Monthly Commentary

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Managing Investments by Overcoming Fears
October 2, 2012
Historically September is the worst month of WTI Crude Oil Futures (CLA) - Daily Chart
the year. While October has a reputation for market
crashes, severe downturns, and the most horrific sto-
ries, September holds the record for worst perform-
ance. In fact, the average return for the S&P 500 In-
dex (SPX—1,440.67) was –0.6% for the period be-
tween 1950 and 2009. That compares to a 0.6% gain
for SPX during the month of October over the same
time period.
This September was a happy surprise for in-
vestors, with SPX jumping 2.3% and the Dow Jones
Industrial Average (DJIA 13,437.13) climbing
2.6%. A 2.4% advance was recorded by the Russell
Source: Yahoo! Inc.
2000 Index (RUT—87.45). While most benchmarks
were higher the Dow Jones Transportation Aver- Agriculture prices have also been declining.
age (DJTA - 4,892.62) plunged 3.3%, a divergence We have seen drops in soybeans and cotton while
that should be noted (see Page 2). wheat, coffee, and cocoa have fallen from their recent
Helping the equities and bond markets was highs. Corn, which was high at the end of August due
the launch of Quantitative Easing III (QEIII). The Fed to the drought, has fallen significantly, which should
will concentrate on pushing mortgage rates even benefit consumers over the long-term.
lower, which is partly expected to increase new The House of Representatives failed to pass a
home sales and increase employment in that sector. new farm bill before recessing for election season,
September was also less defensive than Au- thereby potentially changing the framework for pricing
gust, however investor and institutional interest did milk, eggs, and other foods.
wane. A combination of religious holidays, investors
US Dollar and Interest Rates
questioning ―what is next to look forward to,‖ Spain,
As we noted, the Fed voted to institute another
and the upcoming presidential election and financial
round of quantitative easing. Initially the US Dollar
cliff has investors marking time on the sidelines.
sank, along with interest rates, but toward the end of
Commodities Split the month began the ―greenback‖ began to rise from
Gold and silver prices continued to rise last the lows. This was partly due to weakness from the
month, extending the upside breakout that began in Euro, as concerns and news headlines arose from
August. Both metals reached new six-month highs, Spain and Greece. The Dollar benefited from end-of-
ending the month nears their highs. Platinum and quarter volatility and uncertainty, which is likely to
Palladium, among other base metals, began the continue as news dominates trading.
month strong but ended lower. Most interest rates were slightly lower at
West-Texas Intermediate Crude Oil began month end but the yield on the 30-day T-bond was
the month strong but the spot price encountered re- slightly higher. The yield curve shows a near 3%
sistance near the $100/barrel level (see chart), and spread over the term of the curve. Treasuries were
then retreated back toward the $90/barrel level. How- sought out as a move to quality and lower risk, keep-
ever, prices at the gas pump remain high, which is ing pressure on rates.
impacting consumers.
© Copyright 2012, Olympian Capital Management. All rights reserved.

2. Dow Jones Transportation Avg. (DJTA) — Daily Chart Let Us Debate
Now that we have entered the final leg of the
Presidential Election Season, consumers, investors,
business owners, and academics will likely be listen-
ing for ideas and ideals that may help the country
and the world. This Wednesday the candidates will
hold their first debate and the search for sound bytes
will begin. The question is will these comments and
jabs overshadow news headlines from Europe?
FOR THE QUARTER
The third quarter ended with the benchmarks
rising. SPX added 5.9%, DJIA was up 4.4%, and
Source: Yahoo! Inc. COMPQ jumped 6.5%. The best performing groups
were wireless services (+7.5%), household apparel
Consumers and the Market (+36.2%), oil & gas refining (+30.8%), Internet
Unexpectedly the Consumer Confidence In- software & services (+23.9%), and homebuilding
dex jumped last month (see chart below right). Simi- (+21.0%). The weakest performers were education
lar action was seen in the stock market, with the services (-21.5%), commercial printing (-9.8%), com-
CBOE S&P 500 Implied Volatility Index (VIX—15.73) puters & electronics (-8.4%), semiconductors
continuing to show a high level of trader compla- (-8.2%), and agricultural products (-7.9%).
cency.
WHAT TO WATCH FOR
The strongest industry groups last month in-
In addition to the upcoming geopolitical and
cluded health care facilities (+22%), construction ma-
political events investors will be watching the upcom-
terials (+21.6%), educational services (+11.8%), ca-
ing Employment Situation Report, which will be re-
sinos & gaming (+10.5%), and gold (+10.4%). The
leased Friday. Job creation will not only feed the po-
weakest groups were semiconductors (-6.2%), home
litical rhetoric and landscape but will also provide
furnishings—retail (-6.2%), railroads (-5.9%), semi-
some additional color ahead of the shopping season.
conductor equipment (-5.6%), and electric manufac-
Generally, US stocks react favorably during
turing services (-5.3%).
an election period. Furthermore, while the October
Important Divergence can be the most volatile and dangerous than other
As we pointed out on Page 1, there was a months, the end of October can provide a treat and
divergence. DJTA plunged 3.3%, which is a negative not a trick.
signal. Most of the decline followed a warning from
global shipper FedEx Corp. (FDX—$84.62), who in-
dicated that shipments are declining. The warning Consumer Confidence Index — Monthly Chart
has impacted other shippers, including the rails (see
above) and competitors. However, some dry ship-
pers have benefited as shippers seek cheaper alter-
natives to reduce their costs.
The final revision to 2Q Gross Domestic
Product (GDP) showed that the economy appears to
be slowing more than expected. This is a confirma-
tion to the comments from FDX management. How-
ever analysts are looking for more information about
3Q and projections for the final quarter of the year.
On Thursday many of the largest stores will
report their monthly sales results for September. This
Source: The Conference Board
will help to confirm or not-confirm concerns that the
economy is slowing.
© Copyright 2012, Olympian Capital Management. All rights reserved.

3. Disclaimer
This commentary should not be construed by anyone as the rendering of personalized investment advice (or an
offer thereof) for compensation. This Commentary, and any information and research contained therein, does not
represent a recommendation of investment advice to buy or sell stocks or any financial instrument nor is it intended
as an endorsement of any security or investment. This Commentary is for informational purposes only and repre-
sents the writer’s or provider’s own investment opinions, and should not be construed as personalized investment
advice. Olympian cannot assess, verify, or guarantee the suitability of any particular investment to any personal
situation and the reader of this Commentary bears complete responsibility for its own investment research and
should seek the advice of a qualified investment and/or tax professional prior to making any investment decisions.
Olympian may only transact business or render personalized advice, and offers of service can only be made, in
those states or international jurisdictions where Olympian is registered or where an exemption or exclusion from
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diction with Olympian’s current licensure (if any).
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(Revised 2/2012)
© Copyright 2012, Olympian Capital Management. All rights reserved.