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September 2009 Market Review

Posted by Larry Doyle on October 1, 2009 9:31 AM |

I could wax poetic about the ebbs and flows of the various segments of the markets along with a variety of developments on and off Wall Street; however, in doing so I may detract from purely reading what the numbers are telling us. What do the numbers say? Much like last month, with the exception of the U.S. Dollar Index, every market segment once again increased in value. Wow!!

The dollar is clearly the ‘juice’ which is being used to drive an inordinate number of positive carry trades.

Are we merely supposed to enjoy the positive returns and assume they are a precursor to a brighter tomorrow? Not in my opinion. As I have been referencing, I believe we are not even a third of the way into running our ‘economic marathon,’ and thus prudence dictates we maintain our discipline and pace. Why do I feel this way? Our global banking system remains under pressure and has unrealized losses of $1.8 trillion. To this point, I wrote yesterday “When Is a $3.4 Trillion Loss Supposed to Be Good News?”:

A $3.4 trillion loss may be perceived as good news when it was previously projected to be $4 trillion. That said, when losses of this magnitude are buried in a mix of financial chicanery and accounting charades, the impact is not lessened but only extended.

How did the Financial Times characterize this IMF report and the state of global banking? The FT writes this morning:

The International Monetary Fund’s financial stability reports are losing their capacity to shock. This is a shame. . . . The shock factor may be gone, but sustaining a recovery will be no cakewalk.

Active traders may be excessively ebullient or despondent, depending on the daily swings in their profits or losses. I will enjoy the higher values in my monthly statements as they come in, but I am not changing my approach to increased discipline across all parts of my personal balance sheet.  A balanced and well diversified portfolio with excess liquidity still strikes me as the best approach at this time.

Now, take a look at the numbers. Comments, questions always appreciated.


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