Press Releases

For further information, contact:
Paul Schatz, Founder and President
Heritage Capital, LLC
(203) 389-3553

WOODBRIDGE, CT - May 20, 2010 - Concerned that commercial loan defaults will be the next cause of a stock market decline? Not to worry, says investment strategist Paul Schatz, president of Heritage Capital in Woodbridge, CT. "The market has already discounted much of the commercial real estate problems. What investors need to worry about are issues yet to be featured in the news."

The problem, says Schatz, is that the market has come too far, too fast, given the lack of non governmental and private economic foundation with too many uncertainties lurking in the background.

"It's typically not known dangers that cause market declines. It's the surprise, the problem no one anticipated," explains Schatz. In the interest of airing those problems now and giving the market a chance to discount them, Schatz offers his view of threats that could rattle financial markets.

The municipal crisis:
"States and municipalities have been plugging budget holes with stimulus dollars or by shifting funds, both of which are limited resources with end dates," said Schatz. States such as California, Oregon, New Jersey, Arizona and Nevada are running deficits of 20 to 40% and headed to a cataclysmic crash. Orange County's bankruptcy in December of 2004 will be just an appetizer of what could be coming down the road, he predicts.

The tax crisis:
The U.S. will see one of the biggest tax increases in history next year with the roll back of the Bush tax cuts and increased taxes for health care reform in 2013. Historically, higher taxes hinder private sector expansion, which is essential to end the recession and have sustainable, real growth. "We are repeating exactly the same mistakes FDR made in 1937. And we know how that ended," he said.

The global financial crisis:
Japan, the second largest economy in the world, is in its 21st year of secular bear market and deflation with no end in sight. "This has the potential to far exceed the 2007-2009 financial crisis. By 2020, it will not be able to survive on this path with an aging population, zero population growth and closed borders," explained Schatz.

"Then we have the partially known and discounted problem of PIIGs of the European markets - Portugal, Italy, Ireland, Greece and Spain - deep in debt, with collapsing tax revenue and little chance economic growth can bail them out. The bills are due and austerity measures are highly deflationary for a very long time." Schatz added that, so far, the markets have not favorably viewed the IMF and ECB bailout.

"The good news about these problems is that the more they are recognized, dissected and analyzed, the less likely they are to be the cause of the next bear market. Given time, financial markets digest bad news relatively well. It's the surprises that worry me," said Schatz.

Schatz offers investors the following advice for dealing with market surpris...have a plan to sell. "You don't want to be the last one standing when the music ends and no chair to sit down. If you preserve your capital, there will always be another chance to make money. But the more you lose, the harder it becomes to recover."

Schatz recommends that investors understand and use stop losses/limits, both hard and soft, options and other instruments that do not decline when the stock market does to limit losses if the market turns down. Stop losses set an automatic sell price at which a position is to be liquidated. Options are the right to right to buy or sell its stock, at a specified price, by a specific date. As the position increases in value, the stop loss or option needs to change as well to preserve gains. "If you don't understand how to use stop losses or options, take some time to learn or find an adviser who can help you. Investing can be a very risky business. You need to understand that risk and how to manage it because there will be surprises out there that we haven't thought of yet," said Schatz.

Heritage Capital follows an active investment approach in all of its models, shifting investment positions to take advantage of trends developing in the market, or to avoid periods of greater risk. Client accounts are typically allocated among the different strategies based on the individual's risk profile.

Paul Schatz has been active in the financial markets for more than 21 years, including positions as chief investment officer for a regional advisory firm and equities trader with Shearson Lehman Brothers and Cowen & Company. Heritage Capital offices are located at 1 Bradley Road, Suite 202 in Woodbridge, CT.

Heritage Capital Inc. is a registered investment advisory firm that utilizes an active management approach in its investment strategies. Active management seeks to take advantage of market cycles to position portfolios in rising asset classes and avoid declining investment classes by following market trends. Schatz has been active in the financial markets for more than 15 years, including positions as chief investment officer for a regional advisory firm and equities trader with Shearson Lehman Brothers and Cowen & Company.

Heritage Capital offices are located at 1 Bradley Road, Suite 202 in Woodbridge, CT.

Heritage Capital strategy results portrayed in this release reflect actual fee paying accounts' performance of the strategies for the identified time period. The information given is historic and should not be taken as any indication of future performance. Investment return and account value will vary so that at any given time an account may have a gain or loss. Market volatility can significantly impact short-term performance. Results of an investment made today may differ substantially from the performance shown. The possibility of loss always exists.

Heritage Capital LLC ("Heritage"") composite performance results represent time-weighted actual performance results for continuously managed Heritage accounts, which individual accounts Heritage believes to be representative of its investment management process (i.e. mutual funds and exchange traded funds) for each specific strategy during the corresponding time period. The composite performance results reflect the reinvestment of dividends and other account earnings, and are net of applicable account transaction and custodial charges, and the separate fees assessed directly by each unaffiliated mutual fund and exchange traded fund holding that comprised each account, and the maximum investment advisory fee that the accounts would have incurred (by applying the Heritage's current investment advisory fee of 2.00% as set forth in its current written disclosure statement) during the corresponding time periods.

Please Note: Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that future performance will be profitable, equal the performance results reflected, or equal any corresponding historical benchmark index. The historical index performance results for all historical benchmark indices do not reflect the deduction of transaction and custodial charges, or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing indicated historical performance results. The historical performance results for all indices are provided exclusively for comparison purposes only, so as to provide general comparative information to assist an individual client or prospective client in determining whether the performance of a Heritage program meets, or continues to meet, his/her investment objective(s). A corresponding description of each index is available from Heritage upon request. It should not be assumed that Heritage account holdings will correspond directly to any such comparative benchmark index. The Heritage performance results do not reflect the impact of taxes.

For reasons including variances in the investment management fee incurred, market fluctuation, the date on which a client engaged Heritage's investment management services, and any account contributions or withdrawals, the performance of a specific Heritage client's account may have varied substantially from the indicated portfolio performance results.

In the event that there has been a change in a client's investment objectives or financial situation, he/she/it is encouraged to advise Heritage immediately. Different types of investments and/or investment strategies involve varying levels of risk, and there can be no assurance that any specific investment or investment strategy (including the investments purchased and/or investment strategies devised or undertaken by Heritage) will be profitable.

Information pertaining to Heritage's advisory operations, services, and fees is set forth in Heritage's current disclosure statement, a copy of which is available from Heritage upon request. Performance results have been compiled solely by Heritage, are unaudited, and have not been independently verified. Heritage maintains all information supporting the performance results in accordance with regulatory requirements.