Hold Steady as Markets Ready for Holiday Rush
With a 9% congressional approval rating – people are surprised about the Super Committee?
In reality, the U.S. budget situation and Europe will certainly continue to earn the market’s attention over the short holiday week, though focus will turn toward the upcoming Black Friday for retailers.
As for any potential downgrade, the rating agencies have indicated they will wait on a downgrade decision until the election so we don’t run into the debt ceiling issue again until then. Also, interest rates in the United States are not likely to force a decision before the election either.
For the week, the Dow Jones Industrial Average (DJIA) lost -2.94% to finish at 11,796, the Standard & Poor’s 500 (S&P 500) lost -3.81% to finish at 1,216, and the Nasdaq Composite Index lost -3.97% to finish at 2,573. The Russell 2000 Index, which tracks the performance of small capitalization stocks, finished up losing -3.39% finishing at 719.
Our favorite economist, Ed Hyman just raised his 4Q 2011 Gross Domestic Product forecast from 2.0% to 3.0%. He cites strong profits, aggressive policies by the Fed, and strong technological innovation as some of the drivers for the uptick. From our perspective, better retail sales, high expectations for holiday sales starting this weekend, higher vehicle production, and better unemployment claims have also been a big help.
We know that these markets seem dangerous, exhausting and – I dare say – even interesting, but unless you have a change in your need for short-term liquidity, we remain firmly seated in the camp that it’s foolish to be trading this market if your original investment strategy is (and has been) positioned for an economic recovery.
Call us for help or if you have any questions.
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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 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values.
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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