Tuesday, March 31, 2009

Private Client Commentary - volatile week

Dear Clients,

Like I said in my last commentary, this looks to be a very volatile week. Yesterday the Dow dropped 240+ points (but it was down as much as 340 during the day). So why? Was it Secretary Geithner

Sunday, March 22, 2009

Wednesday, March 18, 2009

Private Client Commentary - things motivating buyers at the moment

Dear Clients,
My what a difference a couple of weeks can make. February was the worst February since 1933. As of today, the market is on track to seeing its biggest single month increase since April 2003 (by the way, the last bear market bottomed in March 2003).
You have to admit, it felt like the sky was falling last month. But please remember, as I

Monday, March 16, 2009

Private Client Commentary - last time we were at 7 200

Dear Clients,
The Dow closed Friday at 7,223 and you have to admit, even though the market is a zillion miles from where it was October

Sunday, March 8, 2009

Private Client Commentary - tone from Washington

Dear Clients,

There's been no love affair between Washington and Wall Street thus far in '09. And while surely none of us would blame our new administration for a 6% (annualized) contraction in last quarter's GDP or for the current 8.1% unemployment rate, I bet we can agree that policy recently passed and proposed could have been a bit more investor friendly. Although the tone coming out of Washington has been somewhat more inspiring the past few days (referring to President Obama's more upbeat comments on the economy).

In a recent commentary I suggested that our policymakers have two major opportunities to give the stock market a much needed lift. One being the "Bad Bank" concept, where the government establishes an entity that would purchase the so called "toxic" assets off of bank balance sheets. The other being a suspension of mark-to-market accounting, which requires banks to value assets at current market prices. As you might imagine, there's virtually no market for these mortgage assets currently. Therefore banks are forced to mark them down (by the $billions) to what many believe are artificially low prices while their intent is to hold them past the current reporting period.

A House financial services committee has schedule a hearing for this Thursday on mark-to-market accounting rules. If indeed Washington were to suspend mtm, I believe Wall Street would be very pleased.

While there's nothing yet on the calendar regarding the "Bad Bank", supposedly Treasury Secretary Timothy Geithner and company are working on the details of a "public-private partnership" which would bring private distressed debt investors into the mix. Word has it that we are to receive some detail on this within the next couple of weeks.

No predictions here, just giving you a heads up that the next few days and weeks could bring some interesting developments. And in the meantime, expect that while emotions run high (leading to reactionary investment decisions), short-term traders will continue to rule the stock market (i.e., lots of volatility).

At this stage, rather than wondering how low the market will go, the more important question for the long-term investor becomes; how long can it stay at these (or lower) levels?

Stay tuned,
Marty

Thursday, March 5, 2009

Private Client Commentary - stop reading if

Dear Clients,
Yesterday

Private Client Commentary - A stock market conversation

Dear Clients,

Many of you have commented that you enjoy the Q&A format for my commentaries. The following is a continuation of the Investor/Advisor conversation where the investor is looking for some clarification on some recent comments made by the advisor, and where the advisor emphasizes the importance of not reacting to the headlines.

Take care,
Marty

Investor: You

Private Client Commentary - everything has a ceiling and floor

Dear Clients,

I write this early Friday morning and it's looking to be yet another down day for the market.

"Could get worse before it gets better" is something I've been reminding for months now. I've also been reminding that market history supports the notion that to sell when the market has taken this kind of hit could be a bad idea. The thing is, market history supported that notion when the Dow was at 9,000 less than two months ago. So if two months ago you had a two month time horizon, you should have sold. If you have a time horizon that extends several years, well then it's an altogether different set of circumstances.

The question we have to ask ourselves is; is this time different? Will the market bounce back in furious fashion when the sideline cash (one day) comes roaring back in - when a real return of 0% in T-Bills is no longer acceptable and it believes the worst economic scenario is finally priced into stocks? Or will it rush to gold, already at record highs, while the economy continues to struggle under the weight of, well you name it? Do we buy into an asset class (gold) that has run through the roof

Private Client Commentary - look into the future

Dear Clients,

Okay, whether you

Tuesday, March 3, 2009

Private Client Commentary - Stovall interview

Dear Clients,
A couple of months ago I sent you a chart showing every bear market with a decline of 30% or more, dating back to 1901. The chart showed how stocks tended to bounce aggressively once they finally bottomed out. In that spirit (and in light of the recent dramatic sell-off), the following is taken from last Tuesday

Monday, March 2, 2009

Private Client Commentary - Buffet letter

Dear Clients,

This week you'll hear from all corners of the media how Warren Buffet, the Earth's wealthiest individual, in his annual letter to Berkshire Hathaway shareholders, confessed to doing some "dumb things" in 2008. I browsed around various media outlets this weekend just to see how they titled their headlines and I have to tell you, the critics who claim that the media sensationalizes the bad news and contributes to the sour mood of the American citizen are absolutely correct (at least as far as the coverage of Buffet's 2008 letter to shareholders is concerned). I happened to read the letter and while stating the facts in terms of the things he wishes he could take back, he made some awfully good decisions in 2008 as well. Overall I found it to be a pretty upbeat, yet very honest, message to his flock. I encourage you to read the letter in its entirety on berkshirehathaway.com. You'll be relieved to know that the

Sunday, March 1, 2009

Private Client NL Business Cycle

THE BUSINESS CYCLE
(The Forest Through The Trees)


Did you know that the Native American rain dances actually worked 100% of the time. That