Market Perspectives (June 2012)

by Jim Baird on June 7, 2012

Executive Summary

  • Market volatility spiked in May as economic data disappointed and the Eurozone crisis flared up again, driving a flight to quality rally in the Dollar and Treasuries and downward pressure on stocks and other risk assets.
  • Soft data both in the U.S. and abroad contributed to concerns about the state of the U.S. economy, which has slowed again in recent months.  Turning points in the economic cycle are very difficult to identify in real time.
  • Long-term fundamentals such as attractive valuations are often overlooked by investors during turbulent periods, but will still support positive returns for patient investors over the long term.
  • Investors should not lose sight of their true investment time horizon and risk tolerance when making decisions about the structure of their portfolio, even during periods of uncertainty.

Tipping Points

Capital Markets

In 2000, Malcolm Gladwell was a staff writer for The New Yorker magazine when his first book “The Tipping Point: How Little Things Can Make a Big Difference” was published, eventually becoming a New York Times bestseller.  In brief, the book offers insights into the processes and factors that are present in the evolution of a trend and that are critical to determining whether that trend will fizzle out or blossom into a much wider phenomenon.  Among the more interesting revelations in the book is that these common elements are not limited to a particular field or discipline, but span many variety of phenomena present even in the natural world.

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