The nature of a market generally ensures there's a wide range of opinions from managers, but in September there were some consistent themes amongst managers' performance commentaries.
Overall average performance for the month was strong on the back of the strong rally in equity markets, particularly in the US, a weak US currency, and strong commodity markets.
In Australia the strong performance of many second tier resource stocks was a welcome reward for managers focusing on that sector, particularly as the US dollar weakened and gold rose. However a couple of interesting comments emerged, such as Optimal's George Colman, who noted that of the ASX200's rise of just over 4% for the month, three quarters of it could be attributed to the market's sharp rally in the first four days of the month.
Looking forward the most recurrent comment, and in many cases concern, pointed to the highly anticipated QE2, or quantitative easing in the US. While most commented that given the US' lacklustre economy something needs to be done, the concern lies in what happens next in the event that a further easing doesn't kick-start the economy, and the inflationary pressures that printing more money is going to have. Kapstream's comment in particular was both insightful and creative, likening the anticipated QE2 to the Cunard liner of the same name which having once ruled the waves in many roles, now sits in Dubai waiting....
Most managers still seem to consider the markets to be finely balanced, and there aren't too many rampant bulls, with many keeping their powder dry until more convinced that the rally can push on through resistance without being derailed by some macro issues from offshore..
