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05.14.2010 / Market Analysis Recap. Posting by Stephen Frantz, Tributary Capital Management President and Chief Investment Officer

We continue to be modestly surprised by the overall strength in the U.S. equity markets, particularly in Small Cap stocks, whose index returns are in the double digits through the 1st quarter of 2010. Traditionally, strength in Small Cap stocks signal forward looking strength in the economy. Although we have been forecasting decent growth in the U.S. for 2010, the strength in this sector suggests that we may be to conservative in our estimates.

"Traditionally, strength in Small Cap stocks signal forward looking strength in the economy."

Thematically, we have been focusing on large cap domestic companies whose revenue streams are diversified to include substantial exposure outside of the U.S., specifically in the Far East. Although Large Cap Multi-Nationals and International stocks have shown positive returns for the year, Small Cap stock returns have been significantly higher.
 
We continue to favor modest overweighting of stocks over bonds, and continue to have a bias to overweight international stocks. Although the strength in the US dollar has muted returns of international stocks so far this year, we continue to believe the catalyst for Global Growth continues to be outside of the U.S.

For more information on the Tributary Capital Management team, visit tributarycapital.com.

What are your thoughts on the markets? Please share your comments.


Comments are provided as general market commentary and should not be considered investment advice or predictive of any future market performance.  Past performance does not guarantee future results.

Investments are: Not FDIC Insured • May Go Down in Value • Not a Deposit • Not Guaranteed By the Bank • Not Insured By Any Federal Government Agency

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