Looking at the S&P levels for the month of March might suggest there wasn’t much that happened in the way of meaningful events.  The broad market index closed at 1,327 at the end of February and is looking to close right around that same level this month.  That analysis would fail to recognize the tremendous swing in the S&P in the middle of the month with the index getting as low as 1,249.  This movement is not surprising in light of the nuclear radiation in Japan, the unrest in the Middle East – Tunisia, Egypt, Libya, and now Yemen and Syria – and fiscal issues in Europe.  These occurrences beg the question “How do these events affect my investments?”

First, we definitely see signs of an economic slow down from Japan.  This slow down appears to be temporary, but we are watching events closely.  Some of the individual companies we own have facilities in Japan and are acting accordingly.  In the aggregate, resources are being diverted to address the disaster and as unfortunate as the situation is, we do not see any immediate threat from Japan.

Second, the unrest in the Middle East continues to capture headlines. The uncertainty associated with this region of the world has caused the price of oil to move around and catch the attention of inflation watchers.  We feel oil – energy companies in general – will play an important role in the portfolio, but we are not looking to profit from a short-term spike in oil. As the future of certain leaders in the Middle East becomes clearer, we feel oil will settle down. Production in that part of the globe is just as much of an interest for the producers as it is for the consumers.

Finally, Europe still seems to be grabbing a headline or two, as we feel it should.  We have taken an interest in the future of the Euro – see our most recent Newsletter – and its impact on the portfolio.  Although we are not cheering for its demise, we do think it is priced inaccurately relative to the dollar and have taken positions to profit from that relationship.

We are watching the events that affect your investments in the short-term, but try not to lose sight of what’s important in the long-term.  Getting caught up in headlines and current events is easy to do, but usually only leaves one questioning what real impact an event may have had.  Keeping a long-term focus ensures we invest according to what really matters and what will affect your portfolio in the end.

As always, feel free to contact us if you have questions or concerns.

Sincerely,

Your THOR Team