INVESTMENT REVIEW SECOND QUARTER 2010
The second quarter saw investor anxiety increase. The Greece debt crisis focused the attention of the market on the possibility that sovereign nations are at risk of defaulting on their debt. The “flash crash” of May 6th added to the anxiety by alerting investors to the role of the high frequency traders and their impact on the volatility in our stock market. The new financial regulation is being digested by the market as to the impact; and the British Petroleum oil spill aggravates the mood for investing. Consequently all this uncertainty lead to selling the stock market and the buying of fixed income securities and gold. The stock market represented by Standard & Poor’s 500 index; including dividends was down 11.43% for the quarter.
Some stock market participants are focusing on what happens when government stimulants is removed from the economy. For example when the home buyer tax credit expires, is the home buying market able to show growth without the government help? One camp says it’s too early to pull government help, the other camp say the government is piling on too much debt which will have long run disastrous consequences.
There is some good news in the economy such as corporate earning increasing and some decrease in unemployment. Also, stocks are undervalued compared to the fixed income market.
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Outlook 2010
The stock market will again be volatile, with an upward bias.
On pullbacks in the market we will add to positions in the materials sector, the financial sector, and the technology sector. We will also add to our international positions, and individual fixed income securities.
7/7/2010
Marian P. Young
Registered Investment Adviser
Young Capital Growth Company, LLC
Telephone 866-930-1870
marianyoung@onebox.com