Arrival Capital -- Market Commentary
Friday, September 01, 2006
Q3 2006 Mid-Quarter Review
It seems at least once every year investors are reminded that markets can slide down quickly on fears, both real and imagined, that the economy is headed in the wrong direction. Early summer 2006 was such a time. Inflation fears coupled with concerns over a slowing economy, on top of geo-political worries, led to a pronounced downturn from May through June. Companies in energy, industrials, manufacturing, and retail were all hard hit. Then something happened, the fears subsided, and stocks that had been depressed slowly recovered to more appropriate levels. As we now stand, most of our client accounts are at or near all time high levels. Thankfully, by adhering to our value philosophy, we were a buyer and not a seller during the nadir of early summer. The discipline of making and holding investments based on intrinsic value and not on simply what others are willing to pay at a given panicky moment is what provides the framework for investing and managing portfolios during the tough times, when lack of conviction can otherwise mean trouble for investors.
As September begins, there is the usual concern for more market turbulence in the fall, but we believe that as interest rates and energy prices begin to stabilize and slowly fall, the consumer's position will strengthen, and with it retail and the financial sector. There is also nothing on the horizon suggesting that worldwide growth and development, and the global need for infrastructure, will not continue to provide a good tail wind for attractively priced stocks and companies in the energy, materials and manufacturing sectors. Finally, we continue to search out the healthcare and technology sectors for investments that meet are stringent criteria for putting to work client capital in the way that maximizes the chance for long term growth and minimizes risk, both foreseeable and unknown at this time.
Arrival Capital is focused on meeting all your investment management needs. We thank you for your confidence and perseverance. Be assured that we are there sweating out the challenging times for you, watching over your portfolios, and constantly on the look out for ways to increase returns, minimize risk, and do all that we can to assure you a more secure financial future.
