L&S Advisors Outlook: Spring/Summer

YOGI BERRA SAID “IT’S TOUGH TO MAKE PREDICTIONS, ESPECIALLY ABOUT THE FUTURE”

As we watch the securities market volatility and the uncertainty prevailing in the economy, Yogi’s words take on new meaning. Although the government seems to be working hard to assist the country out of its current economic malaise, what we see in the future is more “uncertainty”. The “uncertainty,” though, could potentially produce numerous investment opportunities, - but in our opinion, the time frame for these investments will be shorter than we would prefer.

Both Bulls and bears generally agree that for stocks to post a significant rally during the second half of this year it will require convincing evidence not only that the U. S. economy’s decline has slowed but that the economy will begin to turn higher by year-end. Corporate profits will need to at least match the forecasts for an upswing to prevail through the rest of the year and to even justify current market values.

Although the markets rallied significantly during the second quarter of 2009 (despite all the attention to the “green shoots”), the global economy faces many formidable challenges. There are many conflicting forecasts for both growth and demand, such as rising unemployment, lower corporate profits, the conflicting direction of commodity prices and increasing budget deficits as well as looming inflation and /or deflation concerns. The run-up in the securities markets since March 9th may mean the good news for the second half is already reflected in stock prices. Many market experts feel that we will see a range bound market for the next few years moving up and down in a relatively narrow sideways band. Under this scenario, we will have to work hard to produce satisfactory returns. We have already begun to do this. Our Client’s have probably noted that we have been more active investors recently. We believe that actively managed stock picking is a necessity in this new market environment. However, while always on the lookout for increased capital and growth appreciation, we continue to hold true to our key principals of preservation of capital and risk management.


Past performance is no guarantee of future results. The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities, markets or issues mentioned. The information contained herein, while not guaranteed as to accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice