GROWTH IS SLOWING ???

During the 2Q investors perceived economic growth to be slowing: here, in Europe, and in China.  With increasing comfort that inflationary fears were over-wrought, the 10 year US Treasury rallied to a yield of 3.92% from 4.48% three months earlier.  Reflecting that slowing sentiment, the S&P 500 index's basic materials sector retrenched, falling -9.5%; industrials were down -3.3%.  Not surprisingly, however, utilities rallied with the sector gaining +9.3%.  Financials were up +4.3%, and healthcare rallied +4.1%.  All returns are after dividends.

Gold Leaf is an independent Registered Investment Advisor that buys stocks in cash positive companies with sustainable competitive advantages.  Gold Leaf's goal is to provide objective investment management and to protect client assets on the downside while participating in most of the market's upside.  On June 30th, portfolio attributes were:

Our big winner for the Q was a medical device manufacturer which gained +54.3% from our clients' average cost basis.  The company is in its infancy and is creating a market that previously did not exist, an enviable position.  One of our distressed banks rallied +24.5% for the Q as confidence grew that management is genuinely moving on restructuring issues.  All returns are after dividends.

Harley-Davidson was the upset for the Q and suffered a loss of -13.9%.  The company announced that it would slow production as inventory levels were ahead of demand.  HDI has always prided itself on controlled growth by producing less than demanded in any one year.  The fact that supply temporarily outstripped demand caught investors by surprise.  We think the stock is attractive and have been adding to positions.  All returns are after dividends.

Gold Leaf does not provide legal, accounting, or tax advice.