19 Apr April 2009: What Has Changed?

WHAT HAS CHANGED?

It is Spring. The grass is showing green, trees are showing leaves, new growth is upon us, and most of us are feeling better. Following the September 15, 2008 Lehman Brothers failure, the economy and the securities markets experienced six very negative months. In fact, the first quarter of 2009 was the sixth consecutive losing quarter for the Dow Jones Industrial Average. Throughout January and February, when the outlook seemed the darkest, investors were able to “stay the course”, while fear seized those with less experience and resolve. The Dow hit an intraday low of 6,470 on March 6th and then proceeded to rally 20% through early April. This rally doesn’t mean that we have put the problems behind us, but it does remind us that recovery will happen. It will be a recovery you won’t want to miss. As we wrote in February, we are in constant discussion, debate, and deliberation regarding the developments in the global markets and are evaluating what adjustments may be necessary to manage through this challenging time. Daily, we ask ourselves the question: What has changed? Our focus centers on the actions of world governments, the daily flow of economic data, the housing market, and the credit markets. Though encouraged, our conclusion was that major gaps still existed in the plan to secure a recovery. In other words, not enough had changed. That is, until recently.