At any given point, financial markets are subject to political, economic, monetary, and psychological uncertainties that can distract investors.? ?For example, the same kind of debt problems that plagued Europe in 2011 continue to distract market participants and potential participants in 2012.? ?Concerns over growth in the Emerging Markets and now the U.S. are gaining attention. ?In the not-too-distant future Spain, Portugal, and Italy may force investors to confront the same sovereign problems presented by Greece.?At some point, investor?s attention will also be directed toward the potential fiscal time bomb ticking in Washington. ?On December 31 the payroll tax holiday ends, the temporary Bush tax cuts expire, and unemployment benefits will be severely curtailed.?? On top of that, the 1.2 trillion in automatic spending cuts from last year?s failed debt-ceiling negotiations will kick-in.? All this can only be avoided if Congress takes quick action (and that is indeed a big ?if?).
In spite of all of these concerns, the market managed to climb a wall of worry to a 13.44% gain, on a total return basis, in the first quarter of 2012. ?Why? Because there have also been many encouraging developments entering 2012.? Equity valuations were attractive, job and manufacturing growth were improving, corporations were flush with cash, interest rates were low and investors were under invested in equities; ?and many of these conditions are still apparent. However, the uncertainties outlined above caused many investors to miss out on the best first quarter performance for the S&P 500 since 1998.
An investor cannot wait for a ?green light? to indicate it is safe to invest before making investment decisions; such signals are rarely evident until they appear in the rear-view mirror.? There will always be yellow and red lights flashing to distract an investor, possibly preventing them from achieving long term financial goals.? Avoiding emotion is key, no matter what the near-term direction of the market.? A disciplined plan based on science and rules can help filter out the background noise of global news and politics, making it easier to overcome distractions.? At?Stadion?we don?t pretend to predict the future.? Rather, we focus on what we can control, which is how we respond to changing market conditions. We do not waste effort and time on distractions that are?beyond our control.?For almost two decades our core beliefs have kept us focused on Stadion?s disciplined and objective approach to dealing with market uncertainties in our efforts to provide above average long term returns with less volatility for our clients.
John Wiens, CFA, VP Portfolio Management
The S&P 500 Index is the Standard & Poor?s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock prices. It is not possible to invest directly in indexes which are unmanaged and do not incur fees and charges.?Past performance is no guarantee of future results. Investments are subject to risk and any of Stadion?s investment strategies may lose money. Any references to specific securities?or market indexes?are not intended as specific investment advice and should not be relied on for making investment decisions.
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