Markets succumbed to volatility last week with all equity indexes posting losses for the first time in six weeks.
Despite earnings reports that continue to exceed analyst expectations and glimpses of optimism of recovery in Europe, markets are already starting to question the sustainability of recovery in the labor markets and concerns about the fed meeting in September, and regarding the inevitable taper.
Despite what could be short term volatility in the fall regarding the Fed Chairman, debt ceiling and sequestration discussions, our team remains cautiously optimistic about further advances in the stock markets. From a valuation perspective, the market is trading below or in line with historical norms and still below previous price to earnings multiples. We are already witnessing changes in sectors that look to lead in the back end of 2013.
When markets advance as they have, I believe it is critical to revisit your investment policy statement. A thoughtful analysis of your allocation weights, sector weights and tax considerations in light of changes in the markets and your circumstance should prompt a tactical relocation process that will help protect against downside volatility.
