Investment Cost Control.
It is your money, we respect this....
It has been some time since our last post, but not our most recent update. We have been active over the summer with all of this market volatility. We have seen some major hedge funds actually wind down and the managers have said it is time for a break, or a permanent break. It has been a rough summer and that has now passed.
On the earnings front, Q2 earnings were decent. Corporate cash is high, planned project and M&A activity is picking up and that displays signs of some credit easing, all good things but little signs hitting the retail investor. We suspect this is coming but much more slowly than many would like, or expected. I personally am not sure why! We had a very big credit bubble and a ton of over capacity - how could you not expect this to take many years? None the less we don't think it is time to sit idly by, there are opportunities to be had, dividends are very high for strong performing companies, PE ratios are low, but if you don't pay attention fundamentals mean little if there is little action from investors. These stats could remain low for some time.
On the real estate front, it is still poor and will likely remain that way for many years to come -- too much inventory and not enough personal income growth. As for other countries problems, there are plenty but all as part of the fall out. Take Ireland for instance. Does anyone really expect that country to fill their over abundance of housing? I hope not, they could take 20 years to get back on track in the housing market. It will likely depend on population growth, because they do not have a huge immigration market to fill all those empty houses. But we all know this, so the worry is somewhat unfounded in my personal (and professional) opinion.
With this, we suspect M&A activity will continue and this will help foster new growth in the market but at a much more stable pace.