3.12.10

3.12.10

          We believe that the market strength is not justified at this point in time. If you take time to examine this strength, you find that the move is on light volume and for the most part, in the stocks with the highest risk built in. And each move higher makes owning stocks that much riskier. We are in a world right now that offers few safe investments so we need to wrestle with the question of how do we properly manage risk while trying to maximize returns? History dictates that in order for the market to be ‘healthy’ it needs a large number of stocks to be rising and for volume to be ‘heavy’. The general public has not returned, keeping on the sidelines.  Those who have put money have for the most part gone to Bonds. This is still a ‘traders’ market. The big banks, brokers, and insurance companies are doing a lot of the trading in their own accounts.

          Some analysts are saying that a ‘good sign’ is that Consumer debt is going down. When you ‘drill down’ you find that much of the debt is not being paid off but rather is being ‘written off’. So much for that argument!

          There are over two hundred banks in the Chicago Region of which 119 of them were in the ‘red’ in 2009 while only 86 of them turned a profit. As we speak, the FDIC is opening a satellite office in Schaumburg Illinois that will accommodate up to 500 staffers to help manage receiverships and liquidate assets from failing Midwest banks. Twenty one Illinois banks failed in 2009 and another three so far in 2010. There are 16 others that were undercapitalized as of Dec.31, 2009. Could it be that we have just seen the tip of the iceberg?

          We remain 100% in CASH

Till next time

The MTA Staff