December 2011

by Bruce Campbell

The media continues to point to problems that it believes the markets should be concerned with including the spreading European Debt Crisis, slowing global economies, continued US debt, and so on.  While this is the message that the media puts forward, the indicators that we follow are suggesting a different situation.  One by one these indicators have improved since the market bottom back in October.  By the end of December, only a few of the indicators were left to move to positive giving us the “all clear” signal.

From a contrarian standpoint, most investors are frustrated with last year’s returns and have positioned their portfolios for flat and/or volatile markets by investing in slow growing income stocks.  This has pushed many of these companies’ shares to historically high valuations.   This could be the crowded trade that disappoints in 2012.

We continue to position the portfolio in the highest growing companies, whose earnings growth is accelerating and seeing positive revisions to those earning growth rates.  At the same time, we use top down technical tools to help us drive our asset allocation process.  We highlight these updates in our regular Sector and Holdings report.