Dightman Captial Group
We manage adaptive investment strategies, as part of a comprehensive planning environment, designed to protect capital in sustained market contractions and grow capital during market expansions.

Protect...Grow...Repeat

Market & Economic Brief

March 4th, 2010

GLOBAL STOCKS
Stocks are making a recovery attempt from the pullback that developed in the middle of January but remain vulnerable, in our opinion.  We will not be surprised if stocks reach new highs in the current rally but have become more alert for another, potentially more significant, correction. 

WORLD ECONOMY
Leading economic indicators by ECRI are starting to point to a slowdown in the U.S. economy toward the middle of the year.  Debt issues in Europe, the Middle East, and some U.S. states continue to pose potential problems.

INFLATION DATA
Inflation generally appears to be contained and continued deflation concerns appear to be off the table for the time being.

U.S. RESIDENTIAL HOUSING
The housing market has stabilized but weakness has started to reappear in parts of the market.

PLANNING
New conversion rules for ROTH IRA's in 2010 may present a unique planning opportunity.

Growth Strategies

We believe a well designed growth strategy needs to have a preservation of capital component.  We address the preservation component with specific investments held in portfolios as well as how the account is allocated toward growth investments.

In terms of the preservation component, it is our job to monitor economic data, corporate earnings, debt markets, stock fundamentals, market sentiment and other metrics to guide our overall view of the investment landscape.  We then compare our economic information with asset performance data.

Generally markets are in an upward trend and we are able to maintain our investment allocations with few changes.  However, our strategy is designed to deliver value in a variety of market conditions and holding do change with market conditions.  The most common term used to describe how we manage portfolios is Core/Satellite. 

  • Our Core investments provide our clients with exposure to a wide variety of global asset classes that tend to exhibit lower volatility than stocks and higher returns than bonds.
  • Our Satellite investments can include high growth opportunities like small international companies, alternative energy companies, industry sectors or other assets.  During difficult market conditions we underweight our satellite investments and increase our cash position.

We believe in asset allocation and diversification, but not in the way modern portfolio theory (developed in the 1950's) prescribes.  We are not frequent traders but there are market conditions where investment changes increase.  We do attempt to reduce some risk factors by focusing on exchange traded funds (or a similar investment structure) versus individual stocks for most of our market exposure.

In summary, we work hard to find money making opportunities for our clients, but we are not afraid to wait out difficult market conditions with a significant cash position if we feel that is the prudent course of action.