After a correction of 6% and a duration of one month, the markets have roared back with the S&P recovering all of their losses over the last month.  Currently, the markets sit right at or just above their highs for the year.  Among the many market pundits, they are evenly split over whether or not we break higher from here into uncharted territory or whether we pull back into a more severe correction.  The month long correction that began in May was shallower than what many expected (us included).  Accordingly, we continue to fall in the camp that is expecting lower prices over the coming few months.  There are a number of well thought out reasons behind our expectations and they have been discussed in these pages over the last few months.  They remain the same.  We continue to fully expect a correction of some magnitude (10% or more) in the near term. 

WHERE WE ARE HEADED 

HOW WE ARE DOING

As our clients have noticed, we have been very active in repositioning our accounts to respond to the new market environment.  Many of our positions were stopped out with the 6% correction in May and we were able to avoid most of those losses.  We have now been intent on capturing the gains the market is willing to give. We remain a bit cautious here with a mix of fixed income, equities, high yield bonds, and short positions that should temper any market weakness.  In year's past, the next few weeks of the year have been treacherous.  The current market is showing some signs of ill health despite the recent advance and, accordingly, we are watching things very closely.

It is hard to believe that the summer is winding down and coming to a close.  And as if I needed a reminder, I received "nice" emails from both Belmont University and UT requesting that I pay tuition and fees within the next 3 weeks.   It has been a relaxing summer with the kid's work schedules keeping us close to home. We did manage a good trip to Knoxville for UT orientation and Sam and I managed to squeeze in a few meetings with clients.  We hope to do more of that over the coming months so let us know if you would like to schedule some time with either or both of us. 

It is also the time of year when NCAA BCS national champions and Super Bowl winners are in most every city of the country.  Optimism runs high this time of year and every team looks like a winner before that first snap.  I am no exception and expect big improvements from both the home team (Titans) and the alma mater.  However, if I am honest, I like my chances in the markets a lot better than on the football fields!  I imagine Kelly and I will be making several jaunts to Knoxville this fall to combine a trip to catch up with Carter and to watch a game.   

Sam and Bo

We continue to make posts to our blog throughout the week so check it regularly if you want to see our thoughts.  You can access it by following the link below. 

THE GREATEST COMPLIMENT

In these uncertain times, a trusted financial adviser is more important than ever.  Whatever comes over the upcoming months and quarters, the markets are certain to have lots of volatility and wild swings.  Europe, the US economy and dysfunction in Washington, and continued trouble in Iran and the Middle East to name just a few.  If you have family, friends and neighbors that may benefit from our services, would you please forward this email and/or provide our contact information to them.  We purposefully do not spend time marketing our services so that we can devote all of our resources to managing your assets.  Thank you to all who have provided us referrals - it truly is the greatest compliment you can give us.      

Remember to visit our blog for market comments and observations in between newsletters.  We try to provide a few comments in between newsletters and certainly when there is a particularly interesting market day.  You can access it by clicking here. 

Published by Sam C. Bills, Jr.  Copyright � 2008 Bills Asset Management.  All rights reserved.

BAM Market Wrap is produced and distributed regularly via email by Sam C. Bills, Jr. of Bills Asset Management  3001 Flagstone Drive, Franklin, TN 37069 Phone (615) 371-5928 Fax (615) 250-4903 - www.Billsasset.com

Bills Asset Management  is an independent registered investment advisor (RIA) not associated with any financial institution.  Data used in this publication is gathered from reliable sources, although completeness and accuracy cannot be guaranteed.  Performance results do not take into account any tax consequences and are not predictive of future results.  This publication does not give any specific investment advice, does not provide financial planning services, or consider any individual's financial situation, needs or goals.  This publication may not be reproduced or retransmitted in whole or in part without the consent of the author, Sam C. Bills, Jr.

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