Q1 - 2010 Review

Despite all of the negative news surrounding the economy, the uncertainty regarding the recent healthcare legislation and the bearish sentiment overhanging the market - the markets continued to rally. "What is, is..." The fact of the matter is that we continue to see the domestic and emerging markets show more buy signals than sell signals which indicates that demand remains in control. With demand in control, we are running wealth accumulation strategies.
There is no doubt that over the past few months the equity market has seen its fair share of ups and downs, and at times the market rally seemed on the verge of running out of gas. As a matter of fact, the correction earlier this year was nothing more than a normal pullback within the confines of an overall positive trend; using statistical jargon, we saw a reversion to the mean.
International Equities, as an asset class, have underperformed the domestic equity universe this year. For the first three months of the year the iShares MSCI EAFE Index (EFA) is up just 1.27% and the iShares MSCI Emerging Markets ETF (EEM) is up 1.20%. This compares to gains in the broad domestic equity universe between 5 and 8% for the first quarter. Despite the lower return from the benchmark indexes, this does not mean there have not been opportunities within individual countries and regions; investors able, or willing, to tactically allocate money within the International Equity universe have been rewarded so far this year.
So, as we head into the second quarter of 2010, the bias of our indicators still overwhelming suggest a positive stance on the US markets, with Small and Mid Cap continuing to handily beat their Large Cap cousins. Emerging international markets exhibit better strength than the developed international markets. We will run wealth accumulation strategies until supply overtakes demand, and continue to allocate tactically to take advantage of the stronger domestic & international areas.

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