7/27/2010 Historical Post

From: Dale Beals <dpbeals@comcast.net>
Subject: Dale’s Market Commentary 🙂
Date: July 27, 2010 6:59:45 PM CDT

Hi everyone,

As you know, I don’t write many market commentaries, since there are many good ones out there, but I thought it would be useful to step back from the last month or two and take a look at the big picture.
Back in April, 2010, all was well and any stock market pessimist was booed offstage, or off CNBC, or anywhere else for that matter. Then, after a nasty market drop in May and June, the New York Times featured an interview with Robert Prechter, a man who has been foretelling doom since the late ’90s. “Everyone” wondered if he could finally be right. Now, at the end of July, the Dow Jones and the S&P500 have come all the way back to break-even for the year, and everyone is congratulating themselves on how well the European banks passed their easy “stress” tests.
There is a lesson in here for all of us… actually several lessons.
1. Permanent Bulls and Permanent Bears are both right, eventually… just like a stopped clock is right twice a day.
2. Public sentiment about the market is usually greatly influenced by the media reporting of the recent past, and therefore is often wrong… especially when everyone seems to agree.
3. There is plenty of bad news still out there waiting to be blamed for the next market pullback; and there is plenty of positive news still out there to be credited with the next market rally, but you should not believe the causative links market commentators propose. (stocks rose because of good earnings, or stocks fell because of credit woes)
4. There will be many industry experts who will have amnesia and claim they called the recent tops and bottoms, even when you can google what they actually said for yourself.
When times appear uncertain, people look to those who claim to have the answers, even if they don’t have a great track record. Even now, some boldly predict a big rally up from here. Others equally boldly predict that the bottom will fall out of the market any day.
I will not claim to know the future myself, but I will ask the question: “What if the market just meanders up and down in an 8-10% range for awhile and frustrates all the market timers and buy-and-holders? Or, what if the market does go to the moon from here?
Either way, we’ll be OK. Our methodology for asset allocation and risk management (finally completed in January 2010) handled the 2nd quarter roller-coaster quite well (up, down, and sideways), and if we stick to a disciplined approach,we will continue to be OK.
For those of you who are not my clients today, I would appreciate the chance to provide you a portfolio analysis and review. I believe my investment methodology is better and less costly than any you may be using today. I recently contracted with Morningstar to provide portfolio performance reporting and research services. You might be surprised at how my portfolios compare to yours when looking at advanced portfolio metrics like Sharpe ratios. You might even be more surprised at how much less expensive our portfolios are for the same general portfolio profile.
Finally, let me express my deepest gratitude to my existing clients for the fact that Dale Beals Financial Wisdom LLC just celebrated its first anniversary in June, and we are doing well.
Please call with any questions or comments.
Best Regards,
Dale