Author: Gerry Sparrow, Sparrow Capital
In the first six months of 2012, major equity markets advanced, declined and advanced again in most parts of the world to finish with an overall gain of 2% as measured by the Global Dow (GDOW). The equity markets in Europe, Asia, North and South America all finished mixed with the United States Dow Jones Industrial Average (DJIA) up +5%.
The slow patch that the markets experienced in the last quarter of 2011 resurfaced in May and June of this year, thanks primarily to the debt crisis in Europe. What we expect going forward is a policy response to this European crisis that mitigates further damage coupled with lower energy prices that improve economic conditions in the second half of 2012.
Our two Covestor models finished in the plus column for the first half of 2012. Looking forward what we need to see is positive momentum in second quarter earnings reports for our investments and other publicly traded companies.
Our investment approach is to buy companies with consistent earning power and high return-on-equity that have little or no long-term debt. In addition, we like stocks that can be purchased 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 that are in your portfolios, this does not guarantee a return, but it does focus my attention on things that matter to you as a shareholder.