Week 48 Performance.....It's all about the Fiscal Cliff

Although all for major stock market indices were up this week, their actual performance varied quite a bit between them.  The lowest returner of the week, the DJIA was up 0.5% while the Russel 2000 finished the week with the largest gain posting a 1.8% return.  The DWCM Fund finished somewhere in the middle up 0.9%.

But what really drove the markets each and every day this week were the politicians from Washington.  It seems as though any time any one of them started to talk the markets would start to move up or down.  This extreme shortsightedness is rather concerning as we now just flip the calendar to December and are left with a whole month of this drama left to play out. 

The stakes will continue to ramp higher as every day passes without some type of conclusion brings more uncertainty to the markets.  The last scheduled working day for both the House and the Senate is December 14th, which is two weeks away.  Expect continued grandstanding by each party and if a deal does come together don't look for it until the final hours, in which case plenty of back office deals are likely to be made which won't likely benefit most Americans.

So what are investors supposed to do for the next month?  Some have suggested taking an extended Holiday break but we don't see that as being very fruitful.  We believe this back and forth game of chicken could result in some excellent buying opportunities....if you are patient.

We have always stressed the importance of knowing and having both a short-term and long-term investment strategy.  In conjunction with having your own investment strategy, we have always advised people to have a watchlist handy at all times.

You have to look beyond the noise of the current fiscal situation and debate.  Is this so called cliff going to affect the earnings or cash flows of specifics companies?  In some cases yes and some cases no.  Right now it is about deciphering the winners and the losers of this drama and putting together a game plan to start picking companies that fit your strategy either in the short or long-term.

With that said, we at DWCM have always posted our own watchlist on our site.  But behind the scenes that last few week we have been working to improve our processes and procedures of how we develop our own watchlist and make it available to readers and clients.  Our newly developed watchlist will include the following;

1. Our own proprietary DWCM rating of company.  At DWCM we perform all of our stock research ourselves and select assets for the DWCM Fund and client portfolios on our own.
2. Support/Resistance levels, these technical indicators help aid in the process of determining entry and exit points for stock positions.
3. Brief notes on what we may see going on within the stock or company.
4. Ownership, we have a fiduciary responsibility to disclose what position we own in the DWCM fund along with what positions we may own in client managed accounts and our own personal accounts

In some cases each week the list will not contain 100 positions which will likely be the norm rather than the exception.  However, the list will never contain more than 100 different equity positions as this is our tipping point for being able to balance all required research that we believe is necessary to follow a company.

We expect to have this new watchlist posted to the site here by mid next week.

The Week Ahead

As we will likely state each week until the end of the year, the fiscal cliff will be the absolute main driver of our equity markets.  This week however we will see the release of some key economic data and probably none more followed and watched than the monthly jobs reports due out this Friday.  There is also a lot of manufacturing data to be released which could have some impact upon the direction of the markets.  We will keep our eye out on Tuesday for the vehicle sales report.  We see this as a big indicator as to the health of the consumer.

• Mon - PMI Manufacturing Index, ISM Mfg Index, Construction Spending
• Tue - Motor Vehicle Sales
• Wed - ADP Employment Report, Productivity and Costs, Factory Orders, ISM Non-Mfg Index
• Thu - Challenger Job-Cut Report, Jobless Claims
• Fri - Employment Situation, Consumer Sentiment, Consumer Credit

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
• 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.