Marketing Commentary- Q3 2009
What’s Been Happening? The US stock market as represented by the Dow Jones Industrial Average has recovered from a low of roughly 6,500 in March to a third quarter close of approximately 9,700, a 49% gain not including dividends. We agree with those who call this a “relief rally”. Most investors are relieved that the financial system survived what felt like a severe heart attack. DJ Industrial Average over the last year Source: Wall Street Journal Market Data Group In retrospect, the impressive recovery to date should not have been surprising given the severity of the decline...
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What’s Been Happening? At the time of our last review safe Treasury bond investments were very popular. In the world of investments, oftentimes popular is not profitable. During the second quarter stocks as measured by the S&P 500 stock index jumped by nearly 16%. While that gain doesn’t erase all of the losses of the last twelve months, the chart below shows a portion of the losses have been recouped. Some of the most risky sectors performed the best over the last quarter. Emerging market stocks were up roughly 35% while Real Estate Investment Trusts appreciated by approximately 29%...
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What’s Been Happening? In recent months, capital has seemed to be on strike. Bank failures, forced selling and changing government policy have sent a number of investors to the sidelines, waiting for better times. Through the meltdown, cash has been a refuge. We don’t expect this to persist given the velocity of government borrowing and printing of money. In the event of inflation, the real loss of value in a cash account is no different from a price drop in a stock portfolio. Holding cash also results in opportunities lost when the markets recover. The S&P 500 index commenced a 21%...
Read MoreMarketing Commentary- Q4 2008
What’s Been Happening? The old Chinese curse, “May you live in interesting times”, appeared to be in full force in the fourth quarter of 2008. The market stampede away from assets with any risk to the safety of US Treasury bonds continued and accelerated in the fourth quarter. As a result, any investment that was not US Treasury guaranteed suffered. Stocks, corporate and municipal bonds and alternative investments were all battered. For example, the S&P 500 stock index, twice during the past quarter, lost more than 20% of its value with a partial recovery in between. Fundamentals didn’t...
Read MoreMarketing Commentary- Q3 2008
What’s Been Happening? Since we last wrote this piece three months ago the financial markets have been in turmoil. The problems in the credit markets have spilled over to the stock market and we have witnessed a crisis of confidence in the financial system not seen since the Great Depression. Starting with subprime loans and most recently moving to “credit default swaps”, banks have been forced by accounting convention to write down these assets to fire sale prices. The ensuing losses caused some banks to fall below the minimum requirements for capital imposed by regulators. To remedy the...
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