After reaching all time highs on August 1st, the markets have struggled and have now entered into a period of some weakness.  Last Wednesday we posted on our blog "The market is in a tight trading range with the S&P bounded by 1700 on the upside and 1685 on the downside.  Breaks in either direction will likely lead to the next big move."  As many of you now know, we have had such a break to the downside and the market is down 4% from the highs and 2.5% from the 1685 level.  The odds have shifted to lower prices but this market has had a history of strong surges after technical break-downs.  That said, the most severe sell offs do not come without warning.  Sometimes the warnings are not obvious and not recognized by a large number of investors who are conditioned to view every market sell off as a buying condition.  Severe sell offs occur when there is enough market weakness to get most investors at least thinking about selling and are usually triggered by some unexpected outside event.  Most of the time those conditions do not result in a severe correction and taking a defensive posture proves counter productive.  However, in a few cases, heeding the warning signs have yielded dramatic results as investors preserve their capital and avoid devastating losses.  In both the bear market of 2000-2002 and the financial calamity of 2008, investors that ignored the warning signs lost 50-80% of their portfolios. 

WHERE WE ARE HEADED 

HOW WE ARE DOING

It was an eventful last weekend.  I (Bo) celebrated my 47th birthday and on Saturday morning, we got up early for the trek to Knoxville to drop our middle child and only son (Carter) off at school as he embarks on his freshman year at UTK.  Rain was in the forecast and stories of long lines and miserable move in experiences were shared by many that had forged ahead of us.  However, the rains held off and the lines were extremely manageable.  We managed to get Carter moved in and settled within just a couple of hours.  We even had time to help my niece and sister move some of her stuff in.  It was a bittersweet day as we were all excited for the adventures that awaited Carter but were already missing him.  We ran a few errands to get last minute stuff and then said good-bye to Carter late afternoon.  We spent a couple of hours visiting with Sam and Nancy and my oldest sister Sandy before making the trip back home.  It was a long day but we were glad to see that Carter was well settled.

With Carter at UT and what I hope is a rebounding football program, I hope to be in Knoxville a little more over the coming months.  Please let Sam or I know if you would like to schedule some time with one or both of us. 

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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