July Closes Out With Sharp Sell Off in Stocks

July 31, 2014

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In the 3rd Quarter Outlook, I made a comment that strong gains in June may have borrowed gains from July. Unfortunately, I was right. Despite improving macro-economic trends and solid corporate earnings so far, stocks had a rough July.   While the Dow Jones and the SP500 were down marginally, small and mid-cap stocks did much worse.   The sell off today was sparked by Adidas and Exxon indicating potential lost sales associated with the Russia – Ukraine conflict and Argentina debt default. While these issues have nominal impact on the overall stock market and holdings in client accounts, it lead to a fear motivated stamped of selling today.

Looking forward, often stock market bottoms are created on bad days like today. Many of our indicators are pointing to that conclusion, but it is too early to call it a bottom yet. The expectation for the year remains for returns in stocks of 10% to 12% and bond yields rising.

The only major portfolio action taken today was to sell the position in Met Life which reported lackluster financial results for the June quarter.   The sale of Met Life will free up some cash to take advantage of any opportunities that may occur if the selloff in stocks continues.

Regards,

Andy

Disclosures

Information sources used to prepare this report include Argus Research, Value Line Investment Survey, Zacks, Barron’s, Kiplinger’s, Fidelity, and Decision Economics. Founded in 2010, Andrew Hill Investment Advisors, Inc. is registered as an investment advisor with the State of Florida and with the State of Texas and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. Andrew Hill and clients of AHIA hold positions in the investments mentioned in this report. Please contact Andrew Hill Investment Advisors, Inc. if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account.   Our current disclosure statement is set forth in Form ADV, Part 2 and is available for your review upon request. Tax and estate planning advice is general in nature and the firm is not engaged in the practice of law.

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