Though many await the beauty and crispness of fall, I've never been able to completely enjoy the changing leaves or the clear Carolina blue sky. Instead, I'm beginning to dread the approach of winter. Christmas and college basketball notwithstanding, what does winter have to offer? The sky's gray, the ground is brown, trees are bare and cold physically hurts.
But wait, with this summer's record-breaking heat, an earthquake, a hurricane and the volatile equity markets, I'm ready for a change. The major equity indices were down 8 to 9% for the summer, and August alone proved to be the worst August in a decade, down 5-6%. And that was with a nice rebound in the last week and a half of trading. The suspects were wearily familiar (Europe and recession fears) or maddening (Washington and the debt downgrade).
Though European debt and double-dip recession fears have continued to pressure equities in September, there are positives. Unlike September 2008 and the onset of the financial crisis, corporations are now strong, energy prices are relatively stable (perhaps falling) and there is plenty of value out there for the disciplined investor. The U.S. economy is indeed fragile and more vulnerable to unexpected events, but equity market fundamentals are strong and investors will eventually tire of earning 0% on cash.
In times like these it’s good to remember that great old British wartime expression: “Keep Calm and Carry On.” That phrase fits nicely with the long-term investment strategy of the North Carolina Community Foundation. Financial markets are driven either by fear or greed. The Foundation’s Finance Committee remains vigilant and navigates the portfolio well inside those extremes.