Poignant and realistic commentary on the market, from a fundamental perspective:
"ARE WE THERE YET?
We have found that the incessant questions asked by children on a trip are also imitated by adults on CNBC and virtually everywhere else.
We have heard literally thousands of times in the last months “Is it time to buy the financials? Is the market at the bottom? Is it time to get in?” The questions go on and on by many who should know better because, of course, there is no answer.
More than 663,000 jobs disappeared from the economy in March bringing the total in excess of 5 million. Tragically, we seem to be getting used to figures like these. The first three months of 2009 saw the unemployment rate soaring to 8.5% up from 7.6%. This is the highest level in more than a quarter of a century. More than 2 million jobs were lost according to the Labor Department's employment report released on Friday, April 3. Nearly every job category was affected, and Dean Baker, a director of the Center for Economic and Policy Research in Washington said “There is just no way we are anywhere near a bottom. We’ll be really lucky if we stop losing jobs by the end of the year.”
/**********Hammy Note: What would you call a bottom? A)The number of lost jobs per month starts to decline, or b) we actually start gaining employment?***********/
This severe recession/depression was initiated by a crisis in the credit markets. The crisis still exists as no one has yet been able to determine the value of the toxic assets that the banks and the non-banks carry on their books. We believe that AIG still carries approximately $1.6 trillion of toxic assets on its balance sheet. Until an answer can be found that can put a value on the toxic assets held by the banks and “non-banks” the crisis will continue.
Consumer spending appears to have leveled a bit after nose-diving in the last quarter of 2008. Auto sales improved slightly month over month in February versus January, and house sales have been improving in important markets like California and Florida although at substantially reduced prices. These are all most welcome signs, but they hardly negate the overwhelming problems our nation continues to face. Another good sign: Stock and bond markets have been stabilizing when compared to the last five or six months, and there have been rallies in this extremely volatile bear market that have been strong enough to bring risk-takers back into the fray. We are encouraged by these developments, but do not believe they can be sustained until we see concrete improvement with regard to the fundamentals. We repeat that the basic problems, unfortunately, will continue until a workable solution can be found for the all pervasive credit crisis."
Note: all emphasis is mine.
This came from a newsletter issued periodically by John Hamilton at www.hamiltonadvisors.com. As may be apparent, they don't waste resources on a flashy website.
Hamilton Advisors is a investment advisor/management company located in Greenwich, CT, founded by my grandfather and run mainly now by my dad. It's personal service, and you can really get to know the guy who's banking you coin; many of the business relationships turn into lifelong friendships. If you ever consider trusting someone else with your investments, give these guys a call and find out what they're about--you won't regret it!
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