2010 Annual Review - Sloy, Dahl & Holst, Inc
An annual review of Sloy, Dahl & Holst, Inc., posted by Ron Sloy. This Press Release covers the the changes that occured within the financial industry in 2010 as well as predictions in 2011.
- (1888PressRelease) February 12, 2011 - Ron Sloy of Sloy, Dahl & Holst, Inc.
After posting another year of double-digit returns for the U.S. financial markets, 2010 has now come to a close. Many were left scratching their heads, with cash still on the sidelines. The S&P had slipped to -7% for the year by the end of June, and then moved all the way to +15% by December 31st. Thus proving, once again, you cannot time the markets. The long term investor must hold their ground and avoid knee jerk reactions based on fear and greed. This has been very difficult for most to remember amidst the volatility we've experienced these last few years. If you'll recall in 2009 the S&P was -25% by the end of February, yet finished the year +24%.
This year proved to be very challenging, most notably due to the credit crisis in Europe, the "flash crash", and the oil spill in the Gulf. This put a harsh spin on the midway point of 2010. Investors found their accounts approaching negative double-digit returns, and the term "double dip" could be heard and read from what seemed to be every major media outlet. These events created tremendous volatility, but for the seasoned investor, also created additional buying opportunities.
Sloy, Dahl & Holst remained true to our convictions throughout the year, which ultimately paid dividends during the third and fourth quarters. We were confident in our analysis, the underlying signs of strength within the economy, and the management team we've assembled for our clients' portfolios. We strongly felt 2010 would finish with positive double-digit returns, and possibly reach 12,000 on the DOW. We didn't quite get to 12,000, but our conviction again paid off for our clients' year-end account balances.
As active managers it is our job to show our clients areas of strength within the domestic and international markets, and areas to avoid when we feel they are overvalued. For 2010, we over-weighted the following sectors in our Moderate and Aggressive Model Portfolios. With all but one of these sectors outperforming the S & P, this certainly helped us in having another successful year.
• Real Estate (+28.07%)
• Natural Resources (+21.38%)
• Developing Markets (+18.88%)
• Large Cap Growth (+16.71%)
• Technology (+13.26%)
Two sectors of the economy we thought would provide better returns were Health Care (+4.52%) and Financial Services (+12.72%). Both lagged throughout the year and we removed Health Care from our Moderate and Aggressive Portfolios at the end of the third quarter. The Financial Services sector was actually negative until November, but moved over 20% during the last two months of the year. We are in the process of increasing our allocation in the Financial Services sector for 2011, in our Moderate and Aggressive Model Portfolios.
Where do we go in 2011?
We believe the U.S. market will be one of the leading stock markets in the world in 2011, for the first time in several years. We have decreased our allocation internationally, in both our Moderate and Aggressive Portfolio, and have over-weighted the U.S. economy. We are bullish on Financials, Technology, Energy, and Real Estate. We are extremely cautious on fixed income, because of the rising interest environment.
Just in the last 90 days, the 10 year T-bill has moved from a 2.6% yield to over 3.5%. We see this trend continuing throughout the year, to where the 10 year T-bill could close the year around 4.5%. Historically these levels are still very accommodating for the U.S. economy. However, it will be a difficult year for the Bond Managers and a very good year for Equity Managers in 2011, something we haven't seen since 2007. By year-end we anticipate oil above $110 per barrel, and expect the DOW to reach 13,500 or higher. We also forecast Apple closing the year above $400 per share.
In closing we are extremely excited about the opportunities that lie ahead in 2011. Happy New Year!
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