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Investment Outlook Archives
Third Quarter 2011
POLITICAL PARALYSIS
The S&P 500 index fell 14% during the third quarter, its worst performance since Lehman collapsed in 2008. While significant and painful, the US declined far less than other markets: Germany (DAX) and France (CAC 40) each tumbled 25%, Italy (MIB) dropped 26%, and the MSCI Emerging Market Index fell 23% in the same period.
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Second Quarter 2011
THE RECURRING NIGHTMARE
On the surface, the macro narrative in the second quarter of 2011 has been remarkably similar to the same period in 2010, but, thanks to a voracious rally the last week of June, without the losses among global equity indexes.
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FIRST QUARTER 2011
Most investors, having watched equity markets double off their lows of March 2009, were waiting for a shoe to drop in the first quarter, and, ostensibly, two of them did.
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January 2011
OPPORTUNITIES AND RISKS
As we begin the New Year, we like to review several key themes that could lead us to attractive investment opportunities in 2011. That said, there are also certain risks that have the potential to increase market volatility and undermine these prospects.
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December 2010
The markets take over
Central banks and policy makers in Western economies have been remarkably active since the fall of 2008, when a series of dramatic interventions began to dominate (and complicate) the valuation of private enterprises.
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November 2010
CHOICES
Each recovery period following a recession presents investors with unique challenges that seem insurmountable. Otherwise, markets would easily and quickly discount a full recovery, with normalized earnings, modest inflation and prosperity for all.
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October 2010
MIRROR MIRROR
Rapidly evolving global dynamics necessitate that we frequently retest our views, and that we question the assumptions upon which consensus decisions are made. This exercise helps us make sense of where we are now, and where we may be going.
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September 2010
CONVENTIONAL WISDOM AND FEAR
We have written about investor sentiment in previous letters, but pessimism, in our opinion, has risen to such a level that we are seeing more compelling investment opportunities, not less.
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August 2010
EMERGING TECHNOLOGIES
After a tumultuous and unrewarding second quarter, investors once again embraced risk in July on better than expected second quarter 2010 earnings in the US.
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July 2010
BALANCING ACT
The first half of 2010 has been frustrating for most investors, as support for the massive relief rally of 2009 waned, and fears of systemic risk (this time at the sovereign level) returned.
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June 2010
Correction or Bear Market?
Global equity indexes plummeted 8% - 10% in May, volatility surged and the credit markets struggled to digest the unfolding, eerily familiar debt crisis in Southern Europe.
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May 2010
the latest bubble
Investors have endured two painful bubbles in the past decade, each resulting in peak to trough drops of fifty percent or more in equity prices. First, in technology related equities (we note that the Nasdaq Composite Index is still trading at less than half its high of 5049, reached in March 2000*); second, fresh in our memories and only tentatively stabilized, a gross misallocation and mispricing of credit, especially for consumers (houses, cars, flat screen TVs, etc.), fomenting and institutionalizing leverage to an extraordinary degree.
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April 2010
more with less
The global equity markets rose modestly in the first quarter of 2010, grinding higher despite skepticism that 2009’s strong performance would continue, with the US outperforming most other regions. After a rocky start, sentiment generally became more favorable as consumer data, including job growth, improved along with corporate earnings.
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March 2010
dormant capital
US households reacted swiftly to the crash in equity prices in 2008 by boosting savings and dramatically cutting spending. Though many markets have rallied more than 70% off their lows, there has not been a concurrent rise in equity investment, as retail investors have been reluctant to embrace risk.
To read this Investment Outlook in its entirety, download the PDF