Author: Gerry Sparrow, Sparrow Capital
In the last three months, equity markets rebounded in most parts of the world. The markets in Europe, Asia, North and South America remained down for the year despite higher fourth quarter returns. The slow patch we are currently experiencing results from macroeconomic and political headwinds. More recently, positive economic news in the area of employment, consumer confidence, auto sales and now upward trends in some housing statistics may help the equity markets in 2012.
Our investment portfolios finished in the plus column for 2011 despite poor results by the stock market averages in general. Looking forward, what we need to see is positive momentum in economic reports for both consumer and business spending. This can drive increased sales and earnings for the publicly traded companies that we invest in.
Our investment approach is to buy companies with consistent earning power, high return-on-equity while employing little or no long-term debt, and to purchase at reasonable prices with a high margin of safety. We have a system that filters thousands of stocks on a weekly basis using the Sparrow 75-point checklist that screens the highest quality companies, which are then reviewed and considered for purchase in your portfolio.
As always, my family and I have almost all of our equity investments in the stocks of Sparrow Capital portfolios. This does not guarantee a return, but it does focus my attention on things that matter to you as a shareholder.
Thank you for your continued confidence.