Quarterly Review

The first quarter of 2010 is drawing to a close. We made some good calls.

Our article at the end of January turned out to be right. At the time, S&P was at 1070 or so. Since then, it has climbed to around 1170, a 100 points advance, just shy of 10%.

That set our tone for the quarter. Developments in manufacturing, export and retail subsequently reinforced our view that the global economic recovery was firming. For the upside, equities, especially small caps, are the place to be.

Better yet, this is also the time to invest in early cyclicals such as home builders. We did some analyses backed by fundamental research on this sector. In particular, our call on Standard Pacific in several articles turned out to be very profitable. We invested in the stock this year at $3-3.8 range. Along the way, we traded a bit, selling above $5 and buy back in more at below 4.5. It has been quite interesting. Lennar has performed fine too.

We've trimmed some bank stocks. Sold all JPM shares and some WFC shares. New regulations may not be friendly to shareholders. But these large banks should do just fine.

We've been moving into retail stocks. Recently, we picked up SCSS at below $7. It's now at $8. But this is a very volatile stock. It could continue to swing widely.

Energy sector surprised us. It did not perform as well as expected. It could surprise the other way in the next quarter.

REIT sector surprised us on the upside. It's likely not over yet. So we don't think we should short the sector in general.

For the quarter, our fund is up 15% versus S&P's 5%. That's nice. We look forward to the Spring quarter.