February 9,2010

The fundamentals of the world-wide economy are improving daily.  We see this in the United States with significant improvements in almost all areas of the economy.  Yes, unemployment is still high and job creation is slow.  But, there are many positive elements of the jobs reports which give us encouragement.  Corporations are reporting good profits and for the first time in almost two years, they are experiencing sales growth.  We continue to favor equities.  We favor the financial stocks.  The big banks are out of favor and are selling at very reasonable multiples.  We like stocks with large exposure to overseas sales.  Many equities are selling at low multiples of cash flow generated.  Free cash flow multiples are also very low. 

The investment markets continue to look for problems.  Recently it is fears of Greek debt.  Portugal and other small European countries are also debt ridden.  However; we do not see this issue as a major world-wide economy killer.  It surprises us how quick market participants and the media are to ignore the good news and look for trouble.   Yes there are problems in the world.  There are also many positives.  We continue to believe the positives outweigh the lagging negatives.

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