Fiscal Fear Week

Category : Blog on November 10, 2012

This week marked one of the worst of the year for major domestic indices as the Presidential election was decided and the bat and ball between Obama and Boehner regarding the fiscal cliff began (the S&P was down -2.3%, NASDAQ -2.6%). Its early days, but at this point we have no reason to believe it won’t go down to the wire and we expect to see the VIX marching back into the 20’s and possibly well beyond.

Credit markets followed equities lead, both investment grade and high yield ended the week down (HYG -1.1%, LQD -0.57%).

Precious metals rallied (GLD 3.2%) as investors flocked to gold and silver in wake of heightened market anxiety. Oil ended the week up (DBO 1.4%) boosted on Friday by the release of Thomson Reuters/University of Michigan consumer sentiment index numbers which hit a five year high. Given the significant consumer slice of domestic GDP, this represents a reason to be optimistic.

Finally, more glum news out of Europe as the European Commission reduced its regional forecast for 2013 economic growth to 0.4%, down from 1.3% in the spring.

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Investing Quotes

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    • “Be fearful when others are greedy. Be greedy when others are fearful.”

      —Warren Buffett

    • “The individual investor should act consistently as an investor and not as a speculator.”

      —Benjamin Graham

    • “Know what you own, and know why you own it.”

      —Peter Lynch

    • “Sometimes your best investments are the ones you don’t make.”

      —Donald Trump

    • “It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.”

      —George Soros

    • “My favorite holding period is forever.”

      —Warren Buffett

    • “The essence of investment management is the management of risks, not the management of returns.”

      —Benjamin Graham

    • “You make most of your money in a bear market, you just don’t realize it at the time.”

      —Shelby Davis

    • “We have two classes of forecasters: Those who don’t know and those who don’t know they don’t know.”

      —John Kenneth Galbraith

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