24 Aug 2001

Posted at 11:24h in The Friday Brief by
For years investors took comfort in the statement above.  Contemporary investors, including this one, took comfort on Tuesday when the automotive giant affirmed its third-quarter profit outlook and production for the year, four days after rival Ford Motor Co. lowered its earnings forecast.  That prediction shocked investors who had been reassured by stronger-than-expected first-half U.S. auto sales as the economy slowed.  GM’s confidence on Tuesday gave investors a glimmer of hope that the economy‘s trend might be improving. 

17 Aug 2001

Posted at 12:35h in The Friday Brief by
Bear markets turn investor strengths into liabilities and this insidious beast is no exception.  The aftershocks of the ‘Internet Bubble’ make this crash all the more difficult.  What we held as strengths before the collapse in confidence have become liabilities.  During Bull markets, long-term investors are rewarded for holding good companies in spite of brief stock pullbacks that occur when short-term investors are frightened off by negative news.  Investors with longer views snap up the bargains left behind, believing that the news has limited or no long-term relevance.  Alternatively, bear markets lack clarity or visibility of the future, making it difficult or impossible to know whether the effect of negative news is short lived or has longer implications. 

10 Aug 2001

Posted at 13:52h in The Friday Brief by
As I write this letter, the market is falling rather dramatically.  It was triggered by the PPI release this morning which was down considerably below expectations, primarily on falling energy prices.  Since then, the newswires show that 50 U.S. and British aircraft have attacked three Iraqi military targets.  Given the recent terrorist and military hostilities in Israel, the market undoubtedly fears worse trouble in the Middle East. 

03 Aug 2001

Posted at 13:59h in The Friday Brief by
Evidence is mounting that we may be very close to the low point in the economy.  The cyclical recovery is likely to be more muted than earlier expected, but it looks doubtful that we will see a full-scale retreat.   Six reductions in the overnight bank-lending rate by the Federal Reserve and government mailings of advance tax refund checks should provide consumers with reason to keep spending.