Quarterly Thoughts – Q4 2012

Despite the sluggish economy and the general perception that there has been limited progress after the global financial crisis, most stock markets rose 16% to 20% for the year, some market indices are now recording new highs, and the current U.S. stock market recovery, adjusted for inflation, is on track to be the fastest recovery amongst those that followed the four worst market crashes of all time.  While this may feel like the equivalent of celebrating that your last case of the flu or hangover wasn’t as bad as  previous such episodes, it is still welcomed information.

Dampening this relatively good news are the effects of historically high levels of divisiveness in Washington.  Congressional approval ratings are at or near all-time lows, as is the willingness to cross party lines to make decisions and progress.  The result has been replays of brinksmanship with the 2012 debt-ceiling debate and “fiscal cliff,” and now the looming debt-ceiling debate of 2013.  While uncertainty about the timing or specifics of decisions in D.C. may cause market volatility, these short-term factors should not cause you to stray from your strategy (and therefore your goals).  We encourage you to take a long-term view, because your most important goals occur over the long-term.