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One Man's Truck

01/25/2010

Everybody knows that Americans love trucks. We buy them in all sizes and even sport them up more after the purchase. At this time last week, not many Americans figured that one man's love of a truck in Massachusetts would initiate a series of political events that ended the week of January 18th with the capital markets in disarray. Darn Scott Brown, couldn't he just drive a Ford Escape Hybrid? We could have saved a few hundred points in the Dow.

So now the question is "Was last week's selloff the start of the long awaited deep dive or just another in a series of shallow corrections since last March?"  Listen, if you cut me, I bleed too, so clearly for those of you watching Fast Money you know how I stand. I am using this pullback as a buying opportunity for the longer-term investment "themes" I believe in. For the moment, it doesn't feel too good.

As I said on Friday's show, I shuffled my way into the NASDAQ Friday night thinking of Tom Brady. I feel like Tom right now, without Giselle, of course. That is, Tom after the Giants came out of nowhere and stole his 2007 Super Bowl. It didn't make Tom feel any better that he had won three previous Super Bowls. The loss "in the moment" stings. Comically, all my 2009 bear market torturers came scrambling out of the woodwork to email or criticize me for believing in the recovery of the capital markets. Sorry folks, I still believe.

Speaking of that capital markets recovery, President Obama has the State of the Union address on Wednesday night. As a side note, besides his speech, there will be plenty of activity on January 27th - FOMC meeting and Apple tablet introduction. Let's look ahead to President Obama's speech Wednesday night. What is the one great bi-partisan talking point he can highlight and grab a rousing cheer?  The improvement in the capital markets!  Higher asset prices -  isn't that what the goal was back in March 2009?  Keep that in mind and your investment plan until the incumbents in DC give the nation something else to cheer about.

Am I angered by the events of last week out of Washington? NO.  Incredibly discouraged is more like it. I am not one that likes to get political, but when Washington becomes entwined in the markets, you have to address how it plays into your investment strategy. If you look back on 2009, the market itself experienced sustained rallies when one of three things was happening: President Obama was out of the country, Congress was out of session, or Washington was plain "radio silent."

Where am I going with all this? Simple. All incumbents in Washington need higher capital markets. Let's keep the football analogy -  they need higher markets this election just like the Colts need Peyton Manning.

So yes, I am ornery, and yes, very discouraged as a citizen. But, as an investor I still believe in the strength of corporate balance sheets, properly functioning credit markets, the Enterprise technology upgrade cycle, the global growth story, the need for energy and natural resources, and the emerging markets.

By the way, I like trucks!

 

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.