The 2010 stock market began the year with a rush and in fine style. However, once the calendar pages turned to May, Mr. Market ran into a brick wall and the S & P 500 (broadest index measure of Mr. Market) finished its worst May in 40 years. The merry month of May ushered in a level of volatility not seen in a long time. The Dow Jones Industrial Average moved by at least 1% or more each day and 6 days experienced intraday moves of 3% or more. This trend has continued in June.

The trip on the Wall Street road in 2010 has been similar to a summer road trip beginning with very little traffic and clear sailing. Top down, cruise control on. Suddenly traffic slowed to a crawl and we’ve found ourselves in the middle of rush hour traffic just outside a major city or perhaps close to the beach on a typically hot and sunny day as our summer trip has come to a frustrating halt. The chance we’ll reach our destination in time to enjoy the day at the beach, shopping or sightseeing in the big city looks bleak since we’re stuck without any choice except to wait until the traffic jam breaks.

Now a lot of us might have a few choice words to say or bang the steering wheel in frustration. However, cooler heads can prevail especially if we have a plan and can take the time to adjust the plan while sitting patiently in the traffic jam. Some would call this making lemonade out of lemons. Change our plans, read a book, make some phone calls, listen to relaxing music, etc. There is heavy traffic in the market today; and, the disciplined investor knows the wise thing to do is remain calm, refrain from making any rash or emotional decisions and follow their carefully developed investment game plan.

What does this mean? It means we are carefully tracking our risk management indicators shifting to a more conservative posture. Certain investment positions have been sold reducing our exposure to the volatility of the stock market. The proceeds generated have automatically increased our commitment to more conservative investments such as money markets and shorter-term Treasury securities for now. This goes straight to the heart of our focus on risk-preserve wealth within a weakening market environment until conditions change.

Do you know someone who is fully invested (for growth) and feeling bridled to a “buy-and-hold-no-matter-what” approach? Our recommendation for them- exercise extreme caution, pay close attention to how their investments are being impacted, and review their strategies, if any, to preserve their capital within an environment where global events and the marketplace are constantly changing. They should ask themselves how comfortable they are if Mr. Market decided to deliver another extended correction period.

Mr. Market could carve out many different scenarios over the next few months. He could hobble for a while, find his sea legs and spurt to higher levels, meander slowly but surely to lower levels (some professionals would call this “death by a thousand cuts”), plunge or stand in place marking time. Since none of us have a crystal ball telling us the future, the wise thing to do is wait for our indicators to provide perspective and guidance.

In the meantime, please take time to join us Saturdays at 9 am for The Investor’s Edge on The WORD 880, WRFD (Columbus), Talk 790 WHTH (Newark), and Talk 1320 WLOH (Lancaster) or listen live on the internet by following the links at either http://www.wrfd.com or http://www.wloh.com. These are challenging times and our financial health and well being is under stress. Therefore, you are encouraged to invite your friends, business colleagues and family to join us too.

Godspeed and God bless.

Your Granville Staff Team