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A Word About the Financial Markets

As many of our clients are aware the markets have experienced a significant but cyclical downturn. Many speculators who bet on high tech or internet companies that were all the rage a few years ago have suffered serious losses. However, over the past few years the value of diversification, and choosing to invest with experienced professional money management has proven to be a sound strategy for our clients.

What do you do now?

The state of fear present in the financial markets today is not something new. As discussed in previous newsletters, the markets are driven in the SHORT TERM by greed & fear. We have provided to you over the past several months various data that illustrates why equity markets are superior to other investments over the long term, and why you need to ignore downturns like the one we are now experiencing. However, we have not given you much information to help you with the emotions you may be feeling while you watch your investments decrease in price.

The cycle of market emotions illustrates the feelings you may be experiencing as the markets move through their typical bull and bear phases. DO NOT LET YOUR EMOTIONS GUIDE YOUR FINANICAL DECISION MAKING. It is always hard to pinpoint where we are in the cycle but we are clearly moving toward the point of maximum financial opportunity in the market place. The following is a quote taken from AGF fund Manager Dave Piney on June 26 . “The current drop of investor confidence in companies is heavily discounting the market, and this continues to create opportunities for us,” says David. “Performance will turn around once investors’ negative sentiment begins to subside,” adds David. “But, this attitude will linger for a few months. Volatility will persist, which is not entirely bad, as volatility does create opportunity.” So remember,

1. Your money is not invested in “the market”. It is invested in a diversified portfolio of high quality, well run honest businesses.

2. While the price of your holdings may have fallen, the majority (if not all) of your holdings are companies that are continuing to grow and create value for their shareholders.

3. Investors focus on what they own(quality companies). Speculators focus on the price(market movements). Only investors make money over the long term.

4. We are here for you. If you have any questions about your account, are worried about current events or want someone to talk to please don’t hesitate to give us a call. Our job is to make you more comfortable with uncertain markets so that you may become a successful long term investor.

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