Hi Everyone,

The last couple of weeks have provided us with some unprecedented financial events.

First, a political game of chicken with the “debt ceiling” in Washington almost sent the United States into default on its obligations.

Second, Standard & Poors, a debt rating service, lowered its rating on United States debt obligations from AAA to AA+. This happened on Friday and the result of this downgrade on the markets has been swift and severe. The markets hate uncertainty and the results of the aforementioned events have provided plenty of that. As a result we’ve seen lots of volatility over the last few weeks and will probably see more before this current episode is over.

So what should we do? Number one, we need to maintain perspective. Since the end of April the market (S&P 500) is down about 18% and our portfolios, on average, are down about 5%. They have been constructed to survive these types of downturns.

Number two, evaluate current allocations. These types of corrections present buying opportunities – stocks are now cheaper than they were 3 months ago and it may be appropriate to increase this portion of your portfolio. By most measures stocks don’t appear to be overvalued and corporate balance sheets look strong.

Sometimes the appropriate strategy is to sit tight and sometimes making tactical changes is the right thing to do. Panic is never a successful course of action. We can’t control the markets, but we can control our direction. We will weather this recent storm together if we keep perspective and look for the silver linings. If you’d like to discuss things in more detail please give me a call.

Your Partner in Resolve,
Jim McCusker