Tuesday, December 1, 2009


The following financial market commentary was written by Matt Malick and Ben Atwater of Atwater Malick LLC. Ben and Matt have developed a sound and unique investment philosophy for their clients. They regularly write market commentaries and I plan to post them here for interested followers. You can learn more about them at www.atwatermalick.com .

In many ways, Dubai was the ultimate example of the debt-fueled excesses that led to the global financial crisis as it rapidly expanded infrastructure, transportation systems and residential and commercial real estate. Now that the global economy has slowed and the availability of credit has contracted, Dubai’s state-run companies are seeking to delay the repayment of debt, which many traders essentially view as a default.

We are following the situation as it unfolds, in particular as it relates to the long-term investment thesis behind each of our “focus list” stocks. Although global stock markets have sold-off in response to the news, losses have been relatively modest thus far, and we are not making any immediate changes in our client portfolios. Frankly, outside of potential portfolio exposure in financial stocks, we expect the direct impact of the these events on our companies to be nonexistent. But, the indirect effects on the financial markets are indeterminate and impossible to predict. Any action at this time would be emotional rather than enlightened.

For those of you who are interested in learning more about Dubai, here are links to an excellent two-part 60 Minutes story from August of 2008, when Dubai’s growth was at its peak. We find it particularly entertaining to watch this report with the benefit of hindsight.



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