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