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Earthquakes & Hurricanes & Lions & Tigers…But No Bears, Oh My!

Ok – so maybe there were no lions or tigers, but after the events of last week, if I saw a few walking down the street I’m not sure I’d have been shocked.  At least there were no bears last week as we saw the Standard & Poor’s 500 (S&P 500) rally four of the five days last week to post a weekly gain for the first time in five weeks

The Dow Jones Industrial Average (DJIA) gained 4.32% to finish at 11,285; the S&P 500 Index gained 0.74% to finish at 1,177; and the NASDAQ Composite Index gained 5.89% to finish at 2,480. The Russell 2000 Index, which tracks the performance of small capitalization stocks, gained 6.15% to finish at 692.

It was good news to see the aforementioned indices rebound greater than 4% each without the help of the Federal Reserve (The Fed).  Last week, Fed Chairman Ben Bernanke’s assurance to support the economy stopped short of providing another round of Quantitative Easing. But the market rallies anyway.  We see this as a good sign.

The Gross Domestic Product (GDP) numbers that were revised last week are definitely reflecting a major slowdown in the economy, if not an outright stall.  With first quarter 2011 GDP revised from 1.1% down to 0.4% and the second quarter revised from 1.3% down to 1.0%, there is no doubt that things are rough. Throw in the +9% unemployment rate and there is no wonder people have lost confidence.

But in the face of that, we saw +4% moves in the equity markets last week.  Is that a signal the market sold off too much over the past 5 weeks?  Maybe.  But there is good news.  Gas has come down about 9%…during the summer driving months.  Jobs are being created…albeit not at a barn burning pace, but they are being created.

We know that people may stand ready to feed these words back to us a year from now, but for right now we STILL think: Slowing growth? Yes (obviously), Recession? No.  Even with GDP revised down to 0.4% and 1.0%, those two numbers are a long way off from negative.

But we leave you with this – predictions are less important than convictions.  Our conviction is this – stay invested unless your need for short-term liquidity has changed.  That should be the only reason an investor is selling right now.

If you can’t sleep at night, your asset allocation does not accurately reflect your risk tolerance and you should call your advisor to update your long-term planning and allocations.

Call us for help or if you have any questions.

IMPORTANT NOTE: Due to industry regulations, comments are not permitted on this blog. If you would like to contact the author, please email us at info@monumentwm.com.


Securities and Financial Planning offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC


**Standard Compliance Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.  All performance referenced is historical and is no guarantee of future results.  All indices are unmanaged and cannot be invested into directly.  Stock investing involves risk including loss of principal.  The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index.  The Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.


David B. photo

David B. Armstrong, CFA

President & Co-Founder

Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....

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Please remember that past performance is no guarantee of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“Monument”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Monument. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. No amount of prior experience or success should be construed that a certain level of results or satisfaction will be achieved if Monument is engaged, or continues to be engaged, to provide investment advisory services. Monument is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.

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