September 14
As the stock market continues to climb the wall of worry, that is being built by so many analysts, consumer confidence seems to be returning and investors are leaving the perceived safe haven of the dollar for more risk in exotic investment areas. With the exception of the last double dip recession in 1980 most of the rallies following recent recessions were in actual fact the real thing with stock prices and economic activity higher a year after the initial recovery. We have now experienced the initial recovery since the lows in March and the question remains whether the current wall of worry will be overcome by sound economic fundamentals as time progresses. Corporate earnings have improved as a result of an increase in efficiencies brought about by aggressive cost cutting, but now require an increase in business activity to sustain earnings growth. The availability of credit, the unemployment rate and consumer sentiment that has distinctly moved from consumer to saver, will all influence an increase in business activity in months to come. At the same time interest rates remain low and the residential real estate market continues to stabilize and even improve on a month over month basis, strengthening our investment philosophy and program that has yielded our investors a high inflation adjusted return with very low volatility during the most volatile and difficult times in real estate finance since the 1930’s.
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