Wednesday, October 1, 2008

Private Cliient Commentary - reflective vs. reflexive

Dear Clients,

Looks like another one of those days that calls for two commentaries. As I mentioned in this morning's message, I'm currently not in the office. But in light of today's slide in the stock market, I thought I'd take a break and offer some perspective on what's going on.

As of this instant, the Dow has dropped below 10,000 for the first time since 2004. Today's primary excuse seems to stem from Europe's sudden realization that their banking system is in every bit as much disarray as ours. Like it or not, the economies of the world are without question closely connected, and while it's not as apparent during times when most economies are growing (as some countries expand at faster paces, and a few perhaps not at all), it's very apparent, if not exaggerated, during times when one or more of the major economies of the world begin to contract. So we might think of Europe's issues today as the 'other shoe to drop'. The market looks to be reacting to the probability of a global economic slowdown. In essence, selling on the anticipation (kind of like selling the rumor) of what's to come.

As we've explored, ad nauseam, the market is ultimately the great discounter of a potential future event, or series of events. Its goal is to always be early to the party. But if the market in the short-term is anything

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