News & Our Thinking

Weekly Investor

Weekly Investor – October 03, 2011

18 November 2011

An Ugly End to an Ugly Quarter

Market Summary:  

The broaderU.S.equity indices ended the week in negative territory, putting an end to what became the worst quarter for stock investors since 2008.  Holes continued to spring open within the global economy as policy makers risk running out of fingers trying to plug all the leaks.  In addition to contending with the daily saga surrounding Europe’s financial problems, investors are increasingly concerned aboutChinaand the fall-out from its potential economic slowdown.  As a result, commodities were sharply lower this past week, eliminating yet another “safe haven” for investment dollars.  Despite the prospect of cash earning no interest in today’s environment, investors continue to remain on the sidelines as fear and volatility continue at elevated levels.  With earnings season set to start over the upcoming days, investors are in need of a message of stability from Corporate America.

The S&P 500® closed down -0.4% for the week.  The top-performing sectors in the S&P 500® Index included Telecommunications (+1.8%) and Financials (+1.0%), while bottom-performing sectors included Basic Materials (-3.2%) and Consumer Discretion (-2.4%).  In the fixed-income market, the 10-year Treasury lost ground with the yield ending the week at 1.9%.

We continue to seek those companies possessing identifiable catalysts, and focusing on those stocks with favorable odds.

Innovation Leading to Growth

eBay, Inc. (EBAY) and its subsidiaries provide online marketplaces for the sale of goods and services and online payments services, including PayPal and BillMeLater, to individuals and businesses in the United States and internationally.

Over the past year, EBAY has orchestrated a revitalization of its online auction offerings while continuing to generate impressive growth in its payment services business.  While some of the company results have been masked by the overall economic pressures, EBAY has shown improvements in several key operating metrics.  With the company’s online auction restructuring on track and a management team focused on restoring growth to the company, we are encouraged by EBAY’s progress and a strategy that has the potential to offer attractive upside to investors.

Top 10 Equity Holdings

MasterCard Inc. 4.8%
Qualcomm Inc. 4.0%
Biogen Idec Inc. 3.9%
Google Inc. 3.8%
Danaher Corp. 3.8%
Allergan Inc. 3.8%
Gilead Sciences Inc. 3.8%
Hansen Natural Corp. 3.6%
Jabil Circuit 3.4%
Maxim Integrated 3.4%

U.S. Equity Indices

Index 09/30/11 Week % Chg YTD % Chg
DJIA 10,913.4 1.3% -5.7%
NASDAQ 2,415.4 -2.7% -9.0%
S&P 500 1,131.4 -0.4% -10.0%
Russell 1000 G 527.4 -1.5% -8.2%

U.S. Credit Rates

Index 09/30/11 09/23/11 12/31/10
3 Month T-Bill 0.1% 0.1% 0.1%
5 Year T-Note 0.9% 0.9% 2.0%
10 Year T-Note 1.8% 1.8% 3.3%
30 Year T-Bond 2.8% 2.9% 4.3%
Prime Rate 3.3% 3.3% 3.3%

This newsletter presents selected recommendations from portfolio managers of Argent Capital Management LLC, a registered investment advisor. Opinions reflect the portfolio manager’s judgment on the date above and are subject to change. A list of stocks recommended by Argent is available upon request. You should not assume that these recommendations are or will be profitable. In the course of it’s business, Argent’s client accounts may be buying and selling these stocks.