2nd Quarter Market Performance

Second quarter stock markets gave back some first quarter gains, but we're still positive year to date. Health and financials performed best, while tech and telecommunication helped the S&P 500 outperform. Growth won the quarter and value lost.

U.S. stock markets at mid-year have earned a respectable 9.5% return. A euphoric first quarter 12.6% gain gave way to a 2.8% minor setback in the second quarter. Foreign markets have not fared as well, earning only 3.4%. Figure 1 provides the details, and adds a look at gold's performance.

Figure 1: 2Q Performance

 Source: PPCA

Note the high correlation between U.S. and foreign stocks as measured by the S&P 500 and EAFE, respectively. By contrast, gold prices have moved somewhat independently of stock prices, reinforcing gold's diversification role. Also note that gold has not fared well thus far in 2012, barely breaking even. Stocks have been the better investment. Commodities in general, and metals in particular, have not done well. This could of course change, especially if inflation reignites.

White House Financial & Investment Solutions helps families live easier and less stressful lives through the proper management of their financial resources.  We do this by acting as our clients’ trusted advisor providing a personal touch customized to the client’s needs!  Please visit our web site at www.whitehousellc.com for more information!

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!

White House Financial & Investment Solutions helps families live easier and less stressful lives through the proper management of their financial resources.  We do this by acting as our clients’ trusted advisor providing a personal touch customized to the client’s needs!  Please visit our web site at www.whitehousellc.com for more information!