Thoughts on Recent Market Volatility

In light of the recent market volatility, we thought we would share some thoughts on the causes.

• Global stock markets fell as the European debt crisis worsened with Spanish bond yields reaching Euro-era record highs.  In addition, investors continue to be concerned with the slowdown in China.
• U.S. stocks are currently suffering smaller declines of 1.5% - 2.0%.  The S&P 500 had rallied 4% from its intraday low on July 12th. The decline over the last two days is correcting that fast advance.
• U.S. stocks remain on an uptrend since reaching the 2012 low on June 1st.  We are watching the 200-day moving average on the S&P 500 (currently at 1314).  A significant breakdown from that level would increase the chance of a deeper correction.
• As discussed in detail in last week's conference call, the portfolio is positioned defensively with high quality, dividend-paying equities; little international exposure; and significant weighting towards alternative investments that offer some downside protection.