The New Economic Climb

I recently received a shareholder’s report from a company in which I own shares. I think the first paragraph of the letter provided by the President of the company is very interesting reading, so I have decided to pass it along: “Dear Shareholders, 2008 brought all sorts of challenges to investors. Throughout the year, the financial sector was plagued with failures in banking, insurance and... [more]

I recently received a shareholder’s report from a company in which I own shares. I think the first paragraph of the letter provided by the President of the company is very interesting reading, so I have decided to pass it along: “Dear Shareholders, 2008 brought all sorts of challenges to investors. Throughout the year, the financial sector was plagued with failures in banking, insurance and brokerage firms. By year’s end, after a meltdown in the credit markets, historically high levels of volatility in the stock market, and the resulting turmoil to the overall economy, the Dow’s total return was -31.92% (as of 12/31/08). In fact, 2008 was the Dow Jones Industrial Average’s third worst calendar year since its inception in 1896. For the year, the negative total return performance of the Dow was surpassed only by 1931 and 1907, two years in which the U.S. was also enduring a major banking crisis. Of the thirty stocks in the Dow, only two were up in 2008. For the first four months of 2009, however, the market has shown positive signs. In fact, many economists believe the recession that began in December 2007 ended in March 2009.” The recession is over. Buyers are looking and buying. Sellers are accepting that a new era has begun and they have reset their prices to reflect a reduction of 25% to 35%. This is the beginning of our new economic climb. It will not be a straight upward road; however, the trough is past and the best buying opportunity in the last 10 years is upon us. Neil Binder Principal Bellmarc Realty www.bellmarc.com [less]