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We have witnessed renewed volatility in the financial markets over the past few months. While doomsday financial scenarios from 2008 have been put to rest long ago (at least in the United States), investor fear and worry have returned to levels not seen for three years. An increasingly sluggish U.S. economy, a debt crisis in Europe and a sudden spike in global economic pessimism have led to significant financial market corrections. For the month of September the S&P 500 lost 7.03%, while Europe’s MSCI EAFE Index lost 9.53%. Equity indices worldwide are now solidly negative for the year.
Keeping calm and staying the course is still the right path for investors, despite today’s negative headlines. Our focus continues to be on risk control and diversification—a properly diversified portfolio will serve us well in good times and in bad. Paradoxically, it is usually the tough times when it is most advantageous to invest.
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