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2010 Clear Harbor Quarterly Market Outlook

Clear Harbor Outlook: Q4 2010

October 1, 2010

September provided Q3 of 2010 with a much needed lift to those investors with significant “risk on” exposure—primarily equities, commodities, and commodity currencies. In fact, last month witnessed the most significant September rally in over 70 years with the S&P rallying by 8.8% on the month. Year‐ to‐date, the S&P 500 is up by 3.7% with the Dow Jones Global Index (ex U.S.) better by 2.7%. Gold (struck an all‐time‐high in September), precious metals, and all major agricultural commodities rallied significantly on the quarter as well. Oil closed the quarter better on the year by 12.92% with natural gas off ‐30.51%.

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Clear Harbor Outlook: Q3 2010

July 1, 2010

The second quarter 2010 was marked by a reversal of the market direction of the previous 12 months as equities declined, U.S. Treasuries rallied, credit spreads widened, and economic data faltered. If the second quarter was an indication of future market volatility, I suspect that Q3 could provide significant roller-coaster-like market moving gyrations. Year-to-date, S&P 500 is now off by -7.5% with WTI Crude weaker by -4.6%, and Gold surging by +13.5%. Global equity indices closed weaker by approximately - 14% on average year-to-date. Uncertainty over the U.S. and global recovery, Europe’s sovereign debt woes, China’s growth picture, significant and nagging jobless statistics across nearly every developed nation, and questions over whether American consumers can reduce their household debt levels without producing a significant economic and monetary train wreck are just a short list of concerns that market participants will continue to monitor with great vigilance going forward.

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Clear Harbor Outlook: Q2 2010

April 1, 2010

The first quarter of 2010 provided far less heartburn relative to the first quarter of 2009. The quarter witnessed moderate strength as U.S. equity indices rose 5.3% (S&P 500) to 6.2% (NASDAQ Composite), outpacing global indices by 2% to 4% on average.i Within fixed income, the aggregate bond and government bond indices closed the quarter better by 1.64% and 0.93% respectively. The gauges of market volatility ended the quarter trading near a 2-year low. The S&P 500 has rallied 70% percent off of the March 9, 2009 low-water mark. While the rally is clearly significant, the market peak witnessed in October of 2007 is still approximately 25% away. Market valuations have rebounded as well with earnings accelerating above consensus expectations across most sectors of the economy. Consensus 2011 earnings estimates value the S&P 500 at a price-to-earnings multiple of 13.5— not a historically expensive ratio. The complete pessimism in the market just one year ago has shifted markedly toward a more balanced and even positive tone with bulls and bears more evenly split according to most of the recent surveys.

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Clear Harbor's Outlook for 2010

January 4, 2010

Before delving deeply into my outlook for 2010, I feel compelled to thank my existing clients and friends for their expressions of encouragement and support over the last many years. My decision to establish Clear Harbor Asset Management was primarily due to the fact that the opportunity was in the best interest of the people that we serve every day—our clients. Clear Harbor’s platform is one that is designed for the 2010 investment landscape. The people, the approach to investing, and the platform are properly aligned to add value to our clients now and into the future. As always, I am forever grateful to those who have supported this endeavor.

This is the third year running that I commenced writing my market outlook from the comfort of my home atop a hill in the Green Mountains of Vermont. Unlike last year, this Christmas Day was calm, clear, and sunny. If last year’s high winds coupled with snow and sleet symbolized the high-speed economic crash of 2008, this year’s beautiful weather could be seen as a symbol of the improvement in the capital markets in 2009. Unfortunately, this weather to economic analogy is made through the perspective of past events and therefore does not provide a forward looking mechanism from which one can predict the outcome of financial markets in 2010. I will attempt to wade through a few important market and economic observations from 2009 and provide some predictions for the coming year.

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