Tensions in the Middle East are nothing new. But as the US has pulled back in both Iraq and Afghanistan, the last thing America needed was another conflict to become involved in.
Politics is just one of many aspects that could and does affect both your long and short-term investing strategies. Right now you have markets that were already very unsettled due to the US Fiscal Cliff, continued riots in the EU over its debt crisis, and a slowing China. Throwing more fuel on the fire certainly is not going to help.
Ironically as we thought about putting the performance post together this week, our thinking was that it was time to dip into our cash reserve and put some additional capital to work. Our belief is for all of the back and forth talk in Washington right now, this group of politicians known for not getting something done until the last hour, will once again pull something out. However, we don't anticipate any action being sweeping changes or reforms that could actually benefit the country long-term. But instead more of kicking the problems down the road a bit further.
We believe that companies want and will continue to improve their operations. And although demand might not be there for most companies, the ability to continue to improve operations is always a target that is on the table. These actions can result in whole host of events that could boost company values and stock prices.
Secondly we've been taking a look at the goods and services that people will continue to want or need through a recession. Think health care, food & agricultural products, believe it or not cell phone, internet, or cable services.
Any type of deal completed in Washington will likely lead to a year end rally depending on other events around the world that we have laid out above. So it then becomes a task of looking a bit further down the road into the first two quarters of 2013, what will they look like? Demand is likely to be soft as we continue to work through our own fiscal issues while keeping a watchful eye on the EU, China, and now the Middle East.
We have updated our DWCM Watchlist of the companies that we are tracking very closely and look to start building positions in within the next few weeks. As is our practice at DWCM, we want to lay out in plain English what we are investing in and why. We aim to be as transparent as possible with our investing strategies and asset selections.
Once again this week, the DWCM Fund followed the broader indexes to the downside. Gains for the year are still solidly above the four major indices by two fold, but that doesn't ease the pain on this recent sell off. As stated previously, we look to becoming a bit more aggressive in the upcoming weeks as we look to take advantage of the possibility of a fiscal cliff deal getting done in Washington.
The Week Ahead
The upcoming week here in the US brings us Thanksgiving. This usually results in lower trading volumes which could goose short-term volatility for a few days, and the national media outlets trying to draw conclusions about the US consumer and economy by how many bags people are carrying out of stores from the traditional Black Friday deals.
There is a decent amount of economic data bunched together during the first three days of the week. However, most eyes will be on other parts of the world although bad economic data could give traders more reason to push indexes lower. You also have Bernanke speaking on Tuesday which could get some market attention but most people concur that the Fed has done all that they can do for now.
- Mon - Existing Home Sales, Housing Market Index
- Tue - Housing Starts, Ben Bernanke Speaks
- Wed - Jobless Claims, PMI Manufacturing Index Flash, Consumer Sentiment, Leading Indicators
- Thu - US markets closed for Thanksgiving
- Fri - US markets close early at 1pm EST
Have a great Week!
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
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