Welcome to the July 2012 edition of our newsletter.

This month we saw another choppy market as market participants continue to sort out the news as it comes: more bad news out of Europe, then a possible solution, then some negative comments, then an agreement. Coming more to the forefront this month was improving earnings reports from the S&P 500 companies and the hopeful expectation that the Fed will somehow stimulate the economy. Of course, the earnings expectations were pretty anemic to start with so it wasn’t too hard to do better.

For the month, the S&P was up 1.4% even though we had a 3-4% sell off followed by a rebound to retest the highs, then another 3-4% drop before it turned around again to make new highs. Our maneuvering in and out of equities was helpful in this type of market and we ended the month nearly fully invested on the equity side. Even though the S&P was positive for the month, there were portions of the markets that didn’t fare so well: small caps were negative by over 1% for the month.

As if we needed more challenges, now the drought has pretty much destroyed the entire corn crop and threatens to do the same to soybeans. This will push all food costs higher at some point as corn reached $8 a bushel and beans $16: these are unheard of levels. My heart goes out to the ag industry as they have worked awfully hard to not make any money this. Plus, not only has this year’s crop been scorched, this is the third consecutive year that we’ve had below average yields. Typically, farmers do have crop insurance, but that only restores a lot of what they had in expenses; it doesn’t generally make them any profits for the year.

Back to the financial markets, we do expect the markets to keep moving higher unless we have more significant bad news, and specifically bad news in our economic recovery. As weighty as the challenges are, companies continue to learn how to prosper in this environment. As we swing into the presidential election season we are likely to see focus and many things that are wrong, but rest assured, my bold prediction is that the world will not come to an end in 2012; I don’t care what the Mayans told you.

Thanks for listening. Try to stay cool out there and enjoy the rest of your summer. Please share this video with friends or family. Talk with you next month.