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Good morning. Futures indicate that stocks will open around two percent lower as a result of a lackluster response by the European Central Bank (ECB) regarding burgeoning debt in Italy and Spain as well as the downgrade of U.S. sovereign debt by Standard & Poor’s from AAA to AA+.
Coming into this Summer with the then pending debate over the debt-ceiling, issues in Europe and the potential for a debt downgrade, depending on the client needs, we have taken a number of steps including raising cash, moving to more conservative positions, selling peripheral positions and making certan that the investments we decide to hold are in strong fundamental and technical positions if they are individual securities or if mutual funds, are those with strong management tenure and performance.
The above will not prevent losses should stocks continue to sell off. However, at this time, we believe that it is time to sort through the rubble and look to add to positions on weakness. This past week was similar to an earthquake. Keep in mind that after earthquakes there are several weeks of aftershocks. With this in mind, be ready to buy on some of these aftershocks, but always keeping some powder dry in case there is more trouble to come.