CoreStates 2009 3Q Review & Outlook

At CoreStates, a foundational belief is in the unpredictability of the future. Few would argue with this simple truth. Yet, few in the financial services industry honor this fact in the design of their services to clients. Most, in fact, tout their ability to predict the future as a key reason to entrust your assets to their supervision and management (and fees).

At the current time – three-quarters of the way through 2009 – we would ask these companies and their clients, “So, how is this working out for you?”
Many, we suspect, would lament the fact that they became net sellers of stocks during the first quarter decline to the March lows, then stood by as stocks gained 15% to 30% through the second quarter and repeated that performance in the third quarter.Now, as the fourth quarter begins and they still struggle to predict the next quarter’s market moves, they look around and see:

The increasingly euphoric outlook of stock investors, who have driven domestic and international markets to valuation levels well above their historical averages,
The serious fears of the gold bugs as most “safe haven” precious metals are hitting record high prices, and
The self-contradictory actions of bond investors as interest rate levels and inflation expectations reflect serious economic concerns, while shrinking interest rate spreads on lower quality bonds indicate increasing confidence in economic recovery.

As these conflicting market actions indicate, the current investment outlook is highly uncertain. This is very unusual – not that the future is highly uncertain, but that investors as a group (though still not individually) are recognizing this fact and reflecting it in their investment activities.

And, it is why we do what we do:

• We don’t attempt to predict economic or market moves month-to-month or even year-to-year. But, we do seek to identify the key long-term forces that will be driving economies and markets worldwide via our 20/20 Global Vision.

• And, we provide our investors with a diversity of investments – our 8-Cylinder Portfolios – that assures to the greatest extent possible exposure to whatever areas of the market “are working” at any time, including both long and short exposures so they aren’t dependent on market gains for gains in their portfolios.

Looking ahead, we believe the great uncertainty reflected in current investment markets is appropriate. The outlook has rarely if ever been this clouded by changing international economic forces and domestic governmental redefinition of the economic landscape. But, we remain confident in the CoreStates approach and fully expect to continue providing our clients with services and results that move them toward their long-term financial objectives and life goals.