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State of the markets

February 28, 2008

Mark on the markets Mark Patterson

State of the markets
Now that we are down 15 to 20% from our recent market highs, many are feeling the pain in their portfolios, and some not so much. Some sectors have done very well over the last few months. The asset classes that have really done well are the commodity based assets such as gold, silver, grains, energy, which includes oil, natural gas, heating oil, and gasoline. Stocks in general and especially financial stocks have not done so well. Large cap technology stocks recently have really been hurt as well.
If your investment portfolio had some of these commodity based exchange traded funds [ETF’s], like the gold trackers or the oil based ETF’s as well as the financials and tech stocks, it probably hasn’t stung quite as bad as just having vanilla mutual funds that typically do not have the commodity exposure. Clean or alternative energy has also done very well in this environment.
The commodity based ETF’s are a great way to invest globally, especially if you are squeamish about investing in some of the volatile markets like China, India, Latin America or Russia. While these can be great places for some of your portfolio, some more conservative investors can avoid the volatility of these markets by investing in commodities that these fast growing countries consume at a rapid pace.
The big cap technology companies like Google, Apple and Intel are 40% of their highs over the last couple of months. These technology companies did not correct downward until the Financials had already corrected downward by 40 to 80% in many cases.
So which companies will be the market leaders to lead the markets back up? We can only speculate which sector will lead. My guess is that the commodity based stocks and ETF’s will continue to be a good place for money. I believe that some of the regional banks that have been hurt so badly may be worth building a position. Selected technology, big drug stocks and biotech can be purchased in small amounts.
Until we have a good idea as to whom will be in the Whitehouse, our markets will probably not make a strong comeback in the near term. I expect this market to be range bound for some time. So hopefully a good portion of your investment portfolio pays some dividends. There is nothing wrong with holding a good cache of cash. Be patient for opportunity.
Mark Patterson is a registered investment advisor with MHP Asset management LLC, and can be reached at 447-1978 or Mark@MHP-asset.com