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august 2011

SINCE 1979

Plan & Prosper Market update Watching the minute-by-minute stock market updates and the blow-by-blow happenings in Washington in the past few weeks, has been like watching a soap opera—melodrama at its finest. Events are changing daily and as a result, I have rewritten this Market Update three times in the past couple of days. l would like to provide you with a balanced synopsis of recent events and how we may calmly assess the significant swings in the stock market. The market began a bit of a descent in July and has built to a crescendo when the when the market dropped —4.77% in one day which was three days after the announcement that the debt ceiling was raised. So, the broad stock market lost its gains for the year. With the help of the news media, the following fears and concerns dominated investors minds: whether the debt ceiling would be raised; whether rating agencies would downgrade U.S. treasuries; whether slow economic growth may lead to a double dip recession; negative expectations of the Jobs report; the sovereign debt issues in Europe and so on. Well you get the picture. Let’s talk about what did happen. The debt ceiling was raised. Current social security recipients are continuing to receive their checks. While Moody’s & Fitch rating services announced the U.S. will maintain its AAA rating, Standard & Poors late last Friday evening after market close, downgraded our credit rating to AA+, adding additional fear to the markets. While the economic growth was slow in the second quarter, but still positive, analysts expect growth to pick up the second half of this year. The Jobs Report was up. Corporate earnings are rising. But, investors confidence will need to return. What will that take? A huge dose of positive news. The Fed will be making announcement this Tuesday. Will they come out with QEIII or another stimulus package? The last two stimulus’ boosted the stock market. We will have to wait and see. So, where does that leave us. Back to basics. First, the market declines -10% or more every year. Plain and simple. We were overdue for a correction and we are finally getting it. (Please re-read my January, 2011 Plan & Prosper newsletter). Fear is the driving the markets, more than fundamentals. The Dow as of the end of last week declined —11.6% and is declining further with the recent news of the S&P downgrade. Further volatility is to be expected over the next few months. The next basic principle is from Warren Buffett . . .

“Be fearful when others are greedy, and be greedy when others are fearful”. In other words, don’t let your feelings and emotions dictate your investment decisions. You are appropriately positioned in your portfolio based on your risk tolerance. If you are conservative, then you have a conservative portfolio. If you feel comfortable with a moderate amount of risk, then you may expect to capture some upside potential when the market goes up. When the market goes down, your portfolio will decline , but not to the extent of the full volatility of the market. If you are a growth investor, then you are looking for higher returns when the market goes up, and also willing to accept the down turn corrections like now. Times like these require a tough stomach, holding on and waiting it out. Third principle. If you are still in the accumulation phase, it would be wise to continue to invest. We are entering a season where prices are cheap. Invest cautiously. Remember, buy low when others are fearful. Last principle. Re-evaluating and rebalancing your portfolio is still essential. If you have not been in for a review for at least six months or longer, then I strongly encourage you to call me. (Continued on page) Registered Representatives, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representatives, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and RPS are not affiliated.


11429 Brittany Woods Lane Cincinnati, OH 45249 and The Regus at Summit Woods 300 E. Business Way, Suite 200 (off Reed Hartman Highway) Phone: 513-469-7899 Fax: 513-469-7998 E-mail: Website:

In addition, I would like to apologize if you were unable to access my website for a few days last week. The website was temporarily unavailable during the transitioning from one website host to another. Be sure to mark your calendars for October 12—for my next Client Event. I have invited a special guest host speaker. You will also be able to bring your friends and family! Stay tuned. Past performance is no guarantee of future results. Indices (S&P 500) are unmanaged. One cannot invest directly in any indices. The prices of small company stocks generally are more volatile than those of large company stocks. Dollar Cost Averaging involves continuous investments in securities regardless of fluctuating price levels. Investors should consider their financial ability to continue purchases through periods of low price levels. Systematic investing does not assure a profit or protect against a loss.

Market Update August 8, 2011  

Market Update

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