du Pasquier Asset Management

Arlington Econometrics Market Commentary for the week of November 24, 2008

Happy New Year.

New Year’s Day came early this year, nearly 40 days before the calendar turns the page for real.  Bear in mind that market cycles don’t adhere to artificial dates on the calendar, or anniversaries of any kind.  Instead they move at a pulse and rhythm consistent with changing tides and fundamentals much deeper than our expectations might allow.

This pre-holiday season, and post bailout period, is more significant for the markets in defining thresholds of downside tolerance than any new year, or religious holiday.  The magnitude of global decline is extremely powerful.  No single financial initiative, or holiday anniversary, is strong enough to right the ship of years of financial, and moral, neglect.

It is with optimism, then, that I evaluate the positive directional changes that have occurred recently.  We know that valuation damage is at its most severe today, but began over one year ago.  The risk, one might say, was greater then than it is now.

It’s not over.

But without the psychological damage also inflicted, the reverberations might have been less severe.  There simply was no place to hide from the selling wave or panic.  Nor can we conclude that two positive days in the stock market will eradicate all the negative underlying fundamentals that precipitated the decline.

But it is fruitful to note that we are “safer” from the rush of negative exogenous events today than when these factors were unknown and unanticipated.

Time and patience.

Trends require time to evolve.  They are not moments in time, or defined by a snapshot.  We know that they ebb and flow, and change course parabolically, not linearly.  Therefore might we anticipate an evolution from bear to bull?  I believe so.

During the holiday season, be thankful for good health, family, and the values that matter.  Markets will endure, and so shall we.  The fun of my craft is to balance the risk with the reward, and to keep it all in proper perspective.

Happy Thanksgiving!!

Scotty C. George

(212) 624-1147

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Arlington Econometrics is a quantitative market tool.  Utilizing proprietary algorithmic equations, Arlington offers solutions for market-timing, asset allocation, and macro economic analysis.  Arlington Econometrics’ database spans over forty market bourses, and includes over 70,000 financial and statistical instruments.  Using historical time-series measurements, Arlington Econometrics optimizes the analytical process and forecasting coefficients to make economic forecasting more objective. 

The information contained herein has been obtained from sources believed to be reliable but is not necessarily complete and it accuracy cannot be guaranteed. It is intended for private informational purposes only. Any opinions expressed are subject to change without notice. Du Pasquier Asset Management and its affiliated companies and/or individuals may from time to time own or have positions in the securities or contrary to the recommendation discussed herein.

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