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Welcome to the September 2008 issue of Condor Monthly!


This issue is now available online along with an archive of past issues. To access past Condor Monthly and Condor Newsletters, just click
on the link below or copy & paste the link into your favorite browser.

 

 

Please continue below to view the "From the Portfolio Manager" and "Financial Planning Corner" segments in this month's issue.

 

Condor Capital has recently added to its position in Nike, a leader in athletic footwear, apparel, and equipment. 

 

Nike recently reported quarterly results that exceeded analysts' expectations. The company achieved sales growth in nearly all geographic regions, boosting revenue 10% year over year, excluding the impact of currency translation. The 10% growth in U.S. revenues was especially impressive given the weak consumer spending environment. Operating margins fell, as expected, due to increased marketing expenses associated with the European Football Championship and the Beijing Olympics. However, it is this marketing that has helped Nike to build brand awareness unrivaled by its competitors, which has in turn helped it to maintain strong margins even in challenging retail environments.  

 

Nike has tremendous international exposure, with over 65% of its revenues coming from foreign markets. The Asia Pacific region continues to experience the fastest growth, having received an added boost from the Beijing Summer Olympics. Business in China has exceeded analysts' expectations, and the country is now Nike's second-largest market after the United States. Looking ahead, future orders scheduled for delivery through 2009 remain healthy, particularly in the South American and Asian regions. 

 

Recent Product Launches
The new Hyperdunk shoe for basketball players, launched prior to the start of the Olympics, is sturdier and significantly lighter than the average basketball shoe. Instead of the rugged traditional material that has been used to construct sneakers up to this point, the Flywire technology incorporated in this new shoe combines sturdy lightweight threads designed to emulate a suspension bridge. To that end, the shoe is versatile enough to support athletes' feet exactly where needed the most during competition.

 

Turning from the hardwood court to the track, Nike worked obsessively to upgrade its existing Nike Swift full body running suit for the Beijing games. With considerable research and development in this area, Nike re-built this suit to be more lightweight and comfortable through 100% recycled polyester yarns, which were retrieved from post-industrial fibers, plastic bottles, and other scrap material. In keeping with the Swift technology, the company designed alternative apparel such as the Nike Swift Singlet and Short for runners as well. 

Since adding to our Nike position in early September '08, strong earnings have helped to propel the stock higher despite the market turmoil. Its brisk pace of international growth, combined with a strong brand image in the United States, have Nike's future looking bright. Penetration into sports outside of its core competency, such as tennis and golf, as well as greater growth in soccer thanks to the company's acquisition of Umbro in October 2007, add to the shares' long-term appeal.  

 

 

 

It is no secret that Wall Street has seen better days. As Americans find themselves in what is shaping up to be one of the most severe economic downturns since the Great Depression, they are finding it difficult to avoid being overwhelmed with emotion, especially when investing. While times are undoubtedly tough, there are ways to prepare for the easier times that are sure to come. It is important to remember that history has shown troubled markets will eventually rebound. Luckily, there are a few things that can be done to help maintain a positive outlook on the future. 

 

First, it is important to remember to stay calm. Understanding that declines are a natural part of the market cycle can make it easier for investors to bear the uncertainty and avoid the temptation to react. Investors should remember that if you are holding an investment that has fallen in value, you do not actually realize a loss until you sell it. In fact, during market lows, investors may have the opportunity to expand their portfolios with quality investments at attractive prices. 

Secondly, investors should have a strategy that they can hold on to through market highs and lows and remember that it is nearly impossible to accurately time the market. Unless there is a significant change in circumstances, every investor should stick to their investment strategy in order to reach their goals. While it is important to remember there are no guarantees that an upward trend will occur in the future, history has shown that long-term investors who have stayed the course and not withdrawn their money from the market have been rewarded for their patience, even after significant market declines. Often times, in a down market some of the biggest gains come early in the market rebound. 

 

 Additionally, when market conditions are unsteady, it becomes a good time to examine your portfolio structure and ensure proper diversification across various asset classes and investment styles. However, please note that is important to do adequate research in all areas and vehicles you choose to invest in, as certain investments may include risks not associated with other investments. Ample diversification will help reduce risk and smooth the effects of normal volatility and market conditions. 

 

Our portfolio managers have guided portfolios through recessions, bear markets, and challenging market events in the past. We utilize that knowledge and experience every day, while remaining focused on our clients' long-term objectives. We know that these qualities will serve our clients well over the coming months and years. At Condor Capital, we believe that having a solid investment strategy and sticking to it is the best way to help protect our clients' financial future.