[As it is of general interest this time of year, we opted to include one of our client letters, with the client’s permission, of course. Although we have many notable clients, this particular client is both unique and well-known. My comments are in brackets.]
Annual Managed Account Review for the Trustees of North Pole Inc. and Elf Ltd. Pension Plan
Dear Nick, [we’re on a first name basis]
As always, we appreciate your business. It’s quite a feather in our cap to have a client such as yourself. It was great to talk to you periodically this year [unlisted number, sorry], especially since you were always of good cheer in what was quite a turbulent year in the financial markets.
Probably no one else on the planet has as good a view of the global recession as you and your elves. I was surprised to find out that even business at the North Pole was affected when you mentioned to me that you had to cut back the reindeer, except for Rudolph, to seasonal employment and reduce their hourly earnings this year. [This year was just tough all around–when there is a bull market in coal, I can tell there were a lot of bad little boys and girls. Indicted politicians and Bernie Madoff come to mind.] As you know, consumer spending is still weak, but there are some very hopeful signs for the market and economy in 2010.
In terms of the economy, the yield curve is very steep right now. The market is suggesting that economic growth next year could surprise on the upside. That might provide a nice lift for the market as well.
The best sign of all, though, particularly for your pension plan is–finally!–an indication that relative strength could be returning to favor as a return factor in 2010. The spread between the leaders and laggards had been very weak for most of the year, but has now flattened out. Very recently, there are even signs that the relative strength spread could be moving in a favorable direction once again. We expect that most investors will not notice or take advantage of the trend until it is in place for a year or so, which is part of the reason we appreciate your patience and steadfast good cheer. It’s quite possible that you and the elves will have a lot to celebrate next holiday season. [And we hope the reindeer will be back at work full-time.]
Say hello to Mrs. Claus for us, and good luck with your upcoming journey.
Yours truly,
Dorsey, Wright Money Management
