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2012 Just Like the Last Two Years - Avatar Investment Management

Posted by Gabriel Burczyk | Founder & CEO

July 17, 2012

Avatar Investment Management's July commentary draws parallels between this year and the last two years. A review of their portfolios is also included. "For the third year in a row, the statistics on the performance of the economy for the first half are showing a marked deceleration in activity. If form holds, the economy should catch its footing in the second half, as it did in the last two years. While it is often said that the stock market looks far ahead, that does not always mean that it overlooks what is more directly ahead. In other words, confidence about the second half of the year has to be constantly earned over shorter periods of time.  What may be different in the last few years is the fear that just looking up across the valley might cause one to miss a steep crevice below. To the extent that the global economy is still working off the incredible amount of excess debt that had been built up going into 2007, it is understandable that not only would economic growth expectations be limited, but the fear of a fatal stumble would remain part of the investment psyche."

Click here to read Avatar’s full commentary.

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Avatar Associates

Europe, Gold and China - Avatar Investment Management

June 21, 2012
Avatar Investment Management's June commentary focuses on European elections, gold, Japan and finally China. "The European sovereign debt crisis moved into even higher gear as it became clear that, when put to a vote, very few people are in favor of austerity, the policy of choice within the European leadership councils. The highest profile election, of course, was in Greece in April. In that country, the electorate clearly bucked against the budget measures adopted by the prior government. Those measures were, essentially, imposed by the European leaders who, basically, hold the checkbook allowing Greece to meet its debt obligations. The Greek election, importantly, was not an isolated push back. The national elections held in France resulted in a Socialist candidate defeating one of the leaders in this crisis. Local elections throughout Europe, even including the countries leading the austerity drive, have served to weaken the hands of the European elite. This appears to be a political process that can take some time as it unfolds." Download Full Commmentary Here Get Free Research Reports about Avatar Associates [+] Read More

The Trouble With Keeping Interest Rates Low - Avatar Associates

May 24, 2012
Avatar Associates' May commentary reviews their portfolios and takes a look at the effects of continued low interest rates. "The Fed is certainly aware of the problem of low interest rates for lenders. Outside the Fed (and likely within it) this is referred to as a policy of interest rate "repression." Historically, we have not had to be as concerned about this problem because, obviously, interest rates have never been this low. But we think the challenge today has become as serious for the Fed as its concern about borrowing costs. It represents another element that is stirring under the surface of monetary policy choices. As we have argued in the past, there will come a time when the Fed will probably have to declare an end to the "emergency." That will result in some sort of "normalization" of monetary policy which, in turn, will have mixed consequences. Higher rates will hurt borrowers and maybe business activity. But higher rates will also signify that the economy is strong once more. For lenders, their interest income will rise and that will have some positive consequences. Unfortunately, as well, the flip side is that bond prices will decline with those higher interest rates. So the asset value of the bond holdings will depreciate." Click here to read the full Avatar Associates report. Get Free Research Reports about Avatar Associates [+] Read More

How Good Are Analysts and Management at Forecasting Trouble? Avatar Associates

July 11, 2011
Money manager Avatar Associates takes a look at prospects for the second half of 2011 and the track record of analysts and their predictions. "While second quarter profits may be encouraging against a shaky background, if managers suggest that their expectations for the immediate future have moderated, then the hoped-for second half revival will face a serious challenge. Incidentally, analysts are strongly guided by these management assessments. And if analysts have never correctly forecast trouble ahead, perhaps it is because neither has management. It is usually a case of going over the waterfall together. So if management actually does see a slowdown ahead, we should all take note." Download Full Commmentary Here Get Free Research Reports about Avatar Associates [+] Read More

Businesses Start to See Their Sales Volume Firm - Avatar Associates

May 17, 2011
Avatar Associates suggests we are starting to see another typical development in the phases of economic expansion: firming sales volume. "More than half of the companies reporting so far have recorded sales revenues in excess of what analysts had forecast. In the prior quarter that same number was about a third of companies and before that less than a quarter. These results come at a time when job growth seems to be rising into a high enough level to suggest that the overall business cycle is now in a self-sustaining expansion." Download Full Commmentary Here Get Free Research Reports about Avatar Associates [+] Read More

Profits are More Sustainable and Higher Quality - Avatar Associates

April 13, 2011
Avatar Associates highlights that the growth in earnings we are seeing is largely coming from manufacturing and industrial processes, unlike the last two economic recoveries. However profits may slow a bit in the next few quarters as the financial sector continues to struggle to find replacements for proprietary trading and other derivatives which had inflated their profits. Download Full Commmentary Here Get Free Research Reports about Avatar Associates [+] Read More

Understand the Importance of Asset Class Correlation with Avatar Associates

September 9, 2010
One of the most important features of the investment markets of the last decade or more has been the gradual rise, across the globe, in the correlation relationships between assets of all types. That is, markets are increasingly moving together. These markets can be as diverse as an emerging country equity index and a domestic equity sector…Too much similarity among dissimilar investments leads, in fact, to instability. Download Full Commmentary Here [+] Read More