Pegasus View
Markets In 2009
"I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years."
- Warren Buffett
Warren Buffett’s quotes are often truer than most of us like to think and if we look back on 2009, we can see that we should always be buying for the longer term and not looking for market volatility to be our re-actor to our investment choices.
2009 - June Market View
Thanks to unprecedented government action the world banking system, as well as many of the high risk/illiquid assets held by them are now all effectively bankrolled and supported by state guarantees. This, combined with other positive economic data has created a change of sentiment which has been welcomed by many managers. We have seen a strong rally in equity markets, with China and India leading the way, while at the same time we have seen more rational pricing of corporate bonds, rewarding those managers holding higher quality debt. Read More
2009 - Quarter One
"In the business world, the rearview mirror is always clearer than the windshield." - Warren Buffett
At the end of 2008 we were hopeful that 2009 would bring about a less volatile year and more stability in the markets. However, it was not to be and although the markets began the year well they were soon to breach the lows seen in November 2008 and bottoming on March 9th, from where the markets quickly rallied by 20% bringing hope that this would see the start of a new bull market. Read More
2008 - Quarter Four
"Credit buying is much like being drunk. The buzz happens immediately and gives you a lift.... The hangover comes the day after." - Joyce Brothers
I guess this quote from Joyce Brothers sums up the feeling many of us have for the markets in 2008, having given us the biggest headache for many years.
The credit debacle of the financial world came home to roost last year and with it the unprecedented governmental support given to the global economies, including interest rates being slashed to lows not seen since the 1920's, major stimulus packages being announced and implemented and the Fed embarking on a policy of quantitative easing, flooding markets with liquidity. That said, and despite all this action we are still experiencing volatility in the markets and will do for some time to come, however these policy measures will eventually kick start the global economies. Read More
2008 - Quarter Three
In July we wrote that we felt that there would be more volatility to come in the markets but that a rally would be forthcoming by year end. Little did we know what there was to come. Read More
2008 - Quarter Two
Despite January being reported as the worst start to Investment markets since 1935 in the first quarter of 2008, there was worse to come! Quarter 2 2008, started its ‘roller coaster’ ride with a rally in April and May, bringing some relief to investors, but was short lived in June when the gains were more than cancelled. In fact it was the worst monthly investment performance for 26 years. Read More
2008 - Quarter One
January 2008 was the worst start to Investment markets since 1935 some commentators suggested. The view that the US would enter, or was already in, recession combined with the collapse of the US housing market and the sub- prime mortgage market and resulting credit crisis were the main reasons for this. Things got considerably worse in late January when a trader at SG Hambros ran up billions of dollars of losses and the attempts to unwind these positions prompted highly volatile market trading, which in turn prompted the US Federal reserve to cut interest rates by 0.75%. Add to this the emergency rescue of Bear Stearns by JP Morgan Chase, who initially paid $2 per share for a stock that was trading at $147 a share a year earlier, and it is easy to see why markets got spooked! The news that the price was raised from $2 to $10 was received well by the markets. Read More
January 2008
Concerns regarding the freeze-up in credit markets and its impact on the broader global economy really took hold in the fourth quarter of 2007, resulting in another period of turbulence in the markets. While concerns over US housing and sub-prime mortgages had been bubbling under the surface for some time, the general view was that it was contained and very much an American problem, although the third quarter volatility in credit and equity markets hinted at a more sinister outcome. Read More
October 2007
We are now in the forth quarter following a volatile summer in financial markets. Across the world, banks found themselves holding billions of US dollars worth of structured bond products related to borrowers with poor credit histories known as the US sub-prime market which lead to the recent “liquidity squeeze”. Read More