|
|
Special Edition Newsletter from
Personal Money Planning
|
|
| Find Us On Facebook! |  | |
Join our Facebook page for interesting and helpful information about finance, business, and more.
|
|
|
2011: 2nd Quarter Review
JULY 9, 2011 |
Hello!
Following is a breakdown of what's happened with the markets over the past quarter. We hope you find it informative. |
|
|
Two Steps Forward, One Step Back
 (My thanks to Bob Veres for putting together the bulk of this report.)
The U.S. and many world market indices were looking at modest gains until they ran headlong into the month of June, when a variety of concerns came together to drive prices lower pretty much everywhere in the world. But the losses of the second quarter were generally not enough to overcome the gains of the first three months of the year; so most stock indexes are still ahead for 2011.
Mixed Messages
- In the U.S., the Wilshire 5000 was up 1.71% for the two months heading into the June Swoon, and indicating another quarter of modestly positive returns. Instead, the index dropped 2.63% during the month, finishing down 1.05% for the three months ending June 30.
- Even so, the broadest indicator of U.S. stock activity, the Russell 3000 index is up 4.90% for the first half of the year. The Russell 3000 fell an almost imperceptible 0.03% during the second quarter, finishing the first half of the year up 6.35%.
Large Caps
- The Wilshire U.S. Large Cap index was down 0.90% for the second quarter; up 4.95% for the first half of 2011.
- The Russell 1000 Large Cap index was essentially flat, rising just 0.12% for the second quarter; it finished the first half of the year up 6.37%.
- The S&P 500 fell 0.39% for the quarter, but is up 5.01% so far this year
- Sector losers and winners:
- Among the sectors, the biggest losers were financial services companies (down an aggregate 6.27% for the second quarter of 2011) and energy stocks (down 5.07%).
- Publicly-traded health care companies were up an aggregate 7.29% and utilities rose 5.01%.
Mid-Caps
- The Wilshire U.S. Mid-Cap index fell 0.86% for the second quarter, but is still up 8.70% for the year.
- The Russell Midcap index was up 0.42% for the second quarter; up 8.08% for the first six months of 2011.
Small Caps
- The Wilshire U.S. Small Cap index declined 2.01% during the second quarter; but is up 6.31% for the year.
- The comparable Russell 2000 fell 1.61% in the second quarter; it was up 6.21% for the first half of the year.
Around The World
- Looking abroad, the MSCI EAFE index, which tracks a basket of developed-economy indices, was up 0.33% for the second quarter, up 3.00% for the year so far.
- There are always lessons in the returns; the MSCI Europe index was up 0.78% for the quarter, and is up 6.71% in the first half of the year, when many analysts were betting on a decline due to the widely-publicized debt woes in Greece, and less dire sovereign debt issues in Ireland, Portugal and Spain.
- ·The EAFE Emerging Markets Index, which measures the overall performance of less-developed nations, was down 2.11% for the second quarter, down 0.45% for the first half of the year.
- Among the notable countries, England's FTSE 100 index fell 1.07% for the first quarter; down 1.13% for first six months of 2011, while Germany's DAX index rose 2.74% for the second quarter; up 5.53% for the six months ending June 30.
- Japan's Nikkei average is up 1.11% in the second quarter, but in the first half of the year it has lost 5.6% overall.
- Chinese shares fell 6.92% on the Shanghai stock exchange; down 3.18% over the past six months.
- The Hong Kong Hang Seng index fell a similar 5.90% in the second quarter, and has so far posted a 4.43% loss for the year.
- India's Mumbai Sensex index was down 2.96% in the first three months of the year, down 8.34% in the first half of 2011.
- Brazil's Bovespa Stock Index was one of the biggest losers internationally, down 9.91% for the second quarter; down 10.80% for the year so far.
Bonds
- Bond yields continue to scrape along the floor; you can get a 0.02% yield on 3-month Treasuries currently, 0.10% on 6-month government bonds, and the two-year (0.45%), three-year (0.79%) and 5-year (1.75%) are not dramatically higher.
- The benchmark 30-year Treasury is currently yielding 4.36% a year. The Bloomberg web site shows 1-year muni bonds yielding an average of 0.211%; if you go out to ten year maturities, you can get an average yield of 2.729%. (If you're curious about interesting anomalies in the bond market, check out the rare inverted yield curve in Brazilian debt, where you can be paid 12.75% a year if you buy a 3-year bond, but just 12.46% if you lock in your money for 10 years.)
Also...
- The technology-heavy NASDAQ Composite Index was down 0.59% in the second quarter, but is up 3.30% so far this year.
- In real estate, the Wilshire REIT index rose 3.64% for the second quarter of 2011, and is now up 10.62% for the year.
- Commodities prices were almost unanimously down for the second quarter, led by energy (down 7.94%), agriculture (down 12.09%), livestock (down 9.80%), aluminum and nickel (down 5.32% and 10.32% respectively).
- Gold was up a modest 4.29% to finish the first half of the year at a 5.42% gain.
Where do we go from here?
The U.S. Bureau of Economic Analysis reports that America's economy-the gross domestic product (GDP) -rose 1.9% in the first quarter of 2011, which is significantly less robust than the 3.1% growth rate reported for the fourth quarter of 2010. If you've taken a trip to the gas pump, you are probably not surprised that the inflation rate reached 3.9% in the first quarter.
An Unusual Recovery
As you've no doubt read elsewhere, we are experiencing an unusual recovery from an unusual recession. In past economic downturns, the economy has come roaring back during the recovery, but today we are dealing with a more deliberate climb out of the hole.
A quarterly survey by the Associated Press suggests that the U.S. economic recovery will be slow and deep, held back by shoppers reluctant to spend and employers hesitant to hire. A poll of 42 economists has concluded that economic growth will probably stay below 3% for the rest of this year and early next year, and their crystal balls say that the U.S. unemployment rate will end the year about where it is now: between 9.0% and 9.5%. GDP growth would have to reach 5% for a full year to drive the unemployment rate down by one percentage point; 125,000 jobs must be added each month just to keep up with population growth. In May, the latest month where we have statistics, 54,000 net jobs were added, down from 194,000 in March and 232,000 in April.
Home Sweet Home
The other headline-grabbing issue is housing. A series of charts created by the web site NumberNomics.com makes clear that existing home sales, new home sales, and median new home prices have all been essentially flat since January of 2009. But with interest rates at record lows, a new house is far more affordable today than it was in 2007; the site notes that the cost of purchasing a home is now actually lower in many sections of the country than what it costs to rent. Distressed sales represented 31% of total sales in May, down from 37% in April--which is progress of sorts.
Bottom Line for Investors
None of this is bad news for investors, who prefer the recovery to continue, slow or otherwise. But the rocky month of June, which started with six straight days of losses in the U.S. markets, is further evidence that even positive growth and positive returns don't guarantee a smooth ride. The returns of the first half of the year have come with a certain share of anxiety, but it may be helpful to remember that the great returns of 2009 came at a time when many investors were living in a state of fear bordering on terror.
Let's count our blessings; the mild reversal of the past three months wasn't enough to offset the gains in the first quarter of the year for most of the elements in a diversified investment portfolio.
LINKS TO SOURCES:
GDP estimates, inflation and corporate profits
Wilshire index data
Russell index data
S&P index data
Nasdaq index data
International indices
Individual country data
Additional Individual country data from CNN
Commodities index data
Treasury market rates
AP Economic predictions
Labor market recovery
Numbernomics.com
|
|
|
Hope your July is starting out great. Have a fantastic week!
Sincerely,
Gary Silverman
Personal Money Planning |
|
|
|
©2011 Personal Money Planning . All rights reserved by Personal Money Planning and content may not be reproduced, disseminated, or transferred in any form or by any means, except with the prior written permission of Personal Money Planning unless specifically noted. (Permission is not difficult to obtain.) The one exception is for downloading and printing information from this newsletter for general education by the original recipient.
|
Disclosure
This newsletter is produced by Gary Silverman, dba Personal Money Planning, a registered investment advisor located in Wichita Falls, Texas.
Information in this newsletter is believed to provide accurate and authoritative information in regards to the subject matter covered. However, the accuracy, timeliness, or applicability of the information is not guaranteed and is provided with the understanding that we are not rendering legal, accounting, tax, or other professional advice or services.
This publication should not be construed by any consumer and/or prospective client as Personal Money Planning's solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. Nor should links provided to other sites be construed as the recommendation of the services or products mentioned on those sites. If such services are required, the help of a competent professional should be sought.Remember that past performance may not be indicative of future results. Therefore, you should not assume that the future performance of any specific investment, investment strategy, or product made reference to (directly or indirectly) on this Website will be profitable or equal to indicated performance levels. Different types of investment involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for your investment portfolio.
Historical performance results for investment indexes and categories generally do not reflect the deduction of transaction or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance results.
A copy of Personal Money Planning's current written disclosure statement discussing Personal Money Planning's business operations, services, and fees (known as an ADV Part II) is available from Personal Money Planning upon written request (and can be downloaded from our web site).
Personal Money Planning does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Personal Money Planning's web site or incorporated herein, and takes no responsibility therefore. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
|
|
|
|
|
|
