Monday, March 22, 2010

Eye Of The Hurricane

My opinion of the implications of the historic vote on health care are as follows:

To use a hurricane analogy, we have been in a economic and political hurricane, on many fronts, since president Obama was elected. From the reaction by the stock market today, we are in the eye of the hurricane where the winds slow down. This calmer stage may last a day, a week, a month. Who knows.

As with real hurricanes, once you leave the eye, things can get pretty rocky again. It is for this reason that we continue to be at approximately 48% stock exposure in our balanced models and mutual fund.

Only by standing against the prevailing winds–selectively, but resolutely–can an investor prosper over time. Such a strategy may underperform during markets that are rising based upon the momentum of the herd vs. fundamental valuations.

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