Beech Hill Advisors : Commentary

Each of our portfolio managers give you their analysis of current economic trends within their targeted area of investment. In this issue, we discuss the year ahead and the developments we will be most closely watching in 2010.


	Q2 2010 Letter : The Quarter Was Not Without It’s Fireworks by Will Wurm The markets began the second quarter building on the gains from the first, peaking in mid-April then trending downward with fits and starts, finishing at the lowest levels of the year. We have seen an approximate 15% correction from the highs in April, not surprising after gaining the past twelve months. In comparison, European, Asian and emerging markets declined far greater, some in excess of 20% for the year. Worries about European sovereign debt, the gulf oil leak, and weak employment data heightened investor anxieties, and many reduced their risk exposure in response. The quarter was also not without it’s fireworks as the so called “Flash Crash” on May 6th provided heart palpitations to those of us fixed at our screens.
	2nd Quarter 2010 1st Quarter 2010 4th Quarter 2009 3rd Quarter 2009


	Q2 2010 Letter : A Prerequisite For The Global Economy by Mark Stern The second quarter was rocked by one of the most serious accidents in the brief history of deep water drilling. However nothing about the Macondo well disaster will reduce our dependence on oil. Oilfield depletion cannot be wished or legislated away and the “built environment” developed during the age of cheap fossil fuels has an intractable thirst. Geological and geopolitical reality is such that each year we become more reliant on deepwater and other hitherto unconventional sources. Despite the constant and misleading claims of promoters, there are no magical alternative energy solutions that can realistically replace oil within 100 years. Oil is a vastly superior fuel to coal, and natural gas is far cleaner, and yet after 150 years neither has replaced coal. Human existence now is critically dependent on massive flows of all these fuels. Roughly 1000 barrels of oil alone each second, twenty-four-seven. Over 18.5 million tons of coal each day. Investors and policymakers should bear in mind that a functioning and profitable oil industry is a prerequisite for the global economy.
	2nd Quarter 2010 1st Quarter 2010 4th Quarter 2009 3rd Quarter 2009


	Q2 2010 Letter : Stock Picking With Your Stomach by John Preston The market is human psychology on display. The message of the market cannot be ignored, but if doomsayers direct your actions it will be difficult to be influenced by the data or objective information. Like the continuously playing videotape of the Gulf Spill and its metaphorical impact on psychology, recent news has cast a shadow on the outlook for the future. Investors need to be alert to changing conditions and new information served up by the market. On a portfolio basis it will pay to continue to invest in innovative companies with superior fundamentals and strong market positions. Disregard world worries and allow your stocks to succeed.
	2nd Quarter 2010 1st Quarter 2010 4th Quarter 2009 3rd Quarter 2009

Q2 2010 Letter : The Quarter Was Not Without It’s Fireworks by Will Wurm

Q2 2010 Letter : A Prerequisite For The Global Economy by Mark Stern

Q2 2010 Letter : Stock Picking With Your Stomach by John Preston