Thirty Five and Counting
By Jude Bedell

Thirty five years ago, when we started this company, Gerald Ford was in the White House, disco was king and the Pittsburgh Steelers established a football dynasty with their “Steel Curtain” defense. To start-up businesses like ours in 1975, clients’ portfolio statements were produced on IBM Selectric typewriters.

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Naturally, we are prepared for pullbacks and corrections this Spring. We are proactively writing covered calls AND will take profits appropriately in order to cash-in on perfectly normal market corrections.

The health care bill was just signed into law and poses the question; how will it effect health care investments? Positively. Why? Because the dark cloud of uncertainty is lifted, allowing us to expand our research. Hospitals should benefit because coverage would expand to 32 million people. Generic drug manufacturers should experience dramatically higher sales as more Americans become eligible for healthcare services creating increased demand for more scripts to be written. Increased volume with price sensitivity spells good for generics. The new law provides incentive for Electronic Health Records by hospitals and providers. This is a prime use of technology to create efficiencies and quality control. Both Biotech and large Pharmaceutical stocks dodged the bullet this time and present myriad investment opportunities of low risk and promising reward. The effect of this new law on retirees is crucial but convoluted so we have reprinted a Kiplinger Report, which will also be posted to our webside at www.bedellinvest.com.

Technology investments continue to outperform as demand for mobility is exploding. The third generation of cell phones called 3G is quickly morphing into 4G. This presents new investment opportunities for pure growth. Unless you wintered on Mars this year, you have no doubt heard APPLE is releasing its iPad on April 3rd. For the first 3 months, sales are limited to APPLE STORES or online. We’ll be queued-up with all the other Apple-addicts.

Global Markets in Motion By Mike Frazier American stocks are reaching new highs thanks to the Recovery Bull Rally. In fact, the U.S. was the strongest market for stocks in the first quarter of 2010 with a 4% gain. This compares to a 2% gain in Brazil, a 1% gain in Australia, and a 4.5% decline in China. All of these countries have stronger economic growth than we do, so, what’s creating the dichotomy? The Greenback! There has been a major shift in the U.S. dollar. After a substantial decline over the course of the last decade, the U.S. dollar has reversed course and reasserted itself as the dominant universal currency.

It started back in November, in the wake of a credit scare in Dubai. Concerns about Greece’s credit crisis spread through the rest of Europe, decimating the Euro currency. Consequently, investors are flocking back to the safety of the good ole U.S. dollar.

Maintaining a weak dollar used to be a key strategy for economic expansion; a weak dollar makes U.S. exports more desirable in global markets. With a rebounding dollar, commodity prices weakened. But they are now showing signs of recovery. Rising commodity prices are usually synonymous with growth.

We view this dollar strength a bit misleading, and think it’s more accurate to call it “less weak”. The U.S. economy is far from fully healthy and the budget deficit needs radical attention. But it’s clear that as bad as things may appear here in the US, we’re in much better shape than many other countries.

The growth engine of this global economy remains in Asia, and should continue for decades to come. For years, a weak dollar/strong stock/strong commodity relationship was music to investor ears. This relationship seems to be splitting apart, and likely for the good. A new relationship of strong dollar/strong stock/strong commodity could be in the offing, and this would be healthy and quite positive. It would suggest real demand, on a broad scale, is returning. The result: a structurally stronger global economy. This should continue to be the investment trend in 2010.

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Consumers are not only spending more – they are feeling more positive about the future. Consumer confidence numbers jumped in March as Americans perceived employment was starting to improve. Rising home prices are also helping buoy the mood of the consumer. While consumer confidence is still low compared to historic levels, we are beginning to see the gloom lifting and the consumer seems less fearful and more hopeful for the future.

Could it be all the sleek tech gadgets about to hit the market that have consumers ready to spend? This week Apple launches its highly anticipated iPad with a price tag of $499 for the 16GB WiFi model. This will be the latest release in a string of highly successful new product launches from Apple including the iPod and iPhone. Based on pre-release interest, analysts predict Apple will sell 5 million iPads in 2010.

Technology continues to be the one area consumers are willing to splurge. We continue to invest in customer-centric technology companies that are innovating and creating products consumers want and pricing products in ways that get consumers to open their pocketbooks.

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Uncle Sam made a killing on the Citigroup investment. When the stock was trading in the cellar around $2 a share, the U.S. Treasury “bought” 7.7 BILLION SHARES. Now, it is ready to SELL with the shares trading around $4 per share. That’s a 100% profit. Maybe Tim Geithner should run a hedge fund! Good move to make a profit of $7 billion in 2010. This transaction will also be a WIN for Citigroup, as its ties to the U.S. Government slip away and the company can reclaim its investment standing.

Reforming banks is a fall-out from the financial meltdown that threatened our nation’s financial stability. The crux of the matter is simple: some giant Wall Street firms abused their customers and took enormous risks that nearly brought down our economy while our nation’s nearly 8,000 community banks have been responsible actors who have paid dearly for big banks’ mistakes. Any financial reform bill reflects those differences, imposing greater costs and restrictions on the super-banks, reining in the abuses that caused the crisis, but allowing community banks to continue serving their communities.

Interest rates zigged and zagged through the past Quarter but ended up exactly where they stood at year end 2009. Interest rates have many factors contributing to their behavior, none greater than the health and outlook for the economy. As the economy stumbled towards the end of 2007 and through most of 2008, the yield on the 10-year Treasury plunged from 5% down to a panicked 2%. The yield moved up steadily from there to fluctuate between 3-4% for the better part of 2009. Currently we sit at the high end of that range at 3.85%. This upward climb in interest rates is very normal behavior when exiting from an economic downturn. The generational low interest rates we saw during the credit crisis did not discount healthy economic behavior. Lending practices is another matter as loans are still