The volatility that we’ve experienced in the global markets in recent months serves as a great reminder: although markets generally “climb a wall of worry” over the long run, they don’t do so in a straight line. While the first half of 2015 resulted in a flat S&P 500, this year’s third quarter brought the much-anticipated correction that we (and much of Wall Street) had been patiently awaiting.

But while corrections are no fun for investors, they are a normal and necessary component of the long-term market cycle. Moreover, market pullbacks give value investors like us opportunities to put our expertise to work. Our firm has been finding value in stocks such as Emerson Electric (EMR), which now trades at 12 times next year’s earnings while offering a 4.4% yield (please see our EMR analysis on Page 7). And with companies such as Procter & Gamble (PG) and Chevron (CVX) yielding 3.7% and 5.5%, respectively, good investments become even better ones in down markets. So while corrections may hurt in the short term, they often provide excellent investment opportunities that can add to solid long-term performance.

We begin this quarter’s Hardesty Horizons with our firm’s outlook for both the economy and financial markets on Pages 2-3. As you’ll read in our investment analyses throughout our newsletter, we continue to be positive on the equity market, even in light of the Federal Reserve potentially raising interest rates and with valuations near 10-year highs (although they’ve come down a bit in recent months). As long as interest rate increases are supported by stronger economic growth, and while inflation remains at moderate levels, we believe that higher rates will neither derail the economy nor greatly impact the stock market.

Also included in this Horizons issue is a timely discussion on Page 4 of investing in volatile times. With the recent return of volatility to the financial markets, it is crucial for investors to stick to their long-term financial game plans and remain disciplined. And our discussion of Tax Loss Harvesting on Page 5 details how one can make the best of an unprofitable investment.

As an experienced investment manager, Hardesty Capital has long believed that a customized portfolio of individual securities is the optimal approach for our clients’ investments. Such an approach offers maximum tax efficiency, transparency of holdings, optimal diversification, and many other benefits. And all of this for a lower average fee! Please read our article Investors Beware: The Pitfalls of Mutual Funds on Page 6, which details our conviction in separately managed accounts.

As we enter our third decade in business, we’re as optimistic and excited as ever about the outlook for our firm and our clients. We thank you again for your continued support!