Defense Initiated

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Yesterday we took defensive action for most large accounts reducing our net long exposure consistent with our approach of taking defensive action when the S&P 500 breaches its 200 DMA.

This go around was a little different in that we took the opportunity to do some rebalancing, selling of one-offs and for large clients who owned the iShares Global Utilities (JXI), we sold that position--this includes the RRGR fund that we subadvise. JXI has not done very well so we have simply moved on from the name. To be clear we reduced exposure a little but it was also a cleaning up of some accounts too.

For now the slope of the 200 DMA is sloping upward and I think it is pretty clear that they will figure a way to at least kick the can down the road some more on the fiscal cliff issues so I think down a lot is not an immediate prospect but down a little might be. We will take further action a little more subjectively depending on how the market trades and I will disclose what we do here.