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Thoughts on the Government Shutdown

Lawmakers in Washington failed to reach an agreement on legislation to fund federal government operations for the new fiscal year. As of October 1st, the U.S. government effectively shut down to some greater or lesser extent, and the last time this occurred was in 1996 under the Clinton Administration. Media outlets have been promoting gloom and doom and we felt it prudent to review our perceptions on how this will affect your investments.

Our basic belief is that this shutdown will be resolved, and the U.S. government will return to normal operations. There is a lot of noise and volatility that normally occur with an event of this nature (recall the fiscal cliff 2012 issue, and the 2011 budget crisis), but when normal operations resume, this will have been a minor blip in the long-term progression of the markets.

Our overall investment approach is to be long-term investors (and by long-term, we mean years and even decades). Our investment process operates under the concept that it is better to be forward thinking, as opposed to looking at the day-to-day news noise for our investment decisions.

Consequently, when you turn off the cacophony of daily news on the government shutdown and debt ceiling, you continue to find the workings of an economy in recovery. In fact, the U.S. continues to be the best economic game on the globe. Our fundamental economic indicators continue to show a not-too-expensive equity market with slowly improving fundamentals. While it is near impossible to predict the exact outcome of our dysfunctional government, it is reasonable to expect a solution near-term. Once lawmakers come to an accord, the markets will likely respond favorably and continue their progression forward.

Your continued confidence in our service is greatly appreciated. As always, we invite you to write or call us with any questions in regards to your portfolio.


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