Written by Marie DeCaprio MBA, CFA, CFP®
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10 October 2011
Third quarter ending 9/30/2011 was terrible for all equity markets and even some segments of the bond market. Chaos in Europe caused most of the market fear but average U.S. economic data helped fan the fire. As we have seen time and again, no segment of the market was spared. International markets continue to be the year's underperformer--not surprising given all the news.
As is typical, the more risky the segment (small cap stocks, emerging market stocks) the worst the performance. In spite of the downgrade on U.S. Treasury bonds, their performance shined bright--as investors "fled to safety". I think the market has over shot on the downside and I expect a bounce back--in fact we are seeing it bounce back already as of October 1st. All of this action is eerily reminicent of 2008-2009, a time I think we would all like to forget. The good news is that most clients have more conservative portfolios than at that time and so far we haven't seen nearly the sell off we saw in 2008. You shouldn't think that any of the particular funds you own have gone bad some how, know that when the market is down, most equity based assets will be down as well. Just to put things in perspective, If you have a $250,000 portfolio and the market is down 10%, remember that is 25,000 dollars. Some segments of the market were down more than 20% for the quarter, so please keep that in mind when you are looking at your portfolio values. The more you have, the bigger the dollar value drop when the market goes down (the opposite is true too thankfully).
Here are some benchmark returns for the Quarter and Year to Date as of 9/30/2011 (data from Morningstar Office)
Bonds (all) 3.82% Qtr 6.65% YTD
Large Cap stocks -13.84% -8.71%
Mid Cap stocks -19.88% -13.02%
Small Cap stocks -19.83% -13.79%
International stocks -19.60% -17.18%
Emerging market stocks -22.94% -22.73%
The good news is the market is up more than 2% already this month not including today's great move!
