The Coast is Never Clear

There is no shortage of talking heads discussing the potential consequences of a debt ceiling stalemate. We don’t know how or when it is going to be resolved, but the obvious unattractive ramifications of it not being fixed tends to make us optimistic.

More importantly, to be a long-term investor in the growth of the world’s economy means that we are going to regularly see some “crisis” occur, for example:

• 20% market drop in one day in October 1987
• Gulf War
• tech bubble of the late 90’s
• 9/11
• financial and bank meltdown of 2008-2009
• the European debt crisis

…you name it. There have been and will continue to be reasons to “wait until the coast is clear”.

Unfortunately, in our business the coast is never clear. There will always be something out there that causes us to be concerned. And every now and then, the stock market’s performance will reflect that by handing us a significant drawdown.

But if you look at the performance of the companies that constitute the stock market, the long-term earnings growth which these companies have provided to shareholders should be the focus of a true investor.

The other option is to try to figure when to get in and out of the market based on various forecasts of future events which may or may not occur. That does not sound like a lot of fun, but it is the approach that is popular on financial TV channels. Our advice - turn the channel to a rerun of Andy Griffith.

The chart below goes back to 1970 and shows various stressful events that have occurred and the market’s performance. As you can see, we have had (and will have) periods of stress that cause traders to run for cover, but when you look at the long-term performance, you can see that investors have been rewarded for their patience.

Source: Dimensional Fund Advisors

We don’t know how to help traders. But we believe that we can help investors stay focused on the long- term benefits of a diversified, strategic plan and portfolio.

So while our “representatives” in Washington figure this latest issue out, as always we are here for any thoughts or questions you may have.

Thanks as always for your trust and confidence.

Beach

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information provided does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but there is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Any opinions are those of the author, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Diversification does not ensure a profit or guarantee against a loss. Investing involve risk and you may incur a profit or loss regardless of strategy selected. Past performance may not be indicative of future results.