Recovery Ahead?

The second-quarter earnings season is mostly over and was generally positive, and resulted in a very nice move upwards in the market during the period. So what's next for the markets?

We believe that, in the near term, the story is generally positive. This provides an opportunity for investors who have been on the sidelines to get back into the market and systematically move their equity allocations back up to target (This is the dollar-cost-in we talk about).

When we're coming out of recessions, the environment can seem puzzling, and many investors hesitate to act, mostly due to lack of planning. However, hesitation can be costly: After steep market declines, recoveries typically have sharp bursts of strength, much like we've seen since hitting the March lows.

The yields currently being paid on the safest of investments are tiny. We believe investors should move out the risk spectrum into other asset classes in an effort to achieve greater gains.

Many legitimate concerns remain, including:

High Unemployment

Increasing Deficits

More regulation

Emerging problems in the commercial real estate arena

Potential for higher taxes

A Contrarian view:

Global Stimulus

Stock market telling us a “good economic” story

Pent up demand for both business and consumers

Housing market may be bottoming

The market tends to climb a "wall of worry" and that keeps us positive on the market's outlook. While US and global equities have certainly rallied substantially off of the March lows, investor sentiment has still not reached levels that would indicate excessive optimism. Most people remain on the sideline.

As a result, we think the market still has legs and will pull in even more disbelievers. All that said, it is common to experience necessary periods of consolidation. What we have do know is if things turn badly in a hurry, we can and will make adjustments – dollar-cost-out, as we’ve talked about. If you don’t have a Plan for Success, we can help. Please contact us for a free financial review.