What a difference a week makes…

A quick update on the passing scene…

Last Thursday, 6/23/2016, the Dow Jones Industrial Average closed the day at 18,011.07. And then the “Brexit” vote results were announced. (For our take on the Brexit, please click here).

Friday, and the following Monday, the markets declined precipitously in response to the news.

However, the markets recovered Tuesday and Wednesday. As of this writing, at the market close on Thursday 6/30/2016, the Dow is at 17,929.99, only 81.08 points below the 6/23 close. The low for the Dow for this event was 17,063.08 on Monday, 6/27/2016, or 947.99 points below the 6/23 close.

If anything, this illustrates how short-term events, even when the outcomes for these events won’t be evident for months, or even years in the case of the Brexit, can cause the markets to act irrationally in the short term. In light of this, we would like you to consider and remember the following when it comes to media reporting and investment strategy:

First, doom and gloom creates ratings. Nobody ever reports on all of the airplanes that landed safely today.

Next, news outlets are a business first, and an information source second. They have 24 hours of airtime to fill every day. This is why seemingly innocuous events (such as anything Kardashian or Kanye West related) get so much coverage.

Finally, remember that short-term reactions can cause long-term harm to a well developed, properly executed investment program. Those who sold out on Monday and are holding cash may have done damage to their portfolios that could take a long time to correct.

Happy Fourth of July from the crew at Eagle Financial. We hope you all have a safe and fun long weekend.

The Dow Chemical/DuPont Merger

By now, those of you who hold Dow Chemical Company common stock in your portfolios have probably received a large document outlining the merger details between Dow Chemical Company and E. I. du Pont de Nemours and Company, two of the largest Chemical, Agricultural, and Specialty Products producers in the world. While reading this document is advised, we are providing a short summary of the merger.

The merger is expected, pending approval of the shareholders and clearance of all regulatory hurdles, to be completed in late 2016. Upon approval, all shareholders of Dow Chemical Company will receive 1 share of DowDuPont for every 1 share of Dow Chemical they own.

After the merger, the new company expects to then spin off three divisions into separate operating companies; Agricultural, Material Science, and Specialty Products. Shareholders who continue to hold their shares in the new company will receive shares of these companies as they are spun off from the parent company.

For more information/commentary, please follow this link.

Eagle Financial Strategies’ Opinion: After reviewing the terms and doing our due diligence on the details of the merger, we are recommending that our investors who currently hold Dow Chemical Company stock continue to do so. After the merger, we will analyze each of the three spin offs to ensure that they are companies that fit in your individual portfolios in accordance with your risk tolerance and objectives.

In addition, we recommend that any one who holds Dow Chemical or DuPont shares in certificate form deposit their certificates in a brokerage account to ease the accounting for the merger and the adjustment to cost basis caused by the future spin offs.

Please contact us with any questions as to the above.

As of this posting, the author is a beneficial holder of shares of Dow Chemical Company.