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| Investment Advisor - Market Perspective October 2009 |
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What a difference a year makes! Still fresh in our memories, this quarter marked the anniversary of the start of the economic turbulence of the past year, when the financial world as we know it suffered a tremendous blow. On this anniversary, we may be seeing evidence of the equity markets’ resilience, at least for the short term. Global equity markets have continued their recovery through this quarter, and many have recouped losses from the start of the year. The market rally that began in mid-March continued strongly through the end of the third quarter. Since the low on March 9, momentum remains positive for the stock markets.
In a poll by Bloomberg News, economists lifted their estimates for the third quarter GDP (Gross Domestic Product) by 1.2% compared with July, which would be the biggest boost in surveys since May 2003. These projections followed better-than-expected reports in manufacturing, employment, and home construction. Consumer spending is expected to rise about 1.5% from July to December.
Does this mean we are out of the woods? Are we really experiencing a sustainable recovery? Only time will tell, but housing and employment are still negative, are continuing to get worse, and may for a while yet. Much of the recovery so far is a direct result of all the stimulus money the government pumped into the system and may not have adequate economic reality to keep this trend going much longer.
I believe continued caution is justified at this time. The task at hand – to maintain a disciplined, dynamic approach to your portfolio’s allocation in an attempt to capture returns while being constantly prepared to “Push the Exit Button” in the event this rally stalls in the near future.
We are in the process of completing the quarter end report of the results for your investment portfolio and you will be receiving it shortly. I am pleased to be able to tell you that we avoided most of the tremendous volatility in the first half of this year and we are generating very nice profits for you.
In fact, a few days ago, we passed the 2-year point since the start of this recent bear market and I am pleased to inform you that your account recovered a large portion of those losses. As of this writing in mid October, the S&P 500 stock index is still down almost 30% (since the start of the bear market, 09 October 2007) and our average managed portfolio is only down approximately 8% for the same period. This, again, demonstrates the wonderful benefit of our “Active Management Approach.” Of course, I am required to inform you that past performance is no guarantee of future results, but you knew that already.
If you have questions, or would like to discuss the current markets or your portfolio, please don’t hesitate to contact me and don’t hesitate to share these excellent results with your family and friends.
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