28 Aug 2009

Posted at 15:56h in The Friday Brief by

On Wednesday our nation was saddened by the death of Senator Edward Moore “Ted” Kennedy who succumbed to brain cancer in Hyannis Port, Massachusetts. With 47 years of service in the US Senate he was one of the most influential and accomplished lawmakers of our time. Ted Kennedy was the only one of four distinguished brothers to die of natural causes; President John F. Kennedy, and Senator Robert Kennedy were assonated and Joseph Kennedy Jr., a naval aviator, was killed in action during World War II. The service and sacrifice of this remarkable family to our country is gratefully acknowledged and deeply appreciated.

The persistent rise in stock prices rolled on this week as investors continue to believe the economy is rising from recession, despite ever-present news of bank failures, sluggish consumer participation, and huge looming federal deficits. In spite of it, the Dow Jones Industrial Average advanced yesterday for the eighth straight day, each to new highs for the year, and representing the longest winning streak since April 2007. The MSCI World Index of 23 developed nations added 0.9% yesterday extending its seventh weekly gain. Copper, among the very best indicators of global growth, jumped to the highest intraday price since Oct. 1st on the London Metal Exchange, while oil climbed 0.9%. The early re-appointment of Ben Bernanke to a second term also gave markets a boost.

21 Aug 2009

Posted at 16:15h in The Friday Brief by
Our government was designed with great care by the Founding Fathers to protect “We the people” from the tyranny of majorities or loud and powerful minorities. Our system of “checks and balances” is not perfect, but it has served an ethnically diverse nation well these 230 plus years. However, one glaring omission threatens to ruin it all. Fundamentally understood and respected by the Fathers, but nearly lost on today’s leaders is the idea of fiscal discipline, or spending no more than is received. Indeed today’s Senators and Congressmen are richly rewarded by “we the people” through longevity of office and growth of power, to take from one class and give it to another. Our leaders write larger ‘checks’ against ever-decreasing asset and ever-increasing liability ‘balances’ with no end in sight. Perhaps “we the people” are finally rising up to say enough is enough? 

14 Aug 2009

Posted at 16:21h in The Friday Brief by
During the lifetime of the “Greatest Generation” the market has fallen an average of 40% fourteen times, or once every 5.7 years. In fact the odds of an investor experiencing a loss in any one year are 1 in 3.9. The latest drop from May 19, 2008 to March 9, 2009 took us down nearly 53%. It’s easy to see why so many former investors have been driven to the sidelines. Yet why do others remain steadfastly invested? In short they seek the 11.5% average annual return the market has provided for the past 40 years, along with the added benefit of ready liquidity. They understand the market, while seductively steady much of the time is prone to major emotional swings which require patience and fortitude to endure. Perhaps knowing that the average return a year after a market trough is 46% helps assuage the pain of declines, while understanding that ‘irrational exuberance’ will eventually lead to a hangover helps them remain on course while others fall prey to their emotions.

07 Aug 2009

Posted at 16:25h in The Friday Brief by
The best news of the week comes today as the Labor Department says that job losses are slowing. Payrolls fell by 247,000 workers, after a 443,000 loss in June. The jobless rate dropped to 9.4% from 9.5% last month. It is the clearest sign yet that the worst recession since the Great Depression is coming to an end if it has not already ended. Stocks jumped on the news taking the S&P 500 to a new high since the March 9th low. The index is now up more than 50% since that watershed day when Citigroup CEO Vikram Pandit told employees in an internal memo that the bank was having its best quarter since 2007 as well as comments from regulators suggesting that they might reinstate rules to limit short selling. Nearly $4 trillion in value has been returned to investors during this timeframe.