Pinnacle's Quarterly Commentary
4th Quarter 2011
How disappointing! After all the anxiety producing volatility last year, we enter the New Year with the S&P 500 Index virtually unchanged from December 31, 2010. We suffered through all the pain and have nothing to show for it! Who’s in charge? We need to demonstrate or occupy something! (Read More)
3rd Quarter 2011
It’s “déjà vu all over again”. Haven’t we been dealing with the European debt problems over and over? Why are they taking so long to come up with a solution for Greece while the rest of their financial system melts away? Of course our federal government does not seem to be able to come up with any solutions to our domestic problems either. No wonder investors have lost faith over the last few months. We were optimistic that the U.S. economy could avoid a recession and the markets could rebound in the second half of the year. That was before Congress and the President played chicken with the debt ceiling legislation and threatened a default on Treasury debt. Destroying investor confidence was not a great way to start the third quarter. We moved on from the threatened U.S. default to a downgrade of the credit rating of the United States from AAA to AA+ by Standard & Poor’s. We did not expect the downgrade to have any effect on the government’s ability to borrow money, and it has not. But it did put another question mark in the mind of investors about the ability of our government to produce legislation that would benefit the economy. (Read More)
2nd Quarter 2011
The dog days of summer seemed to come early this year, especially in the Sooner State. As summer time heated up, the financial markets swooned, dropping between 7% and 10% depending on which index you were watching. Fears of a “double dip” recession abounded. The Greek debt default contagion sounded like a new flu strain that could lay the European economies in the hospital. Domestic economic news was dissappointing and the political bickering in Washington weighed on investors. It seemed like we were in for a long convalescence in the markets. Then, just in time for Independence Day, the Greek debt flu was quarantined and the US economic heatstroke was avoided. The stock markets rallied 6% in the last week of the quarter and ended the quarter close to where they started. For all the angst incurred over the last ten weeks, the stock market is still up 6% for the year and the prognosis is improving. (
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Greetings from the gang at Pinnacle where black swans are now being spotted on the Arkansas River out our west facing windows. We are off to another rewarding year with the Dow Jones Industrials Average gaining over 6% for its best first quarter performance since 1998. The fun ride to strong performance became rather bumpy by late February as the social network phenomenon disrupted the ability of heavy handed rulers in the Mid-East and North Africa to supress their citizens’ demands for more open and transparent government. Anytime unrest hits the Mideast, oil prices rise on fears of supply disruptions. Now that the economy is gaining strength, we do not need higher energy prices to put the damper on growth. But when a region known for ruthless dictators and corruption experiences calls for revolution, is this really an “unexpected event” that the term “black swan” connotes? And is an earthquake in one of the most earthquake-prone regions in the world really an event that should catch the markets by surprise? These events proved to be an opportunity for investors to take profits and reduce risk since many good expectations were already discounted by the markets. Fortunately, the market volatility in late February through mid-March allowed us to put more money to work in new positions that we expect to perform well as the temporary uncertainty surrounding these two occurences is replaced by renewed confidence in the economic recovery. (Read More)