I received this today from my fee-only wealth management advisors........

August 5, 2011

Overview of Current Market Correction

“We simply attempt to be fearful when others are greedy and to

be greedy only when others are fearful” ‐ Warren Buffett

At the start of this week the U.S. government found itself facing down the barrel of the debt ceiling crisis. They were under pressure to act under the premise that inaction would lead to some serious repercussions for the global investment markets. They were able to agree to a last minute compromise to avert the crisis – but despite the conventional wisdom it would provide at least short‐term support for equity markets – the global investment markets embarked on a serious decline this week anyway.

The primary causes for this decline? A continued deterioration of the view on global economic growth – or lack thereof – along with concerns of growing systematic risk in Europe due to the spread of their sovereign debt issues. Before we delve deeper into those issues, let’s first put in context where we are right now. The domestic stock market has experienced a 12% correction and is down about 4% year‐to‐date. Let’s recall that just last year the domestic market declined about 17% and was down nearly 8% at mid‐year and then experienced a strong rally in the second‐half of the year. Market corrections are a normal part of any market cycle and historically have presented great buying opportunities. However, it’s easy to spot these opportunities in hindsight as opposed to the middle of a correction, when the fear factor is at

its highest. The question this morning is whether the current market correction is just part of a longer term bull market offering a buying opportunity or are we on the cusp of a new bear market driven by the issues mentioned above.

Global Economic Slowdown

Based on the depth of the recent financial crisis, the ongoing deleveraging process of both consumers and governments and the depressed state of the U.S. real estate market, we have fully expected to be in a protracted slow growth environment. When growth is slow, any soft patch in economic data will be enough to spark fears of a double‐dip recession or, by this time, a new economic recession. The current fears of recession are the same fears that drove the market correction in 2010. At this time, our research sources are still indicating that they do not see a new economic recession in the face of slower growth, due to the continued stimulative policies instituted by the Federal Reserve. What they do so see is a continued slow growth cycle with sluggish growth occurring in the developed markets of the U.S., Europe and Japan balanced by stronger growth occurring in most Asian regions and the emerging markets.

European Systematic Risk

Similar to the recession fears, this issue also has a sense of déjà vu as this concern helped spark the market decline in mid‐2010 as well. The fear is that sovereign issues in Greece, Ireland and Portugal will spread to the much larger economies of Spain and Italy and then to the European banks. Issues with the European banks could lead to additional liquidity issues worldwide based on exposure to these banks by other global institutions. While some degree of interconnected risk does exist, our research indicates that this is primarily a European issue and the impact will be slow or negative growth from Europe adding an additional drag to overall global growth. The reason for this rationale is these issues have been well known and thoroughly discussed for the past 12 to 18 months so global financial institutions have had time to understand and prepare for this issue. This is different than the Lehman Brothers failure that froze global markets in 2008. That failure occurred in a matter of weeks with most people still not believing it would occur until its failure was announced.

Conclusion & Trading Strategies

We currently believe the current correction bears more similarities to April 2010 rather than October 2008. The positive U.S. jobs data that was reported this morning helped reinforce those thoughts. Based on the relative low equity valuations enhanced by the recent decline, combined with the strength of corporate earnings and balance sheets, this correction more likely represents a time to buy rather than a time to get more defensive. With that being said, events in Europe and the weak patch of economic data, cannot be fully discounted so while the probability of a new bear market is low we must assign a higher chance or likelihood to it than we previously thought. It is also likely that we will experience a continued high degree of volatility over the next month or so as the market works through this uncertainty, so be prepared for that volatility to occur both on the upside and downside.

Our actions today include eliminating emotion and continuing to implement our investment strategies. This includes taking some risk off of our current long positions within our alternative strategies, maintaining our current short or defensive positions, but also maintaining a longer‐term bias towards the upside as we think that global economic growth and higher equity prices will not be completely derailed by these current issues.

We hope this correspondence provides you with more insight to our tactical investment approach and how we are focused on using the current environment to benefit our clients’ portfolios as well as protect those portfolios during all market environments. As always, please do not hesitate to reach out to us to further discuss or ask any questions you may have.

The Veros Wealth Management Group

317-781-9300

www.verospartners.com

Are you a "counter" ?

I've known for a long time that I'm a "counter." I have never told anyone because I wonder if it is some freaky kind of obsession I have that no one else has or can relate to.

Counting doesn't consume my life by any means! Don't get me wrong...I'm not weird or anything!! But as I was shoveling mulch the other day (6 cubic yards to be exact), I kept counting how many shovels full it took to fill the wheel barrow. (About 15 in case you are wondering). Why would I do this!?

I also tend to count how many steps it takes me to get between cracks in a sidewalk. What about counting steps as you ascend to your car in a parking garage?

As I started writing this Blog entry I did some internet searches and see that some people are seeing psychologists for this issue. I am proud to say that this "counting" thing does not enter my mind on a regular basis. It only occurs when I am doing some mundane task and my brain wanders off!

So...let me know if you Count.

Know people...make a difference

I have lived in Indianapolis for over 20 years now. Over those years I have become connected with various organizations and individuals. Some connections stemmed from work activities, some from church, some from our kid's activities, and some from volunteer efforts. None of these relationships were created on false pretenses or simply for the idea that I might "need something someday."

However, when you do the right things for the right reasons you tend to make solid friendships that last a long, long time. All of my volunteer activities have centered around something I was passionate about: Church, Heart (cardiac) organizations, soccer, football, scouts, those less fortunate, etc. I have always enjoyed these efforts -- a trait learned as a child back in Decatur, Illinois. (Thanks, Mom and Dad!).

Now, when I am "in need" myself I find that these longtime friends are willing to help out in any way they can. Mostly this means networking for a new position. People are willing to lend their endorsement and open up their "rolodex" if they have some contacts that make sense.

So....get involved in your community. But don't get involved just to pad your resume. Get involved in something that makes sense to you...something you are passionate about. There are SO many ways to help others.

Go on.....make a difference today.

Chaperon

Yesterday I volunteered to be a chaperon for high school field trip. Nate's Anatomy class was to visit Community Hospital South and they needed adults to accompany them. I was thrilled to learn that I passed the "background check" and was considered to be an Adult. Woo hoo!!!

At first Nate was VERY against me going on this trip. I guess it went okay and I didn't embarrass him too much after it was all done.

I had a clipboard with the instructions and the names of 11 students who were randomly put in my "Group." By the way...GROUP #3 rocked it!!

Anyway...we had a short bus ride to the hospital. After some orientation and a panel discussion each group was assigned to visit 2 different areas of the hospital. I must say that I was very impressed by how professional the high school students were in the orientation and panel...actually throughout the entire day. They were quiet and respectful, asked appropriate questions, etc.

Group #3's first stop was the SIMULATION ROOM.....which I initially misread at STIMULATION ROOM. What a disappointment. The mannequin in this real-life hospital room was a scary sight. Poor guy had fallen 20 feet on his construction sight. He had a piece of metal through his face, broken clavicle, intestines hanging out, burned arm, severed toe, etc. The really cool part was that there is a control booth behind a two-way mirror and a technician runs a computer that allows the "dummy" to speak, change his vitals, etc. So as the simulation is going on the dummy can go into cardiac arrest, talk about his pain levels (actually say anything the tech wants him to), etc. Really cool. The kids also got to try their hand at inserting a breathing tube which was interesting. Some of the accidentally got the tube in his esophagus and blew up his stomach instead of hitting the trachea and his lungs. Oops....poor dummy.

Then we were off to the Emergency Room area. Once we were in place they came rushing in with a 17-year-old patient (not a dummy) that had been in a car accident because he was texting and driving. This was all simulated but it was cool. The driver's "parents" were there as well as his siblings/friends. They were crying, etc. They hooked the kid up to all the equipment, started IVs and assessed him. Eventually they decided he needed to be airlifted to higher level trauma center. So....we followed the air-evac team outside to the helipad while they placed him in the helicopter and prepared to leave.

Other groups of students had different experiences including labor/delivery, pharmacy, surgery, etc.

All in all a great experience for the kids. Some of the students have an interest in health care and some others (including Nate) have no interest whatsoever in healthcare. It was still very educational and fun.

Next, Ellen wants me to join her as a volunteer at the Post-Prom party which runs from (something like) midnight to 3am. I'm pretty sure I will be sleeping during those hours!

Study Shows Unemployment Can Be Deadly

Great. Just great. As if I wasn't stressed enough already my wife shows me this article.

In reality I am not that stressed...yet. However I was speaking with a friend at our Rotary meeting this morning. He was recently hired...after 31 months of unemployment. Yikes. I see that Home Depot is hiring down the street.

I have had several professional opportunities go by the wayside already. One because I hadn't been in the I.T. field for more than 10 years and they went with someone who was in I.T. currently. Another because they only wanted to hire someone who had particular experience in their industry. Too bad because I really thought I could have contributed there! Some places are putting off hiring decisions, etc.

So, back to the networking circuit. I don't mind it. People have been very good (for the most part) about agreeing to at least meet and share ideas and thoughts. My problem is that I go into meetings thinking I am a prefect candidate for these positions...for the most part. Why wouldn't they want to hire me? I mean....c'mon!! :)

New Blog Initiative - Make a Difference

I am re-igniting this Blog to share things with family, friends, and others. Life continues at a dizzying pace and I like to share things with people!

Let me bring you up-to-date. In January 2010 I left the business world to join the non-profit world. This was a very deliberate decision not one that was "forced" on me by losing a job or anything of the sort. I joined a group that provided free heart surgeries to children in 3rd world countries. This made total sense because our 19-year-old daughter has had 10 heart surgeries....and we enjoy doing volunteer work in 3rd world countries.

I went in to this endeavor with perhaps too many stars in my eyes about helping others on a full-time basis. It lasted a year before we agreed to part ways. I am still wanting to believe that not all non-profits have the issues I encountered. I worked hard and raised funds....but not quickly enough for the Founder. I had hoped to stay there for many years but the environment turned out to be not suited to me. Bummer.

So now I am in the job hunt. At age 49. I read the papers and see that it is tough for people in this age group to find jobs. However, I don't "feel" 49. And, the new paradigm (a word which has been overused for too many years) indicates that I could have a good 15-20 years left to work....maybe more if I "want" to. What is your definition of retirement? Mine is not sitting on a rocking chair watching the world go by.

So, age should not be an issue when looking for a job. Income? I think everyone is fairly flexible to a certain degree. It's the new economy, right? Relocation? Okay....not flexible there to be sure. Work ethic? Strong, Experience? Plenty...those gray hairs bring a lot of knowledge and can turn a learning curve into a mere bump in the road. Ethics in general? Strong...we understand what's important and how to create long-term, long-lasting relationships.

So where does this lead? Perhaps in non-profit again. I am not ready to assume that all non-profits are the same. I think I just happened to latch on to one that didn't mesh with my business mentality and drive. Business --- sure. I was there for 26+ years. Being in Sales, Marketing, Finance creates a nice broad skillset that translates in to many industries.

Bottom line is that if you understand people you can succeed. Those skills that they teach in college and continuing ed classes are accurate --- listening is a critical skill. Create solutions that solve problems. Communicate regularly. Be real. Follow through. Dig, dig, dig --- got the extra mile. Make a difference.

I welcome your readership and your comments. Stay tuned for the next installment!