INVESTMENT NEWSLETTER
November 2009

Pause to Refresh?

Stocks took a breather in October from the blistering seven month advance that started last March. The large-cap DJIA eked out a 0.1% gain while S&P 500 gave back 1.9% and the small-cap Russell 2000 fell 6.8%. The EAFE Index of large foreign stocks lost 1.3%.

Domestically, natural resources and consumer staples were the top sectors. Among foreign funds, China and Latin America, particularly Brazil, showed continued strength. Emerging markets are increasingly critical to the global economy, now producing about 30% of global GDP.

While large caps held up best last month, since the start of the rebound on March 9, small-cap funds led. So far this year, technology is the leading sector. The US is a major exporter, and a weak dollar helps US tech firms boost market share and profits.

The dollar has been in a clear downtrend since March and is close to record lows against other major currencies and gold. Last year, the dollar surged nearly 30% during the financial crisis, but since the markets rebounded earlier this year, the U.S. dollar has resumed its decade-long decline. The weaker U.S. Dollar has significantly enhanced international fund returns and Upgrading has directed us to buy internationals.

The stock market typically starts to recover one to two quarters before a recession ends, so it's no surprise that the official numbers last month confirmed the US economy is on the mend. After four successive quarters of contraction, the US economy grew by 3.5% in the third quarter, signaling the end of the recession. Government stimulus money and improved consumer spending (largely buoyed by the cash-for-clunkers program) as well as a slight improvement in housing finally pushed GDP into positive territory for the first time in four quarters. Mortgage delinquency and foreclosure rates continue to soar along with unemployment, so for many, recovery seems distant.

Investors remain cautious. According to a Bloomberg poll, although nearly 75% of respondents see the world economy improving - up from just over 60% in July - 40% of respondents say they are still cautious about taking on risk, and just 31% see investment opportunities.

Let's face it, markets have come a long way since March but are still well below their peak.

Please take a few minutes to watch a great video at the following link The Parent Care Resource Video

If you should have any questions, please do not hesitate to contact Sharon Staley via email or call her on 614-888-2230.

Thank You for your trust and continued support!

Sincerely,

P. Michael Valley II
Estate Planning Professionals