The markets have been very volatile since August. Up, down, up, down. It seems that just as stock valuations start to look normal again, there is another shock to the market that drops values by 2 or 3%. We have been taking the stairs up each day, each week, only to take the elevator down in one day. It is very frustrating and discouraging to the individual investor.
That being said, look at where we are compared to October 3rd. The S&P 500 index has gone up 12.6%. While the S&P is still negative on the year, the U.S. economy seems to be picking up steam. Companies (on average) reported better than expected earnings for the third quarter. Unemployment claims are dropping and while we have a long way to go, headline unemployment has dropped to 9.0%. This bodes well for the remainder of the year and into the first quarter of 2012.
While the crisis in Europe will continue to cause a gnashing of teeth, the super committee in the U.S. is at an impasse, and we face a divisive election next year, companies continue to strive to provide a fair rate of return for their investors. If investors step back from the daily minutia and take a longer term view, they will see their portfolios grow.