declined to its lowest value since June 2009
U.S. new export orders have fallen to a 3year low
Gasoline prices reached a 3-month high.Yet, as shown below, the markets had a pretty
good month. Why? Well, you’ve probably
heard that the ECB has put forth a plan to buyEuropean sovereign debt to maintain
“acceptable” interest rates.
Does this solve the financial crisis (excessivedebt and unemployment)? Not hardly. But itdoes reinforce the notion that Europe is com-mitted to save its currency and work its waythrough the crisis.
Stock Market Commentary
September 9, 2012
Lane Asset Management
How is it that I can becautiously optimisticabout the stock market while we have suchseemingly insurmount-able headwinds as up- wards of 20% of un
andunder-employment, over $16 trillion of U.S. fed-eral debt, maybe an-other $1 trillion of stu-dent loan debt, andnearly $49 trillion of sov-ereign debt worldwide(according to TheEconomist)? The answer is that I believe those who benefit most fromeconomic growth will ul-timately find a way to besuccessful through somecombination of industrialingenuity and politicalpressure, just as theyhave in the past. As theprocess unfolds, we arelikely to live through arocky period. The prob-
lem is that we just don’t
know how long that pe-riod will last.Not to be outdone, in the face of weak payrollnumbers in the U.S., the S&P 500 reached an all-time high. Why, you ask again? Because, at leastfor the moment, this gave impetus to the feelingthat the Federal Reserve will continue some formof monetary easing, weakening the dollar andboosting asset prices and, potentially, exports. While I do believe global economic recovery willhappen (on account of the political pressures, if nothing else), it is not at all clear what economictraumas we will go through in getting there. And, while I do see a path for resolving enormous sover-eign debt loads, I believe the high unemployment inEurope and the U.S. will be a much harder problemto solve.Investment Outlook As discussed on the following pages, technicalanalysis on U.S. and international equities is givingmixed signals. Accordingly, for those lacking in ahigh degree of risk tolerance, I continue to believein taking a cautionary approach to investing by fo-cusing on high quality, dividend paying, U.S. equi-ties, preferred stocks, investment grade corporatebonds and municipal bonds. If the market contin-ues as it has so far this year, this strategy will lagthe market. On the other hand, the strategyshould hold up over time, minimize volatility, andproduce an acceptable absolute return.
The charts on this and the following pages use exchange-traded funds (ETFs) rather than market indexes since indexes cannot be invested in directly. The ETFsare chosen to be as close as possible to the performance of the indexes while representing a realistic investment opportunity. Prospectuses for these ETFs canbe found with an internet search on their symbol. Past performance is no guarantee of future results.