September 15, 2009 Market Update
Dear Investor,
I think by now each one of us is beginning to wonder what, if anything, I am doing with your money. I am still convinced that this market will not continue its upward path. As I said a few times now, we are out somewhat early, but from March to the end of May the markets were up almost 40%. Since that time we have not seen much more growth. We saw a bit of a sell off in July buy unfortunately, I was expecting a drop closer to 20% so I missed that quick whipsaw.
I have attached two pieces just recently published. One By Martin Hutchinson, a man who has been a bear for quite a while now, but his piece does make sense to me, and a second piece titled Company Insiders are Telling you to do This by Andrew Mickey. In both cases we see that the same message is coming through. It is not the time to be invested as there is a lot of risk in the marketplace currently. Also, for those who are interested in technical trading, the people at Elliot Wave are still forecasting a sell off well below the March lows and they are convinced this will take place yet this fall. So, at risk of sounding like a big chicken, I would continue to advise that we stay the course. The multi trillion dollar debt in the US and the multi billion dollar debt in Canada will come home to roost. And then it will not be pretty.
I also had opportunity to sit down with a few American business men last week. One from California and two from the mid USofA. They are also convinced that the economy will not grow this year. The man who owns a multi million dollar water business in the US said the only reason companies are showing profits in the second quarter is because they have made some very deep cuts including laying off a lot of workers. He anticipates that this will show up in the third quarter earnings reports. They will likely be very disappointing.
Last week I also met with a few clients in the Peace River, Grande Prairie region. The oil and gas industry is not doing anything yet and they are telling suppliers that nothing will even start again until at the very earliest next year, likely in the fall or winter. There may be some exploration work in the Spring of 2010. While driving around up in that part of the province I could not help but notice that all the industrial sites were full of parked equipment and there was a lot of stuff for sale.
So, lets continue to protect what we have. As some have already said, this is a most dangerous time of the year for stock markets.