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Showing posts from July, 2012

2nd Quarter Market Performance

Secondquarterstockmarketsgavebacksomefirstquartergains,butwe'restillpositiveyeartodate.Healthand financialsperformedbest,whiletechandtelecommunicationhelpedtheS&P500outperform.Growthwonthequarterand valuelost.

U.S.stockmarketsatmid-yearhaveearnedarespectable9.5%return.Aeuphoricfirstquarter12.6%gain gavewaytoa2.8%minorsetbackinthesecond quarter.Foreignmarketshavenotfaredaswell,earning only3.4%.Figure1providesthedetails,andaddsalookatgold'sperformance.

Figure1:2QPerformance

Source:PPCA
NotethehighcorrelationbetweenU.S.andforeignstocksasmeasuredbytheS&P500andEAFE, respectively.Bycontrast,goldpriceshavemovedsomewhatindependentlyofstockprices,reinforcing gold's diversification role.Alsonotethatgoldhasnotfaredwell thusfarin2012,barely breakingeven.Stockshave been thebetterinvestment.Commoditiesingeneral,andmetalsinparticular,havenotdone well.Thiscould ofcoursechange,especially

Volatile Markets

During my more than fifteen years as a financial advisor there have been several comments which I have come across, and will always remember, that deal with investor behavior and psychology during negative periods in the stock market and which I have found to be true.  Unfortunately, I do not know, nor have I ever seen who coined these phrases which are as follows:

1.)Going to all cash in bad investment environments is like being a farmer and burning all your crops when you had a bad year.

2.)Remember for everyone who is selling in a down market someone is buying!

3.)The stock market is the only market that nobody wants to buy when it goes on sale!

We hope that keeping these phrases in mind during the volatile investment environment we are in will help you keep a cool head!

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