Document Actions
Keep Your Fingers Crossed
After an awful start to 2008, there has been a strong rally in March and into April. This may indicate better things to come, or it may represent a “bear market rally”.
After an awful start to 2008, there has been a strong rally in March and into April. This may indicate better things to come, or it may represent a “bear market rally”. This kind of rally is not unusual, and it is particularly painful because it generates hope and produces expectations of improvement, only to quickly dissipate and return to a pattern of negative returns. Let’s hope that this rally is for real.
In the first quarter of 2009, as we indicated in earlier columns, tax free bonds have been a source of strength. The municipal bond sector increased by 4.7% in the first three months of 2009. Taxable bonds, another area that we had recommended, were up 1.3% for the quarter.
Stocks remain negative generally, but have recovered from an awful beginning of the year. Overall, United States stocks were down 8.3% in the first quarter of the year. International issues were down 9%. These results were after a rally of 20% in March. Time will tell if the rally is for real. Early April has been generally positive, but it is too early to tell.
We have a large, diverse economy, so general numbers don’t tell the whole story. There has been a broad range of results from various sectors of U.S. Industry. While precious metals were up 11.5%, real estate was down 29.8%. The technology and communications sectors were both up, by 4.2 and 2.8 respectively. The health sector, which held up better than most in 2008, was down by 5.5% in the first quarter. This remains an area of optimism, and will probably continue to perform better than most other sectors.
Does size matter? Small cap stocks were down more than either mid cap or large, all three were down between 10-15%. Does style matter? Value was down more than growth or blend, and growth declined by less than half of the amount that value did. These do not in any way indicate that particular sectors of the market are trending in a direction that tells us what to do. All it tells us is that it is important to have your investments allocated so that they are participating in every asset category.
We can begin to feel that we are in a recovery when we begin to see two areas of improvement; real estate and employment: the signs in real estate would be increases in housing starts and sales of either new or used homes. In employment, we need to stop losing over 500,000 jobs per month to begin to believe that we have turned a corner.
Conditions are starting to look a little bit better, let’s hope that we aren’t seeing a “bear market rally”. Want to talk? Contact us.
In the first quarter of 2009, as we indicated in earlier columns, tax free bonds have been a source of strength. The municipal bond sector increased by 4.7% in the first three months of 2009. Taxable bonds, another area that we had recommended, were up 1.3% for the quarter.
Stocks remain negative generally, but have recovered from an awful beginning of the year. Overall, United States stocks were down 8.3% in the first quarter of the year. International issues were down 9%. These results were after a rally of 20% in March. Time will tell if the rally is for real. Early April has been generally positive, but it is too early to tell.
We have a large, diverse economy, so general numbers don’t tell the whole story. There has been a broad range of results from various sectors of U.S. Industry. While precious metals were up 11.5%, real estate was down 29.8%. The technology and communications sectors were both up, by 4.2 and 2.8 respectively. The health sector, which held up better than most in 2008, was down by 5.5% in the first quarter. This remains an area of optimism, and will probably continue to perform better than most other sectors.
Does size matter? Small cap stocks were down more than either mid cap or large, all three were down between 10-15%. Does style matter? Value was down more than growth or blend, and growth declined by less than half of the amount that value did. These do not in any way indicate that particular sectors of the market are trending in a direction that tells us what to do. All it tells us is that it is important to have your investments allocated so that they are participating in every asset category.
We can begin to feel that we are in a recovery when we begin to see two areas of improvement; real estate and employment: the signs in real estate would be increases in housing starts and sales of either new or used homes. In employment, we need to stop losing over 500,000 jobs per month to begin to believe that we have turned a corner.
Conditions are starting to look a little bit better, let’s hope that we aren’t seeing a “bear market rally”. Want to talk? Contact us.