Capital Markets Review—May 31, 2009

By Ernie Montford, President of Montford Associates Independent Investment Consultant for The Community Foundation for Cobb County and The Community Foundation for Northeast Georgia

Capital markets in 2009 have been volatile. In early March the stock market reversed its downward spiral after six consecutive quarters of decline. Since then, the S&P 500 Stock Index average has gained more than 30%. Presently the stock market has crossed into positive territory for the first time this year. Considering the market decline in the first two months of the year, this rebound is impressive.As a general comment, stocks have provided very modest returns so far, and bonds are just holding flat.

At this juncture the credit markets are better and the crisis of last year is subsiding. However the debt problems remain and we will surely see additional problems soon from real estate loans in the commercial market. The stock market has bounced off a very over-sold position, but future gains will depend on earnings. From here investors will be watching for signs of improving business fundamentals.

Ernie Montford has more than 30 years of experience in the investment business. His firm concentrates exclusively on investment consulting to institutional funds and accepts fees only from their clients. Ernie works closely with the Community Foundations’ Investment Committee and all reports are overseen by the Boards of both Foundations.