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| Investment Advisor - Market Perspective April 2009 |
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The first three months of the year have flown by and here in Florida we are beginning to experience the lovely warm, but not hot, weather most of us truly enjoy! Unfortunately much of the rest of the country is still dealing with weather that is not as pleasant.
The stock market finished this period down approximately 12% (as measured by the S&P 500 index) after a wild ride which saw a year to date low of over 25% on March 9th. I am pleased to be able to report that our managed portfolios were only down a little (approximately 2% on average) during this intense volatility.
We are beginning the quarter end process of reconciling your account and will be sending your report later this month. I am sure you will be very happy with the results. Not only have we had great results for the past 3 months, we have managed to navigate through the entire Bear Market, which began on October 9, 2007, with stellar performance.
A question on most investor’s minds is ‘have we seen the lows or can we expect a retest of the March 9th low?’ The most prevalent answer is that, due to the fact that the S&P 500 in March broke decisively below its previous low of last November, we should expect to retest that lower low sometime in the near future.
One of our technical advisory firms, STIR Research, is beginning to see other possibilities and I am re-printing some of their analysis data below.
I disagree for the following reasons:
· The March 9th low could be considered the retest of November’s low, and a successful one at that.
· Granted the S&P 500 broke below the November low, however several domestic indexes did not.
· Internationally, Japan and Europe both fell to new lows in March, but 19 other markets did not: primarily Asian and Latin America.
· The March lows did not bring on new highs in declining volume/advancing volume, the number of new lows on March 9th was 855 versus over 2,300 in November, and basically breadth was much better, signaling more strength below the surface.
Also the tone of the market is different this time from anything we have seen for the last 8 months. The theme before has been ‘sell on the rally’. Today, the markets action has been more of ‘buy the dips’. From a longer term perspective, one could argue that we really have been in a bottoming process since late October, when we hit a peak in new 52 week lows and panic selling reflected in the advance/decline statistics.
How is it possible that the market could continue to move higher when all the news is so dire? As always, the market is a leading indicator and is looking forward at what may be happening in the next 6 to 9 months. And lately, we have been getting some news and statistics that have been better than forecasted!
Let’s all hope that we really are seeing the beginning of the recovery. However, rest assured that we remain vigilant to the changes in the market day by day and will adjust your portfolio as needed to protect your assets from excessive losses.
As always, I am available to talk with you and I am also happy to talk with your friends and family and give them an evaluation of their financial situation. Don’t hesitate to call if I can be of service.
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