2008 How’s it going so far?

As I am writing this, on Friday April 11, 2008, the market has just made another one of its downturns. After having gone through a succession of downturns from the beginning of the year until the middle of March it seemed to have taken an upward beat and perhaps it is now ready to start downward again. Since I believe we are in a Bear Market this would be a classic Bear Market event. Times of upward movement in the market tend to give hope followed by declines. The Lowry Service, which is an organization we use for technical information, has been indicating that even when the market has moved up it has done so on less supply (fewer stocks being offered and less volume) rather than real strength in the market. The Boston Globe, in the April 6, 2008, business section noted that the average diversified US equity fund lost 11% in the first quarter, according to Morningstar Inc., while Asian stock funds, excluding Japan, fell 20% and technology funds fell 16%. The Dow Jones Industrial average, of 30 stocks, by comparison was down only 8%. As noted above it seems most of the losses for the quarter occurred before the middle of March when the market moved up a bit. With money market funds and CD’s getting less and less interest it seems a shift into investment grade bonds is inevitable. For our clients where we have taken a defensive position we are moving more of the funds into intermediate investment grade bonds with just a splash of high yield bonds to give us a higher overall yield. In these cases we are keeping the exposure to equities rather limited for the foreseeable future.