Q2 2013 Outlook – Eyes on the Horizon
“Sunset at Sea” – painted in 1911 by American impressionist Frederick Childe Hassam. Hassam produced over 3,000 works of art, his most famous being “The Avenue in the Rain,” which hangs in the Oval Office.

“Sunset at Sea” – painted in 1911 by American impressionist Frederick Childe Hassam. Hassam produced over 3,000 works of art, his most famous being “The Avenue in the Rain,” which hangs in the Oval Office.

Financial markets are fluid, as are the economic and corporate fundamentals that they seek to reflect. As the world evolves, so does investors’ assessment of the future and thus their perception of value.

However, not every financial market participant is as rational as that concept suggests. Financial media and other outlets leave people awash with seemingly unending amounts of data and opinions. Often this flood of information causes more confusion, not less.

Compounding the data deluge is human nature. Psychology plays a role in how people make decisions – regret at missing an opportunity, fatigue from the persistence of problems, and anchoring of expectations to the most recent experience are all examples.

We maintain our discipline of using valuation as our guide – looking for where price offered in the market disconnects from the value we foresee by taking a long-term, forward-looking, fundamental view. This discipline is critical, not only in buy decisions but also in the decision to sell.

In this Quarterly Outlook, we place our comments on recent events into the context of our forward-return frameworks, understanding how each may affect the drivers of risk and return within asset classes over the next few years. Setting our valuation sights on the horizon while also minding the financial market swells will help us navigate the ebbs and flows to come.

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