Watching the world: How headlines impact your financial plan

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Fall 2012 InContext Investor Newsletter
Planning in an Uncertain World
For the majority of 2012, events both economic and political have left Americans with more questions than answers. Most investors would agree that recent times have been fraught with uncertainty. How should we approach the uncertainty associated with financial matters, such as what will tax rates be in 2013, or when and how will the Eurozone crisis be resolved? Investors can approach this from three different perspectives.


Summer 2012 InContext Investor Newsletter
Putting the Global Economy and Markets in Context
The financial and economic environment of the past few years has been challenging. To name just a few headline-grabbing items, investors have had to stare down a ratings downgrade of U.S. Treasury bonds by Standard & Poor’s, the European debt crisis (see sidebar on this page), high unemployment report after high unemployment report and very low rates of interest on bond investments. With all of these stories, which are incessantly focused on negative developments, it can be easy for investors to miss the good news. With the turbulent financial markets of 2008 and early 2009 now several years past, we can begin to put these developments in context.


Spring 2012 InContext Investor Newsletter
Considering International Diversification
Last year was challenging for globally diversified stock portfolios. While the S&P 500 Index was up 2.1 percent in 2011, the MSCI EAFE Index, which is basically the international equivalent of the S&P 500, was down 12.1 percent. The MSCI Emerging Markets Index was down 18.4 percent.


Winter 2012 InContext Investor Newsletter
2011: The Year in Review
2011 was a roller-coaster year in the financial markets. To give some perspective on just how bumpy it was, the S&P 500 Index was down more than 5 percent in August, roughly 7 percent in September and then up more than 10 percent in October.


Fall 2011 InContext Investor Newsletter
Making Sense of Low Rates and the Risks of Stretching for Yield
The credit crisis in Europe clearly intensified in the third quarter of this year with yields on Greece’s two-year bonds going from 26.7 percent at the beginning of the quarter to 62.2 percent at the end of the quarter. While the developments in Europe affected all financial markets, they had a particularly strong impact on high-quality fixed income yields. For example, the five-year Treasury yield was 1.76 percent as of June 30 but fell to 0.97 percent as of September 30.


Summer 2011 InContext Investor Newsletter
Making Sense of the Eurozone Debt Crisis
The Eurozone debt crisis began in earnest in the early part of 2010, and it has 
become one of the most closely followed financial stories of the past year. 
What many investors may not realize is the origins of the crisis began well 
before the financial crisis of 2007–2009.


Spring 2011 InContext Investor Newsletter
All Around the World

The relationship between markets and world events is different than many
would expect. The following article addresses some of the questions investors
have been asking.

When will things return to normal?
Although it can be difficult to accept, what we experienced these past few
months may be what normal looks and feels like. Many people may look back at
2010 as normal, but memories of that time may be altered because of what we
experienced in late 2008 and early 2009.

Even though the S&P 500 Index returned 15.1 percent for the year in 2010, bad
news in the way of high unemployment, numerous bank closures and a struggling
housing market were just a few of the hurdles we faced last year.
It’s common to hear people say, “Just when things were getting back to normal.”
This suggests they were on the verge of normal, but not quite there yet. More
often, we find ourselves looking back, identifying normal only after it has passed
but rarely talking about things being normal in the moment.


Winter 2010 InContext Investor Newsletter

The Year that was 2009

The severe bear market of 2008 that continued into the first
quarter of 2009 tested even the most disciplined investors.
What happened in 2009 to cause investors to be described by
the financial media as “skittish” for almost an entire year?

The Year in Review
The recession that began in December 2007 continued into 2009
with the gross domestic product falling during each of the first two
quarters. After the S&P 500 Index lost 37 percent in 2008 (its largest
calendar year loss since 1931), the S&P 500 lost almost 25 percent
by March 9. The unemployment rate was more than 8 percent by
March and headed for a peak of 10.1 percent in October


Spring 2010 InContext Investor Newsletter
The Elusive Sure Thing

As we began 2010, it seemed there were three sure things:
The price of gold would rise, bond yields would rise and
inflation would show up uninvited. The year began with gold
at $1,121 and the 10-year Treasury note yielding 3.82 percent.

At the end of the first quarter, gold is at $1,113, and the yield on the
10-year Treasury is 3.83 percent (as of 03/31/10). The U.S. Consumer
Price Index, which tracks inflation, rose just 0.3 percent and 0 percent
in January and February, respectively


Winter 2009 InContext Investor Newsletter
Riding the Storm Out

In December 2008, the National Bureau of Economic
Research determined the United States was in a
recession, one that began in December 2007. Since
World War II, the two longest recessions have each
lasted 16 months.

While economists may try to predict when this current downturn will
conclude — with forecasts ranging from June 2009 to after January
2010 — research has found there are no economic forecasters who
consistently lead the pack in forecasting accuracy.


Fall 2009 InContext Investor Newsletter
Confidence of our Convictions

Over the past 10 years, our investments in common stocks
have been a roller coaster of bull and bear markets, almost
too numerous to count. The decade started off with the S&P
500 Index plummeting almost 40 percent from its peak set in
early 2000, followed by a 100 percent increase through
October 2007. And that was just the beginning.

If one defines a bull or bear market as a 20 percent change in value,
from its 2007 peak, we have endured two more bull and bear
markets each in the past 24 months alone! Nothing would indicate
that these gyrations will end anytime soon. Yet, for most of us, it still
makes sense to allocate a portion of our assets to this risky asset
class




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