Posted on October 1, 2009 - by musicwhiz

September 2009 Portfolio Summary and Review

Musicwhiz Portfolio

September 2009 can be aptly described as a month in which major economies took even more tentative steps towards recovery from the sharp recession, and the USA is also reporting that the recovery from recession will be slow and very gradual, and that unemployment is likely to exceed 10% before we are through with this “Great Recession”. At the same time, I was highlighted to an article in the Daily Mirror here which highlighted that the recession is far from over as far as the shipping and marine sector was concerned, as many ships are still moored in the waters off Singapore with no cargo to carry and no jobs to service. There is an acute over-supply of vessels in almost all categories (most pronounceably in bulk shipping) and global trade had also dropped off a cliff 6 months ago and is only gradually, albeit slowly, picking up. As economies struggle to shake off the shackles of recession, demand for commodities such as oil and gas will pick up slowly; but it will still take a good 3-4 years before demand for shipping returns to 2007 levels.

Valuations are taking a tentative breather and it is beginning to get difficult to locate genuine bargains in the stock market; this is due in part to gradually improving risk appetites and the entrance of more retail players as they notice the last 6-month recovery in share prices. This has prompted many investors to jump in head first into the pool without testing the temperature of the water, with the unfortunate result of getting burnt for their efforts. Whether the stock market is trading with “blue-sky” scenarios (this term is increasingly beginning to appear in analysts’ reports and irks me to no end), or incorporating extremely pessimistic scenarios; one must always keep in mind that prudence, conservatism and a sense of reality can keep one grounded and enable one to avoid debilitating losses.

As some of my previous posts had mentioned, one cannot always only choose to purchase when valuations hit trough levels, as this happens under very rare circumstances (and there is only a short window of opportunity – in this case Oct 2008 through March 2009); one should instead hope to pay a fair price for a well-managed company with solid fundamentals, and let the process of growth in the company’s business and compounding increase the value of your investment over time. Read more…

Related posts:

1. August 2009 Portfolio Summary and Review
2. June 2009 Portfolio Summary and Review
3. May 2009 Portfolio Summary and Review