Greetings!
As 2011 begins, we thought it would be appropriate to provide our readers with a brief recap of 2010. In this month's newsletter we will review the performance of certain segments of the markets, some indicators that are beginning to issue red flags for us and touch on, once again, where we believe we are within the grander trend as well as the shorter, cyclical trend we are currently in the midst of. November's newsletter touched on how these cycles tend to repeat themselves in different fashions and how we have seen many things in the past that help guide us through the current environment. We hope you had a wonderful holiday and we wish everyone a great 2011. Call or email us for a "New Year" review of your investment strategy and how Volt may be able to play a role in helping you attain your short-term and longer-term goals.
Regards,Paul
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It Was a Good Year!
Now What?
By Griffin Meyers
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 2010 provided investors with positive returns! The S&P 500 ended the year up just shy of 13%, the Dow Jones up 11% and the Nasdaq up 18%. The shorter-term, "cyclical bull" cycle we are in the midst of still seems to be intact as we enter the New Year. Cyclical bull cycles typically have two upward "legs" with a correction in between. With the correction behind us, it leads us to believe we are in the second leg of the cycle which can still provide an opportunity to capture additional return. However, with the understanding of how these cycles behave within the shadow of a "secular bear", it also warrants cautious awareness as a correction is typically out on the horizon once the second leg concludes. Let's dig in a bit deeper into how the year looked.
Sector Performance (As of 12/31)
The Consumer Discretionary and Industrial sectors lead the S&P 500 with Energy and Materials surging in the 4th quarter. Utilities and Healthcare barely finished positive.
Energy +17.86% Materials +19.92% Industrials +23.92% Cons Disc +25.72% Cons Staples +10.67% Health Care +.71% Financials +10.83% Technology +9.13% Telecom +12.3% Utilities +.86%
Gold, Silver, Oil and the Dollar With continued concerns regarding economic recovery around the world, gold and silver, among many precious metals, have surged. The ETF's (Exchange Traded Funds) that track the two finished the year at near record highs. SLV (Silver) was up over 82% and GLD (Gold) up nearly 28%. Oil traded most of the year within a trading range of $70 to $80 but broke out during the final few months of the year to close at a 2-year high of over $91 per barrel. The dollar remained weak fueling the surge in metals/materials and raised questions about the integrity of the world's reserve currency.
Sentiment When markets climb, so does the public's (as well as the professional's) positive sentiment. Historically, once these sentiment indicators begin reaching extreme levels it is one of the many signals that can begin to raise a red flag and cause us to begin developing concerns. With the unemployment rate remaining high and a housing market that continues to deflate, we are approaching the New Year with continued caution and an awareness of where we are in this cyclical cycle. Although no one can predict the future, our outlook on 2011 isn't as rosy as many of the pundits on TV. With that said, the market trend is still bullish and as an asset manager, an important rule to follow is not to "fight the trend". However, when the tides do change, our strategies are prepared to protect our client's capital by exiting the markets when risk increases and deterioration begins. Call us to explore how our strategies can help you navigate through the markets during these times of uncertainty.
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