GPM - Griffin Portfolio Management
Recap of the Four Trading Days ended Thursday September 4, 2008
- Stocks: big/broad losses in holiday shortened week; S&P 500: -4.9% (week) / -15.8% (YTD)
- Treasuries: solid gains in all maturities; 10 year yield at 3.64%, -16 bps
- High Yield Bonds: mostly positive, despite sharp selloff in stocks
- Crude Oil: $107.89, -7.70 per barrel (October)
- Natural Gas: $7.32, -0.73 per mcf
- GDP grew 3.3% in Q2 (revised up sharply from +1.9%)
Charts: Stocks & P/E’s / S&P 500 / Dow 30 / NASDAQ / Interest Rates / GDP / PPI / CPI / Housing / New Jobs
Economic Indicators / Economic Calendar
Average Annual Return |
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1 wk |
4 wks |
3 mos |
YTD |
1 Yr |
3 Yrs |
5 Yrs |
10 Yrs |
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| Historical % Returns | __% |
__% |
__% |
__% |
__% |
__% |
__% |
__% |
| Short-Term Treasury Fd (Vanguard -VFISX) | 0.3 | 0.8 | 1.3 | 3.6 | 7.2 | 5.2 | 3.9 | 4.9 |
| Intermediate Treasury Fd (Vanguard - VFITX) | 0.9 | 2.1 | 2.9 | 5.5 | 10.9 | 6.0 | 5.4 | 6.0 |
| High-Yield Bond Fd (Vanguard - VWEHX) | 0.2 | 1.0 | -3.2 | -2.5 | -1.0 | 2.7 | 5.0 | 4.5 |
| S&P 500 Stock Index Fd (Vanguard - VFINX) | -4.9 | -0.7 | -9.7 | -14.6 | -15.2 | 2.4 | 5.6 | 4.6 |
| Small Cap Stock Index Fd (Vanguard - NAESX) | -4.0 | 1.5 | -6.8 | -6.7 | -10.4 | 3.8 | 9.1 | 10.1 |
| Data includes reinvested income (10 Yr thru 8/29/08) | ||||||||
Stocks declined sharply Thursday, and as a result, are broadly lower from a week ago. The large-cap S&P 500 is down 4.9%, while returns on other benchmark indices ranged from -7.5% (Tech SPDRs) to -2.9% (Russell Micro-Cap). Advancing stocks outpaced decliners in only one of four trading days. Stocks wobbled early in the week and then broke down Thursday as rising jobless claims data, mixed retail sales and weaker oil prices fueled concerns about slowing growth both at home and abroad. Manufacturing sector data was decent. All market-cap segments lost ground; small-caps less so. Nearly all sectors ended in the red, with notable weakness in techs, chipmakers, energy and basic materials.
Treasuries posted solid gains in all maturities, led by longer bonds. Corporate bonds also strengthened, but underperformed Treasuries of comparable maturity.
High yield bonds (HYB) were mostly positive. Price action continues to be substantially influenced by changes in credit risk sentiment, but some bargain hunting appears to be underway. We are encouraged by the HYB market's recent performance relative to stocks. Net inflows to HYB mutual funds remain supportive. GPM believes that, at current prices, high yield bonds are attractively valued.
GPM’s longer-term outlook for stocks is bullish. Many individual companies and some sectors represent truly compelling values. While inflation is a continuing worry, we believe investors are reasonably confident in the Fed’s leadership in restoring liquidity to credit markets and promoting growth. The Fed has cut rates eight times since September '07, from a start of 5.25% to 2.0% today. Rate cuts and other Fed actions are intended to add liquidity to the financial system and avoid a deep, lengthy slowdown. We believe interest rates will remain low until there are clear signs of a sustainable economic upturn. The resilient U.S. economy should show tepid growth in the remainder of '08 before accelerating in '09.
Past Year - with 20 and 50 day moving average (MA)
10 Year Treasury Yield: 3.64%, -16 bps |
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GPM invests in large, mid and small-cap companies. Our research seeks to identify stocks currently trading at prices substantially below their intrinsic value. We focus on fundamentally attractive companies that are capable of generating superior sales and earnings growth. We also look for undervalued, generally well-run companies with temporary problems that management appears to be addressing effectively and for which a "turnaround" can reasonably be expected. We like to see a "catalyst" that can lead to increasing market attention.
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This document is intended exclusively for clients of Griffin Portfolio Management Corp. (GPM), an Investment Advisor, registered with the Securities & Exchange Commission. The information contained herein is provided as general information to clients of GPM and reflects the views and opinions of GPM at the time of writing. This information should not to be construed as an offer or solicitation to buy or sell any of the securities herein named or as an offer to provide investment advisory services by GPM.