April 18, 2010

The SEC has filed a civil fraud suit against Goldman Sachs, raising fears and doubts about the market rally in many investors minds. In the view of the Gary Goldberg Financial Services Investment Committee, we view this as a company specific incident that does not change the fundamentals of the market recovery. In our view, Goldman's problems are Goldman's problems, not the industries problems. And although other firms with large trading and security creation departments could come under investigation as well, namely JP Morgan and Morgan Stanley, it is still a company specific issue. We continue to adhere to our investment theme that earnings and profit growth in the financial sector will continue to drive the sector higher. However, as we adhere to our "optimistic by nature, defensive by strategy" mantra, we are - and have been - underweight the financial sector for several months. In our view, a 250% to 300% run up in stock prices is simply too much too soon. None-the-less, despite the nerve rattling news and sell off on Friday, we believe there are plenty of investment opportunities out there.