2nd Quarter Update

Investors saw red during the 2nd quarter and it wasn’t from the fireworks, rather it was the never ending headlines that added to the volatility and made for a down quarter. The Dow was off – 2.5%, S&P 500 down – 3.3%, Nasdaq giving back the most – 5% and the Russell 2000 small-cap index lost – 4% for the quarter. Although, ytd thru June 30 the DJIA is up + 5.42%, S&P 500 Index + 8.31%, Nasdaq the big winner +12.66%, and the international markets as measured by DJ Global ex US was up +1% ytd.

We ended the second quarter on a high note with the surprising decision by the Supreme Court to uphold President Obama’s health-care legislation and an agreement by Euro-zone officials to support troubled banks which helped fuel a 239 point rally on the Dow. The second quarter also had its share of upsetting headlines that created volatility which unnerved investors. Investors shouldn’t get caught up in the day-to-day headlines or “noise” that may influence them to make irrational decisions which will affect their long-term investment strategy. It’s time and not market timing that makes a difference.

My view hasn’t changed that we are only a headline or two away from the market(s) rallying from this level. When the countries that make up the Euro-zone see light at the end of the tunnel, China reignites its growth engine and the unemployment rate in the US falls below the 8% level so our economy grows faster than it has, the stock market should rise. I am concerned about how the markets will react to the Presidential election later in the year and we may sell some of our leveraged positions in order to reduce volatility, but this will be late summer or early fall. Please feel free to contact me with any questions you may have or if you’re tolerance for risk has changed.

In the meantime, enjoy the rest of the summer!