Barron Financial Group, LLP
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Beyond the
Trading Desk
Jim Thibault, Managing Partner

I welcome autumn this year after what I would call a fantastic summer. Yes, it was quite warm and most lawns suffered from lack of rain, but there was no shortage of days to be outside and enjoy our warm season. I certainly hope you enjoyed your summer and now look forward to the fall leaf changes and cooler temperatures. Fall has become my favorite season. Enjoy it while you can because winter is not far away.

Sandra and I, along with the two dogs, Simon and Edy, went on vacation in late August to the Adirondacks. Like here in Connecticut the weather was unusually hot and that forced us to change our normal routine of extensive hiking. But we had a terrific time nonetheless. Lots of relaxation, swimming, multiple books started and finished and an overall "recharging" of our batteries. This vacation was the first for Sandra and me as full-time co-workers and although our topics of conversation were somewhat different than in years past, we adjusted quite well. I want to take this opportunity to thank our readers for the well wishes sent before we left. We appreciate your kindness.
 
Thanks to all the attendees of this year's WOW! Forum on September 24th at the Warner Theatre.
Wow! Forum 
The seminar went very well with great audience participation and questions. Also, I want to thank the Northwest Connecticut Chamber of Commerce for organizing the event and managing the logistics.
Last Quarter Round-Up
My outlook last quarter was mildly bullish. I was more comfortable with valuations and expected at least a flat if not slightly upward market. Clearly, I was not bullish enough as the 3rd quarter turned out to be quite strong, with the S&P 500 stock index up nearly 11%. The economic data for the quarter continued its non-committal ways with some areas showing improvement and others more in decline. The Double-Dip recession has been a common theme throughout the quarter. Uncertainty about consumers, business and politics are factoring into current market behavior. Inflation remains low and housing has not firmly established a bottom. Trading volumes are low, which is worrisome. The equity strategy last quarter favored value over growth, large cap over small and an increase in international positions. The fixed income strategy was to reduce cash and inflation-protected bonds, maintain long treasuries and add to short duration bonds. Quarterly asset class results: Growth +12.96%; Value +9.67%; Large cap +11.20%; Small cap +11.43%; Int'l +18.08%; Inflation protected bonds +2.01%; Long bonds +3.70%; Short bonds +0.30%

Global Economic Outlook
I have moved my fair value target slightly upward for the S&P 500 index to 1050-1150. As of the quarter close, we are near the top of this range and feel it makes sense to capture some profits. I believe the economy is recovering, but it is fragile with a 20-25% risk of a Double-Dip. On the bearish side, we have businesses with little incentive to add employees and I do not believe that will change soon. On the bullish side, we appear to have a dramatic shift in political representation coming in November and the expected gridlock could help maintain and possibly elevate stock prices. I expect the markets to view gridlock as a better alternative to anything the two parties might try to accomplish. My equity strategy is to move toward more balanced positions of small cap to large cap and growth to value. Overall equity exposure will be held or reduced. For fixed income, I plan to hold cash, reduce long and short bond exposure and add to alternative fixed income positions.


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860-489-0432,financial.questions@barronfinancialgroup.com
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Notes: Asset class & style returns are based on the price-only performance of ETF's & ETF blends with similar respective focus. Asset class and Style results do not reflect the performance of Barron Financial Group, LLP's advisory accounts. Advisory accounts may not contain these investment strategies and may contain investment strategies not described here. Advisory services include asset management fees that are not reflected in these results. Please contact Barron Financial Group, LLP for more information about specific asset class, style or portfolio returns.

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