Patrick Bourbon
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We decided this time to send you some charts to help you put things in perspective since the U.S. stock market went down 8% in July and August. Note that the market is still up 5% in the last 12 months and up 70% since March 2009.

The charts attached may help you draw your own conclusions without being manipulated by the media, friends…

In Summary:

·       This summer’s stock decline was nothing exceptional

·       The economy doesn’t look that bad

·       Stocks are not expensive

·       Stocks perform well over the long-term, sometimes right after a major correction and/or spike in volatility

We still think that the chance of another recession may be 20% - 50% before 2014 but the charts should help you to put in perspective what happened this summer.

A huge part of successful investing is just avoiding common errors like panicking. The goal is not to be error-free; it is to be right more than wrong over time. Humans are intuitive creatures, but markets are inherently counterintuitive. Investing, like medicine and many fields of science, is a probabilities game, not a certainties game. Investing requires faith that Capitalism is not perfect in the near term but eventually gets very close longer term.

Sometimes, doing nothing is the best strategy... and it is not easy... When you are tempted to go with your gut, remember that your stone age brain may be good with physical risk, but it is the same one that governs your investment gut - it is not a good investment manager.

As you know, we take a long-term, academic and disciplined approach to investing and we try not to react emotionally to market swings, unlike many individual investors who tend to sell equities and lock in losses during down-turns. The portfolios we recommend are always customized and well-diversified.  Markets volatility and declines give opportunity to rebalance the portfolios.

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We would welcome the opportunity to know you better, introduce ourselves, share with you the work we do for our clients, and position ourselves as a useful resource for you. A consultation would be a wise first step toward achieving your vision.


Getting to know you, your needs and motivations, is as important as you evaluating our capabilities to help you meet your financial goals. We do not charge a fee for our initial consultation during which we review your portfolio, and discuss your goals and objectives.


“ Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”
— John Maynard Keynes, The General Theory of Employment, Interest and Money, 1936
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Thanks to the 500+ of you who have read the Best of BFM Newsletter (click here), which summarizes the newsletters you enjoyed in 2010-2011. By now, you should have uncovered that financial decisions are not only driven by rationality but they are also influenced by emotions. You also found out that your vision can literally "trick" you whenever it can (click here)!

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Bourbon Financial Management, LLC
616 W. Fulton St. Suite 411
Chicago, IL 60661
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