CI Outlook - Archives

March 2011

March 6, 2011

An article in this week’s Barron’s makes the point that whatever does not kill this market seems to make it stronger.  Given the current news background the writer is making a good point.  Consider  the recent news, dollar weakness, a budget stalemate in Congress, oil over $100 per barrel and the world holding its breath, waiting for the March 11th “day of rage” in Saudi Arabia.  How much more disturbing can it get?  Yet, market indices are holding near their highs.  Well respected technical market letters such as Lowry’s continue to point out that the market is vulnerable to a sharp pullback at any time.  Financial writers point out that investors are highly confident, and say that cannot be a good sign.  Fundamental analysts, usually late to the party, are the only ones that seem somewhat confidant in the future of the economy and therefore the market.  At this time, for a number of reasons we are siding with the fundamentalists.

First of all, we agree the market could pull back further from its recent highs.  That pullback could be sharp and very frightening.  However in our minds it would signal the end of the first phase of a long bull run and the start of the second leg up.  As we have discussed in the past, when that happens, new leadership emerges.  For the last 24 months, domestic stocks with high dividends and foreign stocks have been the market leaders.  We believe that when we do have the market correction, the new leadership will be domestic midsize and large cap growth oriented companies.  For 2011 we think the best opportunities will be here in US based companies, not overseas.  We have talked about this potential change since early last fall.  Since that time we liquidated ETF’s with foreign exposure.  We started with markets bearing the most potential risk, namely the Frontier Markets ETF.  We have recently finished the process by selling the Emerging Markets ETF and replacing it with the MSCI ETF.  The MSCI ETF has a higher concentration of larger companies and they are mainly in the developed countries. The emerging and smaller economies are suffering from two major economic risks.  They are higher inflation and rapidly rising interest rates.  Now that the trouble in North Africa has surfaced, those markets will also suffer a discount from this new political risk.  All things considered, the safest and cheapest market in the world is right here in the USA.  The cheapest stocks in this market are midsize and large companies.  Many of them have huge cash reserves, little debt and rising sales forecasts.  We have adjusted to this new reality by reducing overseas portfolio exposure from 50% emerging markets last fall, to approximately 20% today.  Most of that 20% is in large developed markets.  The remaining 80% of your portfolio is here in the USA.  We believe this will be the correct posture for most of 2011.

As we always do, we want to thank you for your patronage.  And as always we want to encourage your questions and comments about your investment portfolio.


July 2014
JUNE 2014
May 2014
April 2014
March 2014
Feburary 2014
January 2014
December 2013
November 2013
October 2013
September 2013
August 2013
July 2013
June 2013
May 2013
aPRIL 2013
March 2013
February 2013
January 2013
October 2012
September 2012
August 2012
July 2012
June 2012
May 2012
April 2012
March 2012
February 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
February 2011
January 2011
December 2010
November 2010
October 2010
September 2010
August 2010
July 2010
June 2010
May 2010
April 2010
March 2010
February 2010
January 2010
December 2009
November 2009
October 2009
September 2009
August 2009
July 2009
June 2009
May 2009
April 2009
March 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
Yead End 2007
December 2007
November 2007
Third Quarter 2007
September 2007
Second Quarter 2007
June 2007
May 2007
First Quarter 2007
March 2007
February 2007
Year End 2006
December 2006
November 2006
Third Quarter 2006
September 2006
Second Quarter 2006
First Quarter 2006
Fourth Quarter 2005
Third Quarter 2005
Second Quarter 2005
First Quarter 2005
Newsletter Year End 2004
Client Newsletter 2nd Quarter 2004
First Quarter 2004
Newsletter - Year End 2003
It Ain't Over 'Till It's Over
Newsletter - 2nd Quarter 2003
Newsletter - 1st Quarter 2003
Newsletter - Year End 2002
Newsletter - 3rd Quarter 2002
Newsletter - 2nd Quarter 2002
Newsletter - 1st Quarter 2002
Newsletter - 4th Quarter 2001
Newsletter - 3rd Quarter 2001
Newsletter - 2nd Quarter 2001
Newsletter - 1st Quarter 2001
Newsletter - Year End 2000
Newsletter - 3rd Quarter 2000
Newsletter - 2nd Quarter 2000
Newsletter - 1st Quarter 2000