MARKET SENTIMENT - 2010/08/31

HALVORSON RESEARCH ASSOCIATES, LLC.

No, this is not the time for selling all of your stock, although it may be a good time to adjust your portfolio to include companies with high growth potential, a theme for all seasons. The problem we’re having in this market is that it really could go off in a dozen different directions. For instance, one week will bring sinking labor figures, while the following we are cheered on by some good earnings reports.

Perhaps the report today of a big jump in consumer spending, over 40%, will help all of us to regain our confidence, without which no market can succeed. Could this mark the spot where a new Bull Market begins? Last week revealed that there is a new conservative view pulling voters to the right. How far this movement can help us balance the U.S. budget is unknown, but we don’t want to miss the early stages of a bull market of any size.

WHAT DOES THIS MEAN FOR HRA?

HRA continues to recommend an 80% to 90% investment in long range growth stocks. The market seems to want to go up, but is held back by realism on prospects for a double dip recession. But missing any part of a market up-tic would be most disappointing to all growth investors. HRA feels that it might be a good idea for those investors who want to stay aggressively invested to add a few “hedging” ETF’s to their stock mix. These must be watched carefully, as they tend to go down while the market goes up, but the opposite is also true, which may mitigate some of the variability of a “side-ways” market.

All it will take to keep the economy rolling are some tried and true tax incentives to encourage more investment and capital spending. Both parties are considering these actions since nothing else tackles the jobs problem. Even the FED is struggling to find some way to encourage private business expansion, rather than just pushing on a string. It should be a real pleasure watching new legislators debating old economic principles, as contrasted with passing legislation that no one has seen or read, such as last year’s medical bill fiasco.

HRA notes that not all investments are suitable for all investors: consult your investment advisor before making any major changes to your investments, and don’t forget to update your goals and risk tolerance as things change in your life and in the overall markets.

Good Luck, and Happy Investing!

Halvorson Research Associates, LLC

Janet Raphael, CFA                      Bill Halvorson, FSA                Erik Hughes        

239-738-4212    e-mail: JCR@HRAstockpicks.com