Chesapeake
Investment News
1st Quarter 2010 Review and Outlook - 4/20/2010
The
April 2010
Defense Wins Championships
Monday, April 5th, 2010 marked the end of arguably one of the greatest March Madness seasons on record as the Duke Blue Devils won a hard fought battle over the mid-major Cinderella, the Butler Bulldogs. Much was made of the high flying offenses of
Our outlook for 2010 started with a reserved, cautious optimism and while much has happened in the first quarter of this year, our general outlook remains largely unchanged. The S&P 500 rose 5.4% in the first quarter of this year marking 76.8% growth off the market low of March 2009 but still falling short of the October 2007 market peak by 20.9%. We are encouraged to see the forward and trailing P/E ratios below the 20 year average while during the same period seeing the S&P dividend yield slightly above the 20 year historical average. The merger of Burlington Northern Santa Fe with Berkshire Hathaway, Warren Buffet’s conglomerate holding company, last quarter has proven profitable with shares of Berkshire Hathaway B up 9.5% since February 12th.
Our current bull market has lasted 13 months and has returned 76.8% off the market low. The average bull market lasts 68 months and has historically returned an average of 176% off each market low.
While we believe this signifies that there is still potential room for growth we also continue to question the true fundamentals supporting this rally. As the saying goes, we do not believe we are out of the woods yet. Unemployment is at 9.7% or 3.8% above the historical average. Light vehicle sales, change in private inventories, housing starts, and capital goods orders, all cyclical indicators, are still showing signs of weakness. The total projected 2010 proposed US Budget receipts are $2,165 billion while the total projected 2010 US Budget Outlays are $3,721 billion leaving a budget deficit of $1,566 billion. Sovereign debt remains a concern. In addition, 57% of US Treasuries are owned by foreigners with
As 2010 continues to move along we expect our defense to key our offense. As the world changes and the markets continue to adapt, so too will our strategies for capitalization adapt. However, our core values will not change. We will remain consistent with our long term investment philosophy, continuing to buy high quality dividend paying companies with consistent earnings and rebalancing portfolios to modestly add exposure to segments of the market where opportunities exist.
We at
Sound Advice to Grow On
Chesapeake Investment Management, LLC is a full-service investment advisory firm located in Washington DC.
We strive to help you get the most from your investments throughout every stage of your life. We are well prepared to meet the needs of every client and are steadfast in our commitment to long-term diversification within each of our clients’ portfolios. Our tailored financial solutions revolve around diversified investment strategies and unwavering personal attention, regardless of your range of goals. We offer a fundamental research-based investment philosophy that maximizes proven industry strategies and anticipates the ever-changing needs of our individual and institutional clients. Always being accessible is our promise to you—an unmatched commitment to personal service you’ll only find with Chesapeake Investment Management.
About Us
Chesapeake Investment Management, LLC is an independent Washington, DC-based full-service, fee-structured investment advisory firm registered with the SEC. Our experienced and accessible team of financial professionals is committed to using fundamental research to deliver a diversified sector approach with long-term and tax-efficient portfolio returns.