A lot has happened over the last 5 years but no use walking down memory lane. What people really want to know is if this rally can continue to steam ahead? We wish we knew what the answer was although it makes us a little nervous when almost every night this week the lead story on ABC World News was about the stock markets.
As usual there is no shortage of uncertainties, but there are also pockets of "goodness" that continue to appear. The jobs number on Friday came in just about where people expected, initial jobless claims are still trending lower, and auto sales released on Friday have us on a record pace for 2013. I guess the best way to sum things up is that we are cautiously optimistic.
No one wants to be left behind in this current rally especially if you already missed most of the upswing over the past 5 years. According to a few reports that we have seen, those that stuck it through the great downturn are basically back to the same level prior to the crash or maybe even a little ahead.
But returning back to the question at heart, where do we go from here? The answer lies somewhere in the middle as usual. Those of you you have followed us over the course of the past few years already know that investing is not about being either all in or all out. We believe that it takes a balanced approach to succeed because you won't be able to avoid every bottom or catch every top.
At TAMMA, we have focused on both long-term and short-term strategies while basing our overall cash position within the portfolio on where we think the markets and economy are headed. This has resulted in sometimes excessively high cash positions which was most of the second half of 2012 while during the end of 2011 and beginning of 2012 we had a much lower cash position.
Currently our cash position is overly high for where we would like to be but part of that is due to market conditions. We will not chase performance. We want to ensure that we are buying positions at the price levels that will bring increased value and provide a level of safety.
Other news to note this week included the Case-Shiller Home Price Index which one again reiterated the climb in housing prices. The Consumer Confidence and Sentiment surveys were a bit mixed with one report up while the other was down. The big shocker of the week had to be the negative GDP number for Q4 2012. The decline was largely driven by a decrease in inventory build and a decline in government spending. We would say overall that most economic data released throughout the week showed a steady recovery which likely helped push the overall equity markets higher.
The Week Ahead
Compared to last week, this week is rather light on economic data. There doesn't appear to be any big drivers that could move market activity. So look for external news and continued company earnings reports to guide the markets.
- Mon - Factory Orders
- Tue - ISM Non-Mfg Index
- Wed - N/A
- Thu - Jobless Claims, Productivity and Costs, Consumer Credit
- Fri - International Trade, Wholesale Trade
Have a great week!
TAMMA Capital Management
I hope that readers have noticed the conversion to our new name and logo atop the website. You may have noticed that during the month of January we were not able to write as many posts as we usually do. Instead we have been spending a lot of time on the redesign project of the entire site. We hope to be able to launch the new site this week so stay tuned.
I also wanted to mention for those readers who live locally in Metro Detroit, we will be hosting a business book club review at The Community House in Birmingham this Wednesday February 6th from 6:30 to 8 PM. We will be discussing “The Power of Habit: Why We Do What We Do in Life and Business” by Charles Duhigg. Individuals and businesses are capable of tremendous shifts. It’s needed, because 40% of actions people perform each day aren't decisions, they’re habits. The way we organize our thoughts and work routines has tremendous impact on our productivity, financial security, health, and happiness. This book explores how habits emerge in individuals; examines the habits of successful companies; as well as the habits of society.
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