Smart MoneyInsights

July 2012 Vol. No. 1 Market Commentary

Personal Note from Steve Stanganelli

My Core Values

I strive to run my practice and mylife on the core principles bestsummed up in Don Miguel Ruiz'sThe Four Agreements:

Be Impeccable with Your Word Don't Take Anything Personally Don't Make Assumptions Always Do Your Best

If you are like me and appreciatethis approach to life and business

and value having a reliablesecond opinion or need helpgetting on track, then I lookforward to being a part of yourteam.

I want to help you make sense ofyour money.

Please call me and we can set upa time for a no pressure chat toexplore the ways that we may beable to work together.

Let’s make a plan together toimprove your bottom line.

Market Moves in the Dog Days ofSummer

As the temperature and humidity rise, it's hard toconcentrate on what's going on in the market. Sinceschool's out and vacation are booked, the only roller-coaster that folks want to be on or worry about will bethe ones at the local amusement park.

There is an old adage among stock traders: Sell inMay and go away. The belief is that as marketparticipants and investors focus on summertime fun,there's not much action in the trading pits. And theaction that there is tends to be negative. Summertimemarket moves may seem to lend themselves to an autopilot approach, but that doesn't mean that there aren'topportunities for those who are vigilant.

Over the past few weeks leading up to theIndependence Day holiday, the broad indexes haveincreased. Since the holiday, the trend has reversedwith several broad index Exchange Traded Funds

(ETFs) trading at or near the lower end of theirtechnical resistance levels.

This has been evident with the S&P 500 SPDR ETF(SPY) trading near it's June 25 low of $130.85, off it'srecent rally high of $137.51 reached on July 3 and it's52-week high of $142.21. The same is seen with otherbroad indexes like the Dow Jones Industrial SPDR(DIA) and the Russell 2000 iShares Index (IWM).

Despite lackluster jobs reports, there are still positivesigns to consider for the long-term. Housing numbersare turning positive for instance. Eventually, theeconomy will improve and positioning for equitiesnow will be the smart money move.

by Steve Stanganelli, CFP®, CRPC®

Steve Stanganelli, MSF, CFP®Fee Only Planner & Tax Coach

steve@clearviewwealthadvisors.com978-388-0020www.ClearViewWealthAdvisors.com

Clear View Wealth Advisors LLC Market Commentary July 2012 2

Monthly Market Commentary

Investors continued to monitor the situation inEurope, as news on Spanish financials moved marketsboth down (poor Spanish bank audits) and up(support loans for Spanish banks). Up to this point,there is still no long-term remedy for Europeancountries, with the expectation that they will continueto struggle over the next several years under austerityprograms, diminished growth prospects, and waningconfidence.

While economic data in the U.S. were generally weak,they were not weak enough to drive the FederalReserve to introduce a new program. Instead, the Fedmerely extended Operation Twist until at least late2014. Morningstar economists doubt that the programwill have much more than a symbolic effect on rates,given the already-low rates on long-term securities.

Employment: June saw a disappointing 84,000 jobsbeing added, mostly from sluggish private sector jobgains. While the economy actually added 815,000jobs, 731,000 were subtracted because of the seasonaladjustment factor. The good news is that in July, theseasonal adjustment factor will add, instead ofsubtract, more than 100,000 jobs to the total number,so that’s something to look forward to. Theunemployment rate remained at 8.2%.

Manufacturing: Manufacturing data in June fellsharply, mainly from a massive drop in new orders.This was the largest month-to-month decline sinceOctober 2001, and reversed 37 straight months ofpositive growth readings. Morningstar economistsbelieve that many firms, faced with economicuncertainty in both developed and emergingeconomies, may have held back on new orders.However, at this stage of the recovery, the U.S.economy can tolerate some weakness in themanufacturing sector since it only represents 11% ofoverall employment. Month-to-month durable goodsorders jumped 1.1%, but this was not enough to offsetseveral previous months of decline. On a year-over-year basis, growth has slowed materially, falling to4.6% from 6.9% in the prior month.

Auto: Auto sales have been a key driver in theeconomic recovery, and while they exploded upward in

the beginning of the year because of favorable weatherconditions, growth has tapered off from Marchthrough May. Fortunately, auto sales in June jumpedback up to 14 million units from 13.7 million in May,which was 21% above last year’s tsunami-blightednumbers, putting a stop to the downward trend.

Housing: Housing data in June have been highlyoptimistic, with uniformly positive pricing data, newhome constructions trending upwards, existing homesales data driven up at least partially by a lack ofquality inventory, and homebuilder-related financialdata continuing to rise. Morningstar economistsbelieve that the more predictive, earlier-in-the-cycledata is stronger than the more concurrent data,indicating more gains ahead. Furthermore, low rates,falling inventories, and higher sales levels should leadto better pricing results as well.

Quarter-end insights: It has become more clear thatthe U.S. is less dependent on exports than many othercountries (U.S. exports represented only 13% of GDPaccording to 2010 data), and so a general slowing ofthe world economy would not drastically affect theU.S. economy. However, the U.S. economy is not thesame as U.S. stocks, so S&P 500 companies that havesubstantial overseas exposure are still at risk. Stockswith lower overseas exposure, such as utilities,communications, and health-care stocks, were amongthe best performers in the second quarter. The relativeU.S. strength showed up in country-level data as well,with U.S. indexes down only 5% near the end of thesecond quarter, while both European and emerging-market indexes were down 10-15% for the quarter.Overall, consumers continued to spend, fueledpartially by falling gasoline prices. Unfortunately, lowcommodity prices were bad news for many basicmaterial companies, as prices for their goods droppedwhile costs of production remained relatively high.

Clear View Wealth Advisors LLC Market Commentary July 2012 3

Balancing Act

Rebalancing your investment portfolio is crucial tomaintaining the proper risk profile and asset class mixwhile reaping the benefits of diversification.

Since investors cannot be sure which asset class willdominate the markets at any given point in time, it isadvisable to maintain an asset allocation that isappropriate for you. Investors may tend to avoidrebalancing because it involves buying losers andselling winners, but what they don't realize is thatthey're buying low and selling high--definitely a goodposition in investing.

©2012 Morningstar, Inc. All Rights Reserved. The information contained herein (1) is intended solely for informational purposes; (2) is proprietary to Morningstar and/or the content providers; (3) is notwarranted to be accurate, complete, or timely; and (4) does not constitute investment advice of any kind. Neither Morningstar nor the content providers are responsible for any damages or losses arisingfrom any use of this information. Past performance is no guarantee of future results. "Morningstar" and the Morningstar logo are registered trademarks of Morningstar, Inc. Morningstar MarketCommentary originally published by Robert Johnson, CFA, Director of Economic Analysis with Morningstar and has been modified for Morningstar Newsletter Builder.

Steve Stanganelli, MSF, CFP®Fee Only Planner & Tax Coach

Clear View Wealth Advisors LLC12 Amidon AvenueAmesbury, Massachusetts 01913

steve@clearviewwealthadvisors.comwww.ClearViewWealthAdvisors.com

Tel:978-388-0020