The equity and corporate bond markets have stabilized and improved
significantly from the panic lows of March, 2009. The general consensus
regarding an economic recovery is that it will be slower than average due to
increased taxes to support the government borrowing and spending taking place
to dampen the recession. It is also generally accepted, although not an
immediate concern, that these policies will ultimately result in higher
inflation.
Individual stocks and broader equity markets will have to
have technological, inherent growth, and increasing market share advantages in
this type of an environment to have significant appreciation potential.
Although, recent corporate profit growth and forecast corporate profit growth
are providing a healthier potential return environment for equity markets in
general. Corporate bonds continue providing attractive yields and some stability, and
inflation protected treasury bonds currently provide the same with less
volatility. Municipal bonds are also attractive for higher tax bracket
investors. We will continue to incrementally put our still relatively
high levels of cash to work in these areas over the coming months at opportune
times.
See the home page for sector and stock rankings and
recommendations.
BKS