The few weeks since our last monthly digest have seen the US stock market rise another 7% thanks to more economic news indicating that the economy might have hit bottom. The market is now up 50% since its March 9, 2009 bottom.
 
Time to celebrate? Not quite yet. But the change in investors' psychology is remarkable: a few months ago, anyone buying shares was feeling like a kamikaze on his way to a certain death (mostly reputational). Today, fear inhabits those who did not buy or are still holding cash.
 
We are certainly happy to see the economy improving, and hopefully, if history is any guide, the employment picture will also soon get better. Getting unemployed Americans back to work is key to a sustainable and prolonged economic recovery.
 
Leaving the big picture aside, we started to see some signs of stabilization in the 2nd quarter earnings reports from the companies that we follow. As an example, American Express announced that the number of cardholders getting behind on their payments, an indicator of future bankruptcies, has now declined for 3 months in a row.
 
We continue to advocate keeping a steady hand on the helm in these troubled waters; there is no reason to change your carefully crafted plans now that the market has recovered somewhat. We also believe that the last few months are only the beginning of a few years of very attractive long-term compounding rates of return for equity investors. Our opinion is supported from the low valuation for the companies in our large cap portfolio and the fact that corporate earnings are below their potential once the economy starts growing again.
 
Notwithstanding the inevitable setbacks along the way, ignore the sirens and keep your eyes on the horizon. 
 

Enjoy the rest of your summer.