As of the close of Wednesday May 19, 2010 our favorite domestic market index, the S&P 500, was oddly perched at a 0.0 % year to date return, Right Back Where we Started From.
Do not forget Paul Samuelson’s famous quote from 40 years ago “Stock markets have predicted 9 of that last 4 recessions” as markets have taken a decidedly negative view on recent events.
We are certainly not immune to the constant barrage of negative information coming from overseas, most notably Greece, that being said, we monitor many companies from various parts of the world, and have not perceived their comments as negatively as the global markets.
From our First Quarter 2010 Newsletter:
“The year 2010 will be a teaser for many investors. We feel the markets will end up somewhere between 8 – 10% but the journey will be one we have not experienced recently.
The year 2010, in our opinion, will be a roller coaster market with frequent drops of 10% -15% or more, chasing the weaker hands out of the capital markets, just in time for the capital markets to take an about face and move to new highs, again frustrating shorter term investors.
Our thesis relies on two premises. First, the economy will need to transition from assisted growth (government stimulus) to self reliance, leaving many to question the strength and timing of the transition period. Second, the “buy and hold is dead” thesis will lead to short-sighted investors selling at the small drops, only to be frustrated as the capital markets turn, leaving many in negative return territory as the markets have a nice total gain for the year. We are already seeing this second event occur in the commodity area, and expect the same in the capital markets eventually.”
Have a Good Day !
JK