Not (Yet) Out of the Woods

The second quarter of 2009 witnessed one of the most powerful advances in investment markets in many years. For almost everyone, however, this is hardly a cause for celebration since these advances pale against the extraordinary losses incurred in the preceding year and a half. Nevertheless, we are reasonably confident that a genuine market recovery is underway and is anticipating, in typical historical fashion, an underlying recovery in economies around the world. Meanwhile, clients can enjoy a quarter of handsome gains and year-to-date performance, ranging from mid-single digits to low double digits, which would be quite respectable for the entire year.

April and May showed very strong growth in virtually every equity asset class. This continued in early June but waned as the quarter drew to a close as the markets digested their gains or, in the view of some, retrenched in fear of a false start.

continue story

An Interview with the Chief Investment Officer

The past 12 months has been a roller-coaster ride for the global economy and capital markets. What are we to make of the current situation? The list of topics we would like to cover is so broad that we’ve chosen to present a few key thoughts in an interview, “Q & A” format. We look forward to presenting a more detailed analysis, with graphic displays, in an audio slideshow which will be available in the next few weeks. read more

Summary of Q2, 2009 Manager Research Activity

Below is a tally of the existing managers we have met with and investment opportunities we have considered over the quarter. While we receive unsolicited calls or emails daily, we only list those investment opportunities which pass an initial screen and which we then review in depth. read more

Inflation on the Horizon?

Central banks, including the Federal Reserve, have injected massive amounts of liquidity into their respective economies over the last several months to battle the recent meltdown in the credit markets. Despite this rapid growth in the money supply, we believe that in the aftermath of a pending recovery, inflation is more likely to be contained than not. Current high levels of unemployment (US rate at 9.5%), a transition to a climbing personal savings rate (US at 6.9%), low capacity utilization (US at 68.3%) and a still modestly capitalized global banking system are likely to act as a buffer against a rapid and sustained rise in inflation. Still, we acknowledge that future monetary policy mistakes (e.g., failure to remove some liquidity), the continuation of large federal budget deficits (12% of US GDP for fiscal year 2009) and US Dollar depreciation could result in higher inflation rates over the next several years. read more

Mortgage Choices: Mid-2009

As our long-tenured clients know, we have advised for many years that over a full interest rate cycle, we expect they will benefit by avoiding long-term fixed rate mortgage products in favor of short-term fixed or, better still, fully adjustable mortgage products. read more