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The following is a copy of our second quarter 2009 letter to clients. July 27,2009
Dear (Client), The worst of the economic meltdown appears to be behind us. Many public companies are reporting second quarter earnings above analyst estimates. The banks are paying back their various government loans. General Motors has emerged from bankruptcy. The stock market has now returned to the levels at the end of 2008, though the Dow Jones Industrial Average and the S&P 500 are still down 36% from their highs of last October. The Nasdaq index is off about 30% from its peak. Words of caution abound, however. There have been numerous comments such as those from Federal Reserve Board Chairman, Ben Bernanke who recently noted that, "Job insecurity, together with declines in home values and tight credit, is likely to limit gains in consumer spending." As you likely well know, consumer spending is the fuel which runs the U. S. economy. Instead, the unemployment rate continues to climb. At 9.5% in June, it is now at levels last reached in 1983. And, while consumer confidence has risen from its lows of February and March, it declined again in June. So, although the economy and the investment markets are improving, signposts continue to suggest a slow recovery in both the economy and the markets. As we noted in our previous quarterly letter, we remain positive, but cautious. Over time, the U. S. government will be raising interest rates and stock prices will have to work against that headwind. That places a considerable premium on issue selection. On June 4, 2009, Carr & Associates, Inc. celebrated its 20th year as a registered investment advisors. Over that time our clients, as a group, (and after fees) participated in 81% of the gains in the S&P 500 with only 37% of the risk.* Sincerely, Marilyn V. Brown, CFA Executive Vice President *Please note the letter to clients referred to returns before fees. |