You're a nasty, wasty skunk.
Your heart is full of unwashed socks
Your soul is full of gunk.
Mr. Grinch.
The three words that best describe you,
are, and I quote: "Stink. Stank. Stunk."
You're A Mean One, Mr. Grinch by Dr. Seuss
What a year 2009 has been! Collapsing to the brink of the abyss in March and then rallying so strongly that people are actually sounding merry about investing. Yes, Mr. Market's 2009 personality reminds me of the complete 180 that the Grinch did..."with his grinch-feet ice-cold in the snow, he puzzled till his puzzler was sore, and the Grinch's small heart grew three sizes that day!" Even the frenetic sleigh rides up and down Mt. Crumpit remind me of the markets wild ride. The S&P 500 started the year falling an additional 24% from 2008's debacle only to rally 62% through today, for a year-to-date gain of about 24%. Before you start singing too loudly don't forget that Mr. Market is still down 28% from October 2007.
But lets not dwell on the negatives, we're up 24% YTD and that is much better than anyone expected 9 short months ago!
If the wild rides of 2008 & 2009 taught us anything it was the validity of Tactical Asset Allocation versus the old gut-wrenching buy-and-hold. Our Global Tactical Asset Allocation Model (GTAA) has continued to outperform the 70% S&P500 30% US Treasury buy-and-hold model throughout this year. While the GTAA model has been fully invested for the last couple of months we have been seeing some asset classes showing signs of tiring, namely US Treasuries and International Treasuries. In fact, we just got our first negative indicator in months and have taken International Treasuries from Bullish to Neutral. As the global recovery takes hold we are seeing inflation fears reenter investors minds and a sell-off in Global Treasuries is commencing.
Of course anything could happen, but for now it appears that the inflation Grinch is rising from his cave.
We'll have a complete run down of the various asset classes performance in just a couple of weeks, so in the meantime rejoice in Mr. Markets change of heart, and enjoy your roast beast!
Merry Christmas,
Chris Wiles
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