1) MorningStar on the 2009 stock rally. “Lasting Lessons” – could help put some of the most recent fund returns into context.
2) WSJ: More Baby Bs likely for Berkshire, more (different) shareholders. Next stop: S&P 500?
3) “The Smart Move That’s Long Overdue” – Interesting perspective on new FDIC regulations.
My colleagues and I have just completed our Winter 2010 Quarterly Report, a retrospective analysis of the fourth quarter and full year 2009. In our report we observe that, even though the market began the year by continuing 2008’s dismal decline, 2009 featured great strides in the global economic recovery effort and was a good year for the stock market. Overall, we’re left feeing optimistic for the future as several key indicators currently reveal upward trends. The economic recovery may be slow, but it appears to be underway – and markets should benefit from the improvement.
A few highlights from the report:
– As we predicted, the combination of fiscal stimulus and improved credit conditions boosted economic growth. The resulting increase in corporate earnings exceeded expectations and led to a surge in the U.S. stock market.
– The S&P 500 was up 65% from its March low and 26% for the year, its best performance since 2003. Foreign markets also soared.
– In a reversal of the flight to safety seen in 2008, Treasurys posted their worst returns since 1973.
– High-quality, short-duration corporate bonds rebounded nicely. As the bonds we bought mature over the next several years, we expect to redeploy the proceeds at higher rates of return.
– Overall, the stock market is reasonably valued, but we continue to find attractively priced shares of excellent companies.
– While the economy is improving, there are still areas of concern, in particular high unemployment, the Fed’s ability to smoothly withdraw stimulus as the economy recovers, and conditions in the real estate markets. The combination of these issues and the market’s rapid rise from the depths of March could lead to a temporary correction sometime during the coming year.
Overall, we conclude that economic recovery, low interest rates, and the return of money to stocks from bonds and cash holdings should result in solid stock market performance in 2010, although we do not expect a repeat of 2009’s dramatic rise. Furthermore, a decade of poor stock market performance has historically been followed by a decade of above-average returns. We’re not going to count our chickens before they hatch, but we are optimistic that the decade ahead will reward patient investors.
For more details of our views and outlook, including a discussion of specific stocks we’re currently buying, you can read the Quarterly Report in its entirety.
As always, feel free to contact us if you have any questions or comments.
Jordan Smyth and the Edgemoor Investment Advisors Team
As we begin the second decade of the 21st century, we are relieved that 2009 helped move us along the road to recovery and are grateful for the partial rebound of the markets, following the recession and market collapse of the last couple of years. Weary investors are left pondering what just happened, and what is yet to come. The stock market still has a long way to go, but we are optimistic that it has turned the corner.
As we wade through a beleaguered but resilient financial landscape, we here at Edgemoor Investment Advisors wanted to establish a more efficient way to communicate with our clients and others. Thus, we’d like to formally introduce the Edgemoor Blog, a forum where we can connect on the pressing investing and finance issues of the day, and where readers can come to find a professional advisory voice.
In part, this is the product of the firm’s 10th anniversary, which we recently celebrated. Having served investors, predominately in the metro DC and Charlotte, NC areas but also across the country, for a decade now, we find that many of the people we work with are thirsty for insight and industry commentary beyond what they find during their daily routines.
Our clients – ranging from individuals, retirement plans, and trusts to non-profit organizations and foundations – want timely, genuine, back-and-forth engagement on the pertinent issues of the day. We plan to deliver our expert insight through the blog to meet those expectations.
Edgemoor Investment Advisors specializes in long-term capital appreciation, preservation of capital, and income through disciplined management of value-oriented equity and income-generating portfolios. This blog will reflect that specialty as we delve into the latest market trends, headlines, and dealings on Capitol Hill. Our aim is to create a conversation hub where we can share our knowledge and hear feedback from our readers, so please feel free to post a comment and tell us what you’d like to discuss.
We’re confident that this blog is an informative and efficient way for our clients and readers to stay up-to-speed on industry trends and news. We’ve made it our business for the past ten years to be expert stewards of our clients’ respective financial futures. We’ll employ that same expertise, efficiency, and insight in this blog and remain good stewards of your time online.
Thanks for stopping by, and be sure to visit again as we explore what today’s fluctuating financial headlines mean for America’s investors.
