On the Money

Investors still have plenty of opportunity, by Ignatius Smetek, president and CEO of Arcataur Capital Management LLC

In March 2009, as the outlook for the world economy and financial system offered investors little optimism, I wrote an article that discussed the rare occurrence of the magnitude and duration of the decline in stock prices – an event that happened only three times in the last 110 years!

At that time, the stock market hit a significant bottom, and broad equity averages are 60 percent higher today as the U.S. economy pulled out of recession five months later, during the third quarter of 2009.

Since the fall of 2009, the cross-currents of recovery and the vestiges of the credit crisis have created a tug-of-war for investors. There have been two significant rallies and two significant corrections of the magnitude of 10 to 15 percent each. Employment trends have only improved modestly, and stock prices are at similar levels today as they were in the fall of 2009.

World economic events caused consumers, businesses and investors to reduce debt levels, increase cash and maintain a conservative posture during these unsettling events. The European debt crisis highlighted the concerns of governmental deficits and the slate of unattractive consequences to restore fiscal discipline. Recently, markets have reflected the prospect of falling back into recession (double-dip) and the prospect of larger government via more regulation and higher taxes.

Read more in the latest issue of BizTimes Miliwaukee.

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