What with Labor Day behind us, it is time to welcome fall. August was a challenging month for investors and challenges lie ahead for both stock and bond markets. Unemployment remains elevated and GDP is weak. The economy may be closer to stall speed than escape velocity. What with the specter of US military involvement in Syria, now might not be the time to follow the herd into flight from bonds and bond funds. A spike in bond yields and a corresponding drop in bond prices had many investors headed for the exits once again.
The spike in yield came on the heels of an announcement by Fed Chairman Ben Bernanke that the Federal Reserve may initiate a policy of gradual withdrawal from the stimulus known as quantitative easing. In other words, the Fed would begin to purchase less US Treasury and mortgage-backed debt every month. As previously written, this policy shift may be positive overall if the US economy can finally stand on its own. Adding considerable uncertainty at the Fed is the unanswered question of who will succeed Ben Bernanke when his term expires in January of 2014. Time will tell.
Against this backdrop, now is a good time to review your investment strategy and asset allocation decisions with your advisor. A portfolio allocated between stocks, bonds, and cash, according to your age and your appetite for risk, is meant to be held in all kinds of economic and political settings. At ASG, our philosophy is “monitor and adjust” not “set and forget”. That said, most adjustments are minor and on the periphery versus all or nothing bets on an unknown future. As we approach the fourth quarter of 2013, we will be watching the following dates with keen interest:
|September 11||Anniversary 9/11 Terrorist Attack|
|September 18||FOMC Rate and QE Decision|
|October 1||Federal Budget Deadline|
|October 4||Unemployment Rate|
In closing, we are excited to share our new logo with you. Our unique brand is designed to evoke the path to financial independence upon which our firm is founded. We are deeply grateful for your trust in us and we will work tirelessly to help you achieve your goals.