Catch a theme here? The global consumer is holding up well while the global producer is weaker than anticipated.

So why does muddling through work for me?

Let's get back to our core beliefs: The global economy, including the U.S., will continue to grow, albeit slowly, and there will be lower highs and higher lows as imbalances are contained and a conservative bias permeates at every level from government to business to the individual; interest rates will remain surprisingly low as global competition will keep a lid on inflation along with lower energy prices; the dollar will remain the currency of choice as this country's global competitive situation continues to improve and energy independence remains a possibility down the road; earnings, excluding commodity-related industries, will surprise on the upside despite relatively sluggish global growth; speculation is limited to real estate, art and private equity; the stock markets are undervalued as 10-year bonds are around 2.1 percent, the risk factor should be around three as leverage ratios keep falling; and S&P earnings are slightly higher in the aggregate and much higher x-energy and commodity companies. It's hard to imagine M&A getting any stronger. Another of our core beliefs.

Finally this is all about asset allocation, stock selection and risk controls. I listened to or read the transcripts of at least a dozen companies last week starting with Alcoa and ending Friday with GE and Honeywell. I really suggest that you take the time to read some of these transcripts as managements are really doing some amazing things. Alcoa is splitting into two companies; GE is selling most of its financial assets and reinvesting in its higher margin, higher return industrial businesses; Honeywell is churning out 10 percent + growth and generating 110 percent free cash flow; Citi, Bank America, JP Morgan, PNC, etc., are all making great strides not relying on a rising yield curve to make money; Intel is upgrading its mix. I could go on and on.

My portfolio is comprised long with companies going through positive change, short those with their heads in the ground, a few Larry Tisch value plays and there is no industry concentration. It really is stock specific. I remain around 93 percent net long, no bonds and no dollar currency trading position.

Take the time to understand the strategic goals of the management of each company in your portfolio, step back and reflect hard and long on it, pause once again and consider all that could go wrong and also right, control your risk by maintaining ample liquidity and be patient as change doesn't occur overnight. There are clear winners and losers out there. Perfect for a hedge fund like ours.

Change is a global phenomenon.

Invest Accordingly!

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