Markets declined last week, retreating after initial third quarter earnings repo rts showed weakness and

the World Bank cut its growth estimates in Asia. While t he major indexes rallied a bit on Thursday and Friday, overall, investors decide d that they didnt have much to get excited about. For the week, the S&P declined 2.21%, the Dow lost 2.07%, and the Nasdaq lost 2.94%.[1] While it can be hard to see the big picture when markets slide, its important to keep short-term pull-backs in perspective. To help us do this, we can reflect on how far weve come since Tuesdays five year anniversary of the October 9, 2007 pea k. In the last five years, markets have overcome a great deal: a catastrophic mo rtgage meltdown, a plunge that erased 50% of the markets value, and significant g lobal uncertainty.[2] Since the darkest days of the great recession weve made enorm ous strides towards recovery, and currently, the S&P is within a few percentage points of its 2007 peak. Furthermore, we have reasons to be optimistic about the future. While we could hope for more robust growth, economic indicators are sho wing that the economy is gradually recovering. Unemployment is decreasing, manuf acturing is increasing, and consumers are feeling more confident.[3] We definitely have a long way to go before we can state with certainty that the global economy has recovered. And, as many analysts have stated, the next few mo nths could be turbulent for equity markets. Factors such as the ongoing crisis i n Europe, weak fundamentals in Asia, poor corporate earnings reports, the presid ential election, and the fiscal cliff may create challenges that test your disci pline to stay the course.[4] On the bright side though, the S&P 500 has gained 11.8% since June 1, indicating that investors are ready to respond to positive news and that there may still b e some upside potential this year.[5] In September, the U.S. economy gained 114, 000 jobs, driving the unemployment rate down to 7.8%.[6] The housing market is a ctive, indicating that at least that corner of our economy is doing well.[7] Alt hough we cannot predict the future, these factors are very encouraging. Weve cert ainly come a long way.