View from the Observation Deck

1. The sell-off in the stock market over the past week may have short-term traders spooked, but it is just par for the course for investors with longer time horizons.
2. We are 14 days from the presidential election. A case can be made that there is too much uncertainty in the air for those who trade stocks.
3. We are also in the midst of Q3'12 earnings season. So far, 85 out of the 146 companies (58%) in the S&P 500 that have reported earnings have topped analysts' expectations, according to Bloomberg.
4. The 58% positive beat rate is down from 66% for all of Q2'12. We believe companies aren't spending as much of late due to a lack of guidance on the "fiscal cliff" and uncertainty over who will win the presidential election.
5. Having said all of that, the S&P 500 is still up over 12% year-to-date through 10/23. That tops the 9.8% average annual total return for the index since 1926, according to Ibbotson Associates.
6. The time periods featured in the chart depict the annualized returns for the S&P 500 from the index's lowest price point following a crisis situation.
7. Those crisis situations were as follows: 1973-74 (Oil Embargo); 1981 (Hyperinflation); 1987 (Crash/Black Monday); 1990 (S&L Failures/LBOs); 2002 (Internet Bubble Burst); and 2008 (Subprime/Financial Crisis).
8. While today's challenges are serious and in need of at least a short-term solution, we believe investors should take comfort in knowing the U.S. has been there, done that.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions or other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 is a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance.