Market Commentary for the week of April 27, 2009

Wall Street’s problems are frequently confused with the everyday problems of Main Street. However, it is more likely the case that the small aperture of vision used by masters of finance don’t translate into the lives of average citizens. One might make the case that life goes on in spite of the deviant behavior exhibited by those who populate the concrete canyons of financial epicenters.

As I travel, I am struck that the amount of attention focused upon “the markets” by non-Wall Street’ers is quite small compared to those of us who spend all our waking hours in front of charts, computers, or raw financial data. The concept of “billions of dollars” is lost upon anyone trying to earn a living and provide for a comfortable household. Indeed, Wall Street’s ills resonate as a kind of symptom of what’s wrong rather than a reason for good.

So, for the foreseeable future, the powerful in the financial markets will have a hard time communicating with the public, or performing up to their expectations.

Once the confidence factor is lost, the solutions, themselves, become suspicious. If only we hadn’t allowed institutions to abuse their charters.

As a result, the loss of confidence has caused investing habits to deteriorate. Any altruism, or intrinsic trust, is gone. Therefore stocks, and business, slide laterally rather than with any degree of acceleration. As the markets unwind their leveraged excesses, credit becomes tighter, valuations stagnate, and corporations become commonplace, not unique.

The goal of the financial analyst is to uncover potential from amidst the exogenous “noise.” The bigger picture is brighter than the public perceives presently.

While I do not favor buying depressed stocks, it is impossible not to see value in companies that have been punished along with the crowd, if earnings acceleration patterns still exist.

Most refer to this period of recalibration as a new start. I prefer to see it as a rebalancing of social and moral priorities. The markets are under significant strain. Disease, terrorism, corporate chicanery, psychological reticence and market devaluation give the opportunist little wiggle-room.

The public expects us to act with propriety. Whether they care as much as we about the daily machinations of the financial markets is another thing, altogether. As we seek equilibrium from the chaos of financial malfeasance, let us also try to bridge the gap of indifference that permeates the attitude of our clients and prospects.