August 18, 2014

Cautious Optimism 8/11/2014

The last few weeks have been a roller coaster ride for investor’s emotions.  Believe it or not, we just had a new all-time high on the S&P 500 on July 27th of 1991.39.  As of Friday, August 8th we are off that high by about 3%.  It has felt bad because of the swiftness of the move, but also because of all of the geo-political risk that has come to the markets attention.  We know that the issues inside of Ukraine and Russia have been occurring almost all year, so why has the market decided now to pay attention, you may ask?  Well that is not an easy answer, but think of the laws of physics- particularly inertia. For those of you that have to look back farther than we'd like, the law of inertia states:  An object in motion continues in motion with the same speed and in the same direction unless acted upon by an unbalanced force.  And the continuation of this fight in Ukraine had become unbalanced with the downing of a civilian aircraft.  That act brought the whole world’s attention to how to deal with Russian aggression.  Finally either the pressure from sanctions or Russia’s own economic turmoil has seemed to have some effect for now, as Russia’s military has completed its military exercises on the border of Ukraine. Then of course we have had the flair ups in the Middle East. With Israel and Palestine beginning a cease fire talk in Cairo, hope for an end to the violence there is fragile.  The world markets have applauded the de-escalation of tensions.  The question now is how the sanctions on Russia will hit the rest of Europe.  Germany’s DAX has fallen particularly hard, because of its energy relationship with Russia. The bears have clearly been in control, and though signs of hope that the Geopolitical situation will calm, hope is not an investment strategy.

Make sure you review your situation and understand the kind of risk you have in your portfolio.  If you need some guidance on how to do that, you can contact us at AMJ Financial Wealth Management @ , and request a conversation.  Best of Luck!


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