The stock market continues its wild swings! And, like Tarzan, we're also on the move! Today we are moving across the parking lot to the top floor of 9800 Pyramid Court, Suite 450. The new space gives us plenty of room to grow and serve our clients better!

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IT'S ALMOST THE END OF THE YEAR! Have you done your end of year tax planning? Contact your advisor soon!

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This week, let's read a few words from one of our investment partners, Phil Toews, with his perspective on today's stock market.

In a scene from the movie Margin Call, a banker looks out of his car window and says "look at these people, wandering around with absolutely no idea what is about to happen."  That's an accurate portrayal of the current state of the perspectives of many investment advisors, who fear that an EU sourced Armageddon may be just around the corner, and consumers, who just helped push Black Friday results up 6.6% over last year's holiday frenzy.

News flow moves between extremes from the sometimes positive news about the US economy to the "terrifying" (word choice of Mohamed El-Erian) news out of Europe.  These divergent perspectives have peaked advisors' concerns about both the outcome and volatility associated with this crisis.

How can anyone invest when the markets behave indecisively, and with such big one day moves?"  A question that hasn't been asked, but that is poignant, is "what is the historical outcome when one day volatility increases?"

When the market has one day moves averaging between 1.5% and just over 2%, as it has over in the past few months, the index has ended roughly 30% higher or lower one year later. 

The coordinated efforts by central banks to alleviate the EU crisis produced significant gains on Wednesday last week.  Yet, even as global equity markets surged, the cost to fund Italian debt remained static.  We offer two critically important observations: 

1)  if larger EU economies (Italy, Spain) become unable to fund their debt, the problem may escalate outside of the capacity of even Germany and France to contain, and;

2)  if the situation expands to encompass all of the EU as stated above, we face the prospect of a debt/banking crisis that will surpass the sub-prime crisis in its likely impact on financial assets and the global economy.   

This is not a market that will be friendly to investing that just "buys and holds". As we saw in 2008/2009, when the turbulence of crises escalates, correlations across asset classes tighten, and all assets move lower together.  

The solutions: 1)  Stay committed to equity markets, the best performing asset class that helps protect investors against inflation;  and 2)  hedge your equity portfolios against losses.

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