Greetings!    August is my favorite month of the whole year.  I like hot and humid 95 degree days; playing ball or out on the boat somewhere--eating steamed crabs--August to me is summer. 

This August, to say the least, has not lived up to my expectations!  Forget the hurricanes and earthquakes, I can live with them, but this market--enough already, come on September!  The August markets had a horrific start, probably touched off by the political wrangling called the debt ceiling which was finally ended on August 2.  That political battle gave opportunity to every fringe element in the country to once again (gleefully I might add) predict economic Armageddon and this time people were actually paying attention to them. 

Then our old friend the European Sovereign Debt crisis made it's monthly appearance and the markets were off to the races--to the bottom.  On August 1, the Dow stood at 12,143 and 10 days later on August 10 it closed at 10,719, off by 1,425.  In an historic week (August 8 to August 12) the market volatility was unprecedented.  On Monday the Dow was down 624; then Tuesday it was up 429; then Wednesday it went back down 528; and Thursday it went up 414.  This was the first time in the history of the DJIA where we had four 400 points moves in a row.  We finished Friday up a quiet 126.  I went to a birthday party at a friend's home that Friday night and the host had hidden all the sharp knives.

Finally some calm and reason took over and the DJIA regained much of its losses as we finished August at 11,613, down just 529 points.  It is easy to despair in the middle of such craziness.  I must have said twenty times during that week, "let's not make long-term financial decisions based on short term stock market moves."  August is a thin market with many traders and investors out on vacation; and the folks who were not on vacation were too awe-struck by the gyrations to step in and buy--myself included. 

I had had a great month in July, bringing over quite a few new clients (thanks for the referrals) and with their assets ready to deploy into their new portfolios I waited a few weeks before I invested, afraid that any day right after buying I wouldn't look like a total idiot.  There is nothing worse than having a new client open their first monthly statement and see a bunch of negative numbers.  So I sat on the sidelines much of the month and let the high frequency trading machines and algorithmic traders work their magic--I hope they suffered!     

August was still negative, the fourth straight month of negatives, but at least the last few weeks we had what looked a little like normalcy.  Here are the numbers:    

  

DJIA                  12,143.24               11,613.53          -529.71  

NASDAQ            2,756.38                2,579.46          - 176.92        
S&P 500              1,292.28                1,218.89          -  73.39

(Yahoo Finance. Past performance is no guarantee of future results.  Indices are unmanaged and cannot be invested into directly.)