November 2009

This Market Has Legs

The market powered ahead in November with a positive performance of six percent and now stands at plus 24.67% for the year. As usual, our results are posted on our performance page.  Despite the narrowing of breadth, the lack of volume on advancing issues, and the slowing of buying pressure, sellers remain on the sideline and it would appear that this market still has legs. Thoughts going forward:

• With the ten year trading in the three percent range and probably headed lower as various stimulus packages go away, the market has little competition from cash and Treasuries.

• Although the market is up over sixty percent from its March lows, it shows no signs of forming a bubble, and if Reuter's estimate of almost eighty dollars per share on the S&P 500 for calendar 2010 is on target, the modest forward multiple of 14x would appear to offer further upside.

• The dollar continues to weaken, and while a counter move rally is likely in the near term, this should to be a positive for commodities, gold and energy where we are well positioned.

Despite the consolidation in emerging markets over the last couple of months, based on valuations and growth estimates, they appear poised to outperform  developed markets over the longer term.

 

-Joe