Investment Outlook -- 4th Quarter 2005
As 2005 enters its final quarter, markets are struggling for positive gains for the year. 2005 has had its challenges for everyone, with skyrocketing energy costs, hurricanes, international tension, and rising short-term interest rates as the Federal Reserve tries to keep inflation in check. The only consistent winners this year have been energy-related stocks, and client accounts with these have more than held their own. Other industries and companies have had their ups and downs.

Arrival Capital continues to think long term for client investments, trying not to lose the forest through the trees. The forest in this case being the search for diversified, lower risk portfolios, replete with investments that have value based on assets, cash flow and/or unrecognized prospects. Sometimes it may take a while for the value to be recognized or exploited. Media stocks have been particularly frustrating as investors have stayed away despite the ubiquitous nature of media products. Other sectors --healthcare, transportation, raw materials -- hold worthwhile investments as well, although sometimes subject to the type of volatility we would rather avoid but sometimes need to endure to see a good investment through to better times.

Looking towards 2006, we seek to find investments that are based on a common sense appreciation of the times we live in. America (and the world) is aging, therefore health-related products and services will generate profits for well-positioned companies. America is continually re-building, not only from hurricanes, but also from an insatiable demand for housing and other infrastructure. That means timber, cement, transportation, and raw materials. Finally, technology continues to transform our lives. It will remain difficult to predict which technologies will flourish over time, but the firms with indispensable expertise and platforms should prove to be solid investments as well.

Investing is more than picking which sectors will do well; it is also about creating portfolios that will generate real returns and real cash for investors. Therefore, even as equity markets look to regain their footing as energy prices eventually stabilize, it still will pay to focus on overall investment returns with stocks that pay reliable and increasing dividends. Also, as interest rates rise, it may finally be time to look to add certain fixed income investments that will add steady income to portfolios.

Arrival Capital remains ever vigilant to look after the financial needs of clients. We welcome your questions and comments, and are always available for an in-depth review of your financial situation. As always, we appreciate your trust.
- posted by Jay @ 9:19 AM