Prior to my kids starting school, our family spent a long weekend in Chicago. There were many fun things to do and see, especially for kids ages six and nine.

We went to the top of the John Hancock building, visited the Museum of Science and Industry and the Field Museum, spent the day on the beach to watch an air show, dined at Ed Debevick’s and Giordano’s, hit up the American Girl store,  rode on the train, and took taxis. . . so many great places!

Amongst all of this, what was our nine year old son’s favorite part? He found $3.29 (exactly!) on the Chicago streets. Not all at once mind you, this was pieced together over four days. Aside from a dollar that he found folded up like a giraffe, the big jackpot was two dollars he found folded together. Gotta love him – he’s a boy after his frugal parent’s heart.  We figure he’s either going to be one heck of a salesman someday… or a Chicago street performer. The kid spent more time with his nose to the ground looking for spare change than he did looking up at the tall buildings. He will tell you there are many, many black splotches on Chicago sidewalks that look deceptively like coins!

Thinking of him this week, it reminds me a lot of the current investment environment. So many distractions and head fakes that it can be difficult to keep your eye on the prize and identify opportunities.

Economic releases, surmising what the Federal Reserve will or won’t do next, the European financial environment, Chinese growth, the “Fiscal Cliff”, volatile commodity prices, the U.S. presidential election, the list goes on and on.  A friend shared with me last night that her husband is so concerned about the Obama administration and the upcoming election that it keeps him up at night.

Uncertainty has reigned high this year. However, as we reviewed last month a couple major uncertainties coming into the year have been clarified, driving the equity market higher. Much like my friend’s husband, the third uncertainty we will deal with in 2012 touches the U.S. investor more strongly than any others this year.

Europe (Uncertainty #1) – Will the euro collapse, or won’t it? We are over half way through the year and the euro remains intact. Mario Draghi, the ECB president, spurred markets higher in July by pledging to do whatever necessary to save the euro. “And believe me, it will be enough,” he said. Uncertainty regarding the near-term fate of the euro seems to be fading. The European economy narrowly escaped official recession status by posting a flat first quarter GDP growth number following a 0.3 percent decline in the fourth quarter of 2011. The second quarter of this year experienced another decline of 0.2 percent, but the ultimate bottom does not seem to be falling out from under them.

  • Status – Uncertainty almost disappeared for euro collapse by year-end 

Economy (Uncertainty #2) – Despite European weakness, growth remains positive in the U.S. and some stability is being demonstrated in China’s economy and other emerging market nations. Major governments are providing indicators that they are willing to be accommodative to continue spurring growth forward in the near future.

  • Status – Uncertainty is still high across the globe; however, fear of a European financial collapse has all but disappeared

Elections (Uncertainty #3) – France, Greece and Russia all have established new leaders. The U.S. has candidates for election. Elections will heat up following the Republican national convention. Congress is already debating the “Fiscal Cliff” which will likely be settled by year-end.

  • Status – European uncertainty gone
  • Status – U.S. Election and “Fiscal Cliff” debate heating up

With U.S. Elections and the Fiscal Cliff heating up we expect volatility to continue over the next couple months. However, the elimination of many uncertainties that were present in Europe at the beginning of the year has had a positive impact on markets.

As investors, we must tune out the distractions and focus on identifying opportunities in the market, always looking for that next dollar. If we’re really diligent, the next one could be giraffe shaped! CLS portfolios are markedly more defensive than they have ever been to help mitigate any bumps in the road this fall. We are working hard across the entire portfolio management team to identify turning points in the market and different investment opportunities we can take advantage of.