In BSW Blog, Economic Outlook, Portfolio Commentary

Global stock markets plunged today, following the downgrade of US debt to AA+ by Standard & Poor’s.  The S&P 500 suffered its largest drop in nearly three years, losing more than six percent of its value as nervous investors fled equity markets.

Although BSW invests across a multitude of asset classes, when reeling markets make headlines, we aim to proactively and clearly communicate with our clients regarding the BSW Growth Portfolio.  And these days, our best Offense has been playing strong Defense.  So below please find a distilled summary of our actions, our performance, our outlook, and our commitment to BSW clients.

Portfolio Performance:

We took profits and rebalanced the BSW Growth Portfolio on June 16th, 2011, when markets were making new highs and prior to the US debt ceiling or downgrade dramas.  A complete discussion of those rebalancing actions is contained in our Second Quarter 2011 Portfolio Commentary (here). In a nutshell, we sold and took profits on several positions (Australia, EAFE, Software), raised a 7% Opportunistic Cash position, initiated a Sweden position, and raised our Healthcare allocation.

Bond Allocation:

It’s also important to remember that equity market exposure is just once component of your diversified BSW portfolio, which may also include bonds, foreign currencies, direct real estate, hedge funds, etc.  Beyond that, BSW mandates that all clients maintain a minimum of 20 percent in stable, secure, liquid and income-producing bonds. Lastly, a final note on where the market is (or may be) heading.  We remain defensive BUT are actively seeking to take advantage of opportunities based on rational expectations.  Sure, the stock market is going down – it tends to do that every so often.  But the sky is not falling.  The sun will rise in the east.  And disciplined investors will profit over the long term.

If you have any questions or would like to discuss your portfolio in greater detail, please don’t hesitate to contact BSW.  As always, we are happy to help.

-David Wolf, Chief Investment Officer

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