As is usually the case, it requires more than one measure to determine how investors and savers made out in 2010. For those of you who stayed out of the game and parked in cash, sorry. Let's say you didn't lose anything, but probably earned less than 1% on your money.

The broad market index generally followed is the S&P 500.  The total return for this measure was 14.91%, so U.S. stock investors had a good year. The total U.S. Market, including small and midcap stocks delivered a total return of 17.1%, so diversification within the domestic markets certainly paid off. Small was beautiful in 2010, the small cap index was up nearly 28% for the year. As usual, there was a difference between value and growth in domestic stocks. The value sector, large,beaten down stocks that had declined in recent years, was up 14.3%.  Growth stocks increased overall by 16.96%, reversing the advantage previously favoring value stocks.   

Here is a shocker, the United States Real Estate market sector, exemplified by Real Estate Investment Trusts, delivered a total return of 28.3% in 2010!  

The picture overseas was quite mixed. Overall, international stocks were us 11.12%, trailing domestic markets. Europe, with a number of troubled economies was up only 4.9%, the Pacific region did far better at 15.77%, and Emerging Markets did even better with an increase of 18.86%. International growth outpaced International Value by 15.6% to 7.31%. 

Since many investors have from 20% to 100% of their portfolios invested in bonds, lets see how they made out. First, it is obvious that bonds did far better than cash, regardless of the type of bond. Remember, bond funds can produce both an income return and a capital return as asset value grows. Short term treasuries, the closest thing to cash increased by 2.64%. The longer intermediate treasuries were iup 7.35% and long term treasures grew in value by 8.93%. Remember, if interest rates start to increase, these returns will be reduced significantly.   

What does this all mean to investors? First, you probably can't pick the market sector that will do the best in each and every year, so don't try. The best option is to diversify, have investments in each sector of the market, and allocate this by your investor profile.  The more conservative investor will have a higher percentage of their investments in bonds, and vice versa. It also means that everyone should stay invested, don't fune for cover in down years and come back when things look better.  Timing doesn't work. We can help you determine the type of investor you are, contact us at anadolna@associatesgroupinc.com