We are seeing stocks getting cheaper in the U.S. and abroad, and we are making up lists of good values.  We see some values in the U.S., and we see even more values abroad.

There is no big short term reason to get fully invested.  We continue to hold Treasury bills as a large component of our portfolios, but we do see more values emerging.  We believe that there is time to carefully analyze the opportunities and companies.  In our opinion, after careful analysis, making some purchases of good companies will produce long term profits.


1. Companies should be self-financing.  Outside capital will be hard to find, and costly, so a company should be able to generate internal cash flow to fund its growth.

2. Companies should be located in countries or in markets where growth is still possible during a period of deleveraging and consumer retrenchment.  Obvious examples are necessities like food, clothing, utilities, and low cost consumables (household goods).

3. Other alternatives are consumer goods, infrastructure, and utilities in countries like China, where economic growth is still strong.  Companies should do well in markets where many consumers are acquiring goods for the first time, and the country is adding ports, dams, roads, and railroads at rapid rate.

4. During a period of economic retrenchment and deleveraging, well managed and well established companies are favored.  Companies with good contacts and strong relationships, built over years of doing business, are better positioned when people become more cautious and frugal.


Financial service related industries are not attractive.  This includes: insurance, banking, stock, and real estate brokerage.  An article from the Telegraph in the U.K. points out the problems with derivatives…they still represent a potentially huge problem for all of these industries.

The article says what we have been trying to convey for a long time…derivatives are a big bomb, and the bomb has yet to explode.  Lehman’s derivatives are a tiny fraction of the entire derivative market.  The over-the-counter derivatives market is many trillion dollars, and it has no transparency, regulation, or central clearing agency.  In summary, no one knows who has made or lost what…and no one knows if the losers will pay the winners on settlement date.

Click the following link for a picture from a knowledgeable source.  http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3211647/Fears-of-Lehmans-CDS-derivatives-haunt-markets.html

Thanks for listening.

These articles are for informational purposes only and are not intended to be a solicitation, offering or recommendation of any security.  Guild Investment Management does not represent that the securities, products, or services discussed in this web site are suitable or appropriate for all investors.   Any market analysis constitutes an opinion that may not be correct.  Readers must make their own independent investment decisions.

The information in this article is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation, or which would subject Guild Investment Management to any registration requirement within such jurisdiction or country.

Any opinions expressed herein, are subject to change without notice.  In addition, there are many market, currency, economic, political, business, technological and other risks that are beyond our control.  We make reasonable efforts to provide accurate content in these articles; however, some content and some of the assumptions, formulas, algorithms and other data that impact the content may be inaccurate, outdated, or otherwise inappropriate.  In addition, we may have conflicts of interest with respect to any investments mentioned.  Our principals and our clients may hold positions in investments mentioned on the site or we may take positions contrary to investments mentioned.

Guild’s current and past market commentaries are protected by copyright.  Apart from any use permitted under the Copyright Act, you must not copy, frame, modify, transmit or distribute the market commentaries, without seeking the prior consent of Guild.