Quarter 2 2012 Market Recap & Analysis

Posted by David Fevergeon - June 26, 2012 - Market Analysis - No Comments

It seems volatility has continued to plague investors throughout the first half of 2012.  After a fickle 2011, equity markets posted some of their best gains on record during the first quarter of this year.  Many of these gains were quickly erased in quarter two as uncertainty over Europe, the presidential election, employment numbers, and future tax rates came to the forefront of investor’s minds.  A study released by the Congressional Budget Office, a nonpartisan agency of Congress that produces economic analysis and estimates the cost of legislation, reported that the economy will shrink by 1.3 percent in the first half of 2013 if the government is allowed to fall off the “fiscal cliff” on January 1st, 2013.  The Fiscal cliff is in reference to the expiration of the Bush-era tax cuts and a scheduled round of automatic spending cuts.  A recession is defined as two economic quarters of negative economic growth.  A 1.3 percent decline in the first half of 2013 could be identified as a recession.  Whether lawmakers can avoid political gridlock (as was the case last year) will yet to be seen. The uncertainties facing the world today have caused many companies to remain cash heavy as it is extremely difficult to plan when the future is so unsure.

Regardless of the outcome, we have been busy incorporating new strategies that are used to hedge against uncertain, volatile markets.  If we have not met to discuss your portfolio in recent months, please feel free to contact me for a portfolio review.  We wish you a wonderful summer season!

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