TGIF December 16, 2011

The Market turmoil continues into year-end, as investors are struggling to interpret what Europe’s problems will ultimately mean for the global economy.  The 3-day slide on Wall Street came to a halt yesterday, but confidence remains weak that the recovery across the pond will be smooth.

Today is yet another Friday when both traders and investors alike are simply focused on getting to the weekend in one piece, and use the weekend to reassess where this Market should be headed next.  Au contraire, the stock market turbulence has shined upon our bond portfolios which are doing an extraordinary job of providing comfort and insulation amidst the uncertainty. Bonds are adding real value to investment returns, just as they are designed to do.

Our thesis remains that a stronger finish for this turbulent year is still very doable, and these recent tests are proving the US Market, like the US Consumer, is decisively resilient.  With all the negativity circulating throughout the globe, it’s quite impressive that the DOW is still positive on the year, while foreign markets are still down double-digits. Even the powerful Chinese markets are hitting 3-year lows.  The greatest irony to Standard & Poor’s downgrading US credit last Summer is that wounded global markets are making it very clear the safest and highest quality assets are found in the good ole United States of America. Amen.

Investor psychology has been damaged by the whipsaw price action since July.  It seems as though many investors have already thrown in the towel on their hopes for a year-end Santa Rally.  Since XMAS naysayers are classic contrarians, the probability tilts toward a rally next week.  This is not to demean the problems we face which are obvious and real.  Europe has no easy solution, and will certainly be the major drag in 2012; it’s not going away.

We are spending quality time by fine-tuning our 2012 investment strategy, and will be crafting a plan for both a rally as well as a 2012 disaster.  Regardless of what 2012 brings, we will be prepared because we are doing the work now. And taking nothing for granted. Today’s technology enables us to be ready to act decisively to protect our clients’ nest eggs.

Only 15 days till 2012. Enjoy this time!

By: Mike Frazier

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