Week 44 Performance.....Tragic and Historic Sandy

Our first thoughts this week go out to the millions of people on the east coast of the US affected by the devastating Hurricane Sandy.  There are still millions without power and just last night, New York officials decided to cancelled the New York marathon cancelled the New York marathon which was to be held this Sunday.  It is the first time since 1970 that the race has not been run.  Instead of the race bringing people together, it was actually doing the opposite creating tensions by diverting resources that could be used to help people in need vs. putting on the race.  It was probably the right call.

We knew people that were personally affected and am glad to say that all of our friends are doing well.  We also know that can't be said for everyone and realize that many of you readers likely know people affected as well.  Our thoughts and prayers are with you.

As we turn our attention back to the markets, it was a historic two day shut down of the stock exchanges in New York on Monday and Tuesday.  We were shocked that the exchanges actually opened on Wednesday knowing that the financial district was still under water.  The exchanges were able to run off of backup generators.

Market performance ended up being basically flat across the board but with some great movement between being up Thursday to giving it all back on Friday after people began dissecting the jobs report.  The jobs report on the surface looked good but as usual digging deeper into the numbers still reveal some trouble.  Both average hours worked and income growth were down even though jobs created beat estimates while the unemployment rate ticked higher by 0.1% due to increased labor participation.

Lets face it, everyone who follows this metric knows that the US is not creating enough jobs to decrease the unemployment rate.  Demand is still lackluster which does not gives businesses much courage to go out and spend money on labor and capital.  Individuals and businesses are still concerned about what is going to happen with the fiscal cliff.  With the US Presidential election the tightest sense Bush vs. Gore in 2000, neither candidate will have much of a mandate to get any real legislation passed through a divisive and partisan congress in order to create real change that we need.  We are running out of words to describe the debacle known as the US political system.

The other economic metric that may have been lost this week due to Hurricane Sandy and the focus on the jobs report was auto sales.  Auto sales came in at an annualized rate of 14.3M units vs. 15M units in September.  The trend has clearly been to the upside since last October so this metric is definitely something that we should keep our on eye.  As we have said before, purchasing a big ticket item such as a car is a good indicator as to how much confidence individuals have in their jobs and the economy.


This week the DWCM Fund marked its 6th consecutive loosing week.  We are still comfortably in the black posting over a 21% return YTD which bests all four major equity benchmarks.  While no one enjoys being on such a downward streak, we maintain our confidence in our long-term and shot-term strategies and are working diligently to take advantage of the current conditions while looking beyond the immediate horizon.

Our watchlist (which we will be updating on our website within the next few days) is filling up with positions that are near or close to our buying target.  Currently our cash position stands at 50.4% which leaves us a lot  dry powder to work with.  As we had indicated previously, we have been recommending to client to hold between 30% and 50% in cash.

The Week Ahead
Most markets will be driven by company earnings releases this week as the slate of economic news is on the light side.  Be aware of any news coming out of Europe and any continued news on a slowing China can and most likely affect trading here in the US.

• Mon - ISM Non-Mfg Index
• Tue - ICSC-Goldman Store Sales
• Wed - Consumer Credit
• Thu - Jobless Claims
• Fri - Import and Export Prices, Consumer Sentiment, Wholesale Trade

Have a great Week!  And for those of you without power on the east coast we are hoping you get it back soon!

DreamWorks Capital Management

If you are currently trying to develop your own investment plan or are seeking the help of a professional investment advisor we urge you to give us the opportunity to show you what DWCM can do for you.  No matter what stage in life you are currently at, DWCM can help you plan for your ever changing needs.

DWCM can you help you with any of the steps in your wealth management journey including;

• Addressing emergency fund needs
• Developing a retirement plan
• Sending a child to college
• Looking at various investment options
• Determining how to involve philanthropic passions as apart of your planning process

With our "SMART Principles", we can help you develop your unique goals and create a focused customized plan to achieve your financial and lifestyle goals.

Contact us at pfenner@dwcmllc.com.