Look Over Your Shoulder…Was That the Market Bottom?

After the S&P 500 hit a year-to-date low of 1278 in early June, investors have been on quite a ride over the summer. Led by European headlines and financial instability overseas, the U.S. markets have been faced with volatile reactions to the constant negative news stream. How does an investor, or even their advisor, handle this volatility and invest in this type of environment? Listening to headlines and investing emotionally rarely pays off and is a sure way to deplete your investment account over the long run.

Technically Speaking…

That is why technical indicators can help with investing decisions and take emotion out of the equation. It is the difference between a disciplined investment process and a shoot-from-the-hip investment approach. The reason Stern Brothers didn’t sell client holdings on the June 4th low, at the height of the market panic (and subsequent lows of the year) is because we rely on a group of indicators that told us the environment was deteriorating, but not nearly as bad as the headlines would have you believe. Are there world-wide sovereign debt problems? Sure. Are governments likely to default until a recovery takes hold? Most likely. But investors must keep these events in perspective. There have been about 300 world-wide government defaults (in various forms) since 1900 and there has been tremendous growth since then. The difference is knowing when to accept more risk in the markets and when to protect capital. This is achieved by utilizing a disciplined, proven investment process.

We Take Action

At Stern Brothers, we provide stability, vision and growth for our clients. We know that in the face of deteriorating world economies, the financial markets can display tremendous growth (as they did after the March 2009 bottom). We filter out the noise in order to find quality buying opportunities, and take a defensive stance to protect your capital when the market shows signs of weakness.


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