A little perspective

We provide the following price charts from March 1, 2009 to June 20, 2013 for context. The blue is the Vanguard Total Stock Market Index (VTI) which represents roughly the entire tradable US market. The other colored line is Vanguard Total Bond Market Index (BND) which tracks a broad index of the US bond market and currently has a duration of about 5.5.

 

We have commented endlessly about the adverse impact of Fed policy and the irresponsibility of fiscal policy, and we see recently the perils of the Fed artificially fixing prices and then changing its mind. It manufactures uncertainty & volatility. 

We may well get some more jetwash... at which point we might be interested in equities, but for now, keep proper perspective: a significant run up is having a bit of the air let out.

We watch & assess. We do not necessarily believe rising interest rates are incompatible with rising equity markets.  What everyone fears, however, is that this symptomatic of something systemic and global: could this be the snowflake that causes the avalanche?  We don't think so. This was probable, if not predictable, in direction, but not in timing.

Much depends on the Fed and the wisdom of this Administration & Congress, which is never comforting. We intend to follow this with more substantive commentary shortly, but wanted to respond to some inquiries.