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.

Our Market & Economic Outlook

Most economic and market data is historical in nature which offers limited value in terms of making investment decisions, especially when transitioning from the asset accumulation to the asset distribution phase of life. Fortunately, there are some indicators that have a historical record of signaling turns in economic conditions.  At Dightman Capital, we attempt to blend historical and forward looking indicators to formulate our investment viewpoint.

U.S. Equities The stock market trend can usually be characterised as advancing, declining or moving sideways. Additional detail on the strength, magnitude and length of time for the trend helps determine the current state of U.S. stocks.  A change in the direction of stocks prices usually do not correlate with changes in economic conditions. Generally stock market prices lead economic changes. Once the stock market character has changed, we would expect leading economic indicators to supporting or help explain the change.

U.S. Economic Growth
The intention is to signal business cycle peaks and troughs in advance or early in the change.

U.S. Inflation
The intention is to signal turns in the inflation cycle in advance or early in the change.

U.S. Residential Housing
The intention is to signal turns in the residential housing market in advance or early the change.

The Market & Economic Outlook is not presented as a reason to make changes to our portfolios. More often it is used as a reason not to take action. Stocks spend the majority of their time moving up. However, there may be conditions that warrant a more careful approach to making new investments as well as changes to the composition of exiting investment allocations, depending on the strategy being deployed.

Sources
Dightman Capital uses a variety of information sources when assessing market and economic conditions but the primary sources for the outlook on our website are:

For U.S. Equities http://www.investors.com/

For Economic Growth, Inflation, & Residential Housing http://www.businesscycle.com/