian Anderson

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Privacy Policy

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