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summaries

With the one game tie-breaker for Major LeagueBaseball’s Central Division Championship now inthe record books, it is fair to say that DetroitTigers baseball fans have had a summer of upsand downs. This game, versus the MinnesotaTwins, was certainly a game that many will neverforget – a twelve inning nail biter! It was a gamewhere all fans - Tiger and Twin alike - werehanging on every pitch hoping their team wouldadvance to the post season.

The "game within the game" was absolutelyfascinating for those that have a solidunderstanding of the fundamentals of baseball.Dave Bergman, Sigma’s Senior Portfolio Managerand a twenty year Major League Baseball veteranoffers his insights on how the "little things" in thisgame influenced the outcome.

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In the second inning, Miguel Cabrera led off witha double. The next hitter, Carlos Guillen, knewthat he had to make sure that he got Cabrera tothird base in any way that he could. He shouldtry to hit a ground ball to the right side of theinfield, or bunt, or try to hit a deep fly ball tothe outfield. Any of these scenarios would havepotentially produced another run for the Tigers,

but as we all now know, he was unable to executegood fundamental baseball in that at bat.

In the 9th inning, the Tigers had runners on 1stand 3rd base with one out. The runners havebeen trained for most of their careers on what todo given the results of the next batters hittingaction. As the play-by-play announcers will oftensay, the runner is instructed to "freeze" on a linedrive, meaning that he needs to ensure that hecan get back to his base without getting doubledup should the batter hit a sharp liner fieldedsafely by the fielder for an out. The runner onthird base should be prepared to tag up on a deepfly ball to the outfield so he can score a run. Aball hit on the ground will require the runnerfrom third to run home to tempt the fielder tothrow home to reduce the chances of a doubleplay. These are a few scenarios that must bethought of prior to the play actually happening.In this situation, Brandon Inge hit a line drive tothe short stop and Curtis Granderson, instead of"freezing" at first base, took a few steps towardssecond base. The short stop recognized thismistake and threw to first base to ‘double up’Granderson. So here, inning over and again, anexample of not doing the "little things" that winor lose ball games.

Congratulations Detroit Tigers!and…

Doing the little things can determine whether you win or lose!

the official newsletter of sigma investment counselors October 2009

summaries

26261 Evergreen • Suite 455 • Southfield, MI 48076 • tel (248) 223-0122 • fax (248) 223-0144 • www.sigmainvestments.com

In the 10th inning the Tigers were ahead and 3outs away from going to New York to play theYankees. A ball was hit to left fielder RyanRaburn. He made a critical mistake - took apoorly calculated risk that most fans would haveconsidered a spectacular effort - when he dove fora ball. Because he missed the ball, the batterplayed a single into a triple! The batter eventuallyscored from third base and the score was then tied.However, this was considered a critical mistakebecause it is well known in baseball intelligencethat when your team is leading by one run in lateinnings, taking this kind of risk is unacceptable.The little things can win or lose a ball game!

Finally, in the 12th inning, with one out, MiguelCabrera induced a walk from the Twins pitcher.The next hitter was Don Kelly and he drove a ballto left center field for what should have been asingle. However, the Twins left fielder, DelmonYoung attempted to throw out Miguel Cabrera ashe easily advanced to third base. Because of thismiscue, Don Kelly continued to second base. Thiswas a fundamental mistake by Delmon Youngbecause he should have known that by throwingthe ball to second he would have kept Don Kellyfrom getting into scoring position. In addition, hescrapped the opportunity for the Twins to set upthe Tigers for a double play on an infield groundball. The little things again, could have cost theTwins the game.

The next hitter, Brandon Inge, hit a ground ballto the second baseman and the second basemanthrew the ball to the catcher at home and Cabrerawas out at home plate. Most fans would havesuggested that this was simply a great play by the

Twins, and it was, but nobody commented on thefact that Cabrera’s first three steps were not at fullthrottle and as a result he was thrown out versusbeing potentially safe at home plate. Had he reallykicked it in full speed, one could argue that theTigers would have scored another run! The littlethings can win or lose ball games!

In closing, sports analogies are always made tobusiness. One of the things we have noted atSigma is that indeed, little things do make adifference. The harvesting of a loss to offset again and reduce taxes is a small action that willadd up over time. Similarly, finding ways toreduce expenses in client portfolios by monitoringthe fees on certain assets and then making changeswhen warranted, will provide similar benefits.

All in, we are grateful that the Tigers contendedall year long, but we really would have liked tohave seen more baseball from them this October!

Portfolio PrescriptionsAt the time of this writing the healthcare debatein Washington continues. Oddly, the endgamegoals for both political parties are the same:1) comprehensive healthcare coverage 2) for allAmericans 3) at a reasonable price. The problem isthat there is wide disagreement on what constitutes"comprehensive" and what is considered "reasonableprice." Also, how to get there – the implementationpart – is vastly different depending on which sideof the isle one resides (reminds us of the sign inthe small town auto repair shop: High quality,Fast, Cheap – pick two!).

26261 Evergreen • Suite 455 • Southfield, MI 48076 • tel (248) 223-0122 • fax (248) 223-0144 • www.sigmainvestments.com

It appears that the Democratic leadership in theHouse of Representatives is determined to get abill approved for the President's signature. We donot take lightly the repercussions of any bill thatis ultimately approved. However; we do believethat regardless of the outcome, having resolutionof direction will be a net positive for thehealthcare industry. With resolution comescertainty, something investors crave. Anunderstanding of the contours of any bill willhence allow the managers of healthcare companiesto make rational business decisions to comply withthe bill and optimally, do so while providing aprofitable service to patients.

The healthcare goals of both parties (and thePresident) have always been expanded coverage,quality improvement, and a reduction of costs.This does not mean a rising tide lifts all boatsbut expanding coverage, with either private orpublic insurance coverage, opens up new marketsfor many healthcare companies. Efforts atimproving quality will potentially be beneficial forcompanies that compete in the delivery ofhealthcare, information technology infrastructure,medical treatment research, as well as forcompanies focused on helping consumers toimprove their lifestyles for better health. Thedirective to decrease costs will obviously havediffering impacts on different companies.Depending on how the directive is structured inthe legislative process it is likely that this willultimately be a key separator between the differentproviders within the sector.

Currently, stocks in the healthcare sector generallyare trading at depressed levels, the result of

investor concerns over the uncertainty of the finalshape of legislation. That said, we continue tomaintain exposure to this sector. Regardless of theoutcome, healthcare will remain a significantsegment of the US economy. We believe our focuson the bigger picture and beyond the short termwill ultimately enable us to enhance clientinvestment portfolios over the long term.

The Economic andMarket EnvironmentIn Sum: The Obama Administration continues totest the landscape with a new approach toresolving conflicts with other nations (Iran, NorthKorea, Syria, Venezuela). An apparentimprovement in economic conditions provides theopportunity to focus on foreign relations. As theeconomic crisis has softened, the impetus for morespending assistance from Washington appears to bewaning. This improving economic outlook may toobe responsible for the recent strengthening infinancial asset prices. The destructive bear marketin common stocks that unfolded in 2008 has beenfollowed by a powerful rally in 2009 (through earlyOctober). With the Federal Reserve Boardcontinuing to err on the side of caution, interestrates remained subdued.

Geo-political: A bit more clarity on the Obamaadministration’s foreign policy strategy may begleaned from a study of the circumstances anddynamics surrounding the recent disclosure of theexistence of another Iranian nuclear fuelenrichment factory. Apparently, allies such as

France and Great Britain suggested a more intenseposture in confronting Iran at the United Nationsmeeting in New York in October than what theadministration felt appropriate. This evolvingapproach follows what is appearing to become apattern in interactions with other "countries ofconcern" including North Korea, Syria, andVenezuela. This push towards extended diplomacymay represent an unfolding pragmatism – that theUS no longer has the resources to serve as theworld’s policeman.

Economic: Mounting evidence continues tosuggest that global economic activity is stabilizingand in some regions of the world, actuallyimproving. Recent headlines from the "Economy"segment of the Wall Street Journal website supportthis perception with such entries as "U.S. JoblessClaims Drop", "Retailers Sales Top Estimates", "DataPoint to Trade Hopes" and "Australian Jobs Surge."

Monetary: Federal Reserve Board Chair BenBernanke is the object of much unsolicited adviceconcerning the manner in which the august bodyhe heads should navigate - from an accommodativepolicy thrust to one in which more temperance isdeployed. It would appear that given the weaknessof the US dollar versus most other currencies, theproper tack would indeed appear to be one inwhich this transition begins in the not too distantfuture.

Fiscal Policy: Job losses continue to mount inthe US in spite of the massive Washingtonspending programs of the past eight months. Ofcourse, employment is a lagging indicator, meaningthat job growth improves after the general economybegins to firm. With economic conditions in factappearing to stabilize, it would appear unlikely thatWashington will have the necessary voter supportto expand spending further.

Equity Markets: From the lows reached in Marchof 2009, the major equity indexes the world overhave staged a powerful rally. The Standard &Poor’s 500 stock index gained almost 60% throughearly October, while the MSCI Europe, Far East,and Australia Index gained about 70%. A healthylevel of skepticism over the durability of this rallyis perhaps the single greatest impetus to furthergains.

Fixed Income Markets: Corporate bondscontinue to provide competitive returns comparedto other asset classes. Tighter yield spreads overtreasuries and low interest rates may enticecompanies to continue to increase supply by issuingdebt. This increased supply and economic worriescould drive prices down, causing the rate of interestto rise.

26261 Evergreen • Suite 455 • Southfield, MI 48076 • tel (248) 223-0122 • fax (248) 223-0144 • www.sigmainvestments.com

Please remember to contact Sigma Investment Counselors if there are any changes in your financial situation or investment objectives.

The views in this publication are as of October 2009 and are for informational purposes only. The information presentedin this publication is not intended to provide investment advice. Keep in mind that each sector of the market entails riskand statements concerning financial market outlook are based on current market conditions, which will fluctuate.