MARKET UPDATE: Comment on Recent Market Volatility(August 08, 2011)
Comment on Recent Market Volatility and the Events of the Last 2 Weeks for Wasatch Investors:
The U.S. and world markets have been rocked by a series of developments that we are sure you are aware of, ranging from on-going Eurozone debt concerns, to the tumultuous U.S. debt limit negotiations in Washington last week, and then the Friday announcement by Standard & Poor’s to lower its long-term sovereign credit rating on the United States to 'AA+' from 'AAA.’
The result has been a lot of market volatility and rapidly declining stock prices. While predicting these types of market gyrations is beyond our scope at Wasatch, we wanted to let you know that we believe investing in strong companies with growing earnings at good prices is the ultimate long-term defense for any uncertain macroeconomic environment.
It also is true that diversifying the location, currency, and regional economics of companies you own can help further reduce volatility versus a single focus on one market or economy, such as the U.S. All of our Wasatch stock fund offerings include companies that operate outside the U.S. or which have significant revenues from or exports to other countries.*
In short, we think those who are willing to be disciplined by monitoring valuations, trimming positions as prices advance and then rotating into better valuation opportunities, will fare the best. This has always been our focus at Wasatch, and it has served us well during previous extreme global economic periods, including the 2008 credit crisis and the internet bubble period in the late 1990’s.
It is in volatile times like these where we find it particularly helpful to keep a long-term focus, look for irrational valuation opportunities, and we take comfort in the belief that over the long-term the market generally, historically goes up.
Sam Stewart Jeff Cardon
*Under the “Our Funds” tab of our website, you can see the full range of Wasatch Funds and click on any one of them to find recent country allocation data for each fund on its Fact Sheet. Click on this link https://secure.wasatchfunds.com/Literature-and-Forms/Fund-Literature.aspx to go to the Literature Page of our to find the Quarterly Fact Sheet for the fund you want.
A credit rating is Standard & Poor's opinion on the general creditworthiness of an obligor, or the creditworthiness of an obligor with respect to a particular debt security or other financial obligation. Click here to learn more about S&P Credit ratings: http://www.standardandpoors.com/ratings/definitions-and-faqs/en/us.
Mutual fund investing involves risks and loss of principal is possible. Investing in small or micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities, especially in emerging markets, entails special risks such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.
An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, containing this and other information, visit
or call 800.551.1700. Please read it carefully before investing.
©2011 Wasatch Funds, All rights reserved. Wasatch Funds are distributed by ALPS Distributors, Inc (ADI).