With a volatile decade behind us and an uncertain future ahead, we review what occurred in this final quarter of 2009 and, more interestingly, focus on the ‘teens from 30,000 feet.  This high level view touches on trends in capital flows, ongoing financial market dislocations, government influences, and global growth. 

Recent Performance

The public market rally that closed 2009 was dramatic.  The trend in private equities was muted in magnitude but positive as well.  Since available data remains as of 9/30/09, the cumulative 1-year period includes the perilous fourth quarter of 2008.  As such, shorter period comparisons are skewed by the delayed reporting and pricing mechanisms for private funds.  Longer term data demonstrate the consistent trend of private market averages performing at a premium to public markets.

Real estate and timber markets continued to experience declines through the fourth quarter as those markets are lagging sectors of the economy.  Real estate continued to suffer from an overhang of debt relative to lower equity values.  2010 may be a watershed year for real estate, as we see more distressed loans being moved out of the banks as bank capital is restored.  Hints of a rebound late in the year in the commercial mortgage backed securities market (CMBS) should help real estate to find a bottom.  Private energy funds experienced a healthy quarter and year as prices stabilized and trended up along with economic activity.  The energy sector continued to provide portfolio diversification and opportunity.