The market decline that we have all witnessed in the past couple of weeks against the backdrop of the federal debt ceiling negotiation has been unsettling and disappointing, to say the least. In order to operate effectively, any large organization needs to have a long range plan and the United States is no different. It is rare that everyone in the organization agrees on what the best plan is, but after articulating their points of view, compromises are reached and a plan is enacted. To my knowledge, the United States has never had a long term plan that transcends administrations. This may be a good time to begin and, perhaps, what we’ve been witnessing is an ugly start to the process.

Stock prices have been in a major bull rally since the bottom of the 2008/2009 financial collapse was reached in March, 2009. However, after nearly doubling in price, the Dow Jones Industrial Average (DJIA) has been laboring since early May of this year. After an advance of this magnitude, a sizable correction is not unusual and, in fact, typical of stock market behavior. From the DJIA intra-day recovery high of 12,876, set on May 5th, to the intra-day bottom of 10,604, set on August 9th, the correction has amounted to 17.6 percent. Based upon Monday’s emotional reaction to the Standard and Poor’s downgrade of our Nation’s debt, Monday’s and Tuesday’s huge trading volume, the rally on Tuesday and the “test” of Monday’s lows that is occurring in today’s market, it is likely that the stock market is forming a base from which a rally can occur.

From a fundamental standpoint, whereas we could not find good investment values in the first quarter of this year, we are now actively putting our clients’ cash to work by buying stocks and bonds at prices we perceive to be good long term values.

There is no question that, as a Nation, we need to begin making better decisions than those that have been made in recent years. Neither of the major political parties has reason to be proud. However, in spite of the impediments that have been placed on our system from many quarters, our Country’s economy continues to grow and its businesses are healthy. We will continue to search for those investments that we believe will deliver rewards to our clients.