Wall Street Steward Blog

"We're Half Way Theeeerrree"

If you are ever unfortunate enough to find yourself in a karaoke bar with me, you might hear me attempt to “sing” a hideous version of the Bon Jovi classic “Livin’ On a Prayer.”

Well, in the words of Jon, “We’re Half Way Theeeerrree” in the investment markets. For the people who have no idea what I am talking about, we are officially half way finished with 2013…which means we have meaningful YTD numbers.

Below is the report card along with some color commentary.

The Big Boys
Dow Jones: +15.2%
S&P 500: +13.8%
NASDAQ: +12.7%

Me: An above average year, even if we have a flat second half. How many of you would have taken a +13% year if it was offered on January 1, 2013? Yeah, me too.

Large Cap vs. Mid Cap vs. Small Cap
Russell 1000: +13.9% (large)
Russell MidCap: +15.5% (mid)
Russell 2000: +15.9% (small)

Me: So mid and small beat large, which we would expect in an up market.  Nothing to see here….

Growth vs. Value
Russell 1000 Growth: +11.8% (large growth)
Russell 1000 Value: +15.9% (large value)
Russell MidCap Growth: +14.7% (mid growth)
Russell MidCap Value: +16.1% (mid value)
Russell 2000 Growth: +17.4% (small growth)
Russell 2000 Value: +14.4% (small value)

Me: So among large cap stocks, value crushed growth, as the chase for dividends continues. In the mid cap arena, value won a nail biter…and in small cap land, growth won handily.

MSCI EAFE: +4.5% (large foreign developed)
MSCI EAFE Small Cap: +5.9% (small foreign developed)
MSCI Emerging Markets: -9.4% (emerging markets)

Me: If you owned the developed markets, you made a little bit of money…but if you had some EM, you got hurt a bit. Not surprising.

Fixed Income
Barclay Aggregate: -2.4%
Barclay Government: -2.0%
Barclay Credit: -3.6%
Barclay High Yield: +1.4%
Barclay Municipal: -2.7%

Me: Here is the shocker. Nearly all of the bond indices (except for US high yield) are negative YTD. This is mainly due to the rise in interest rates that occurred in May and June. The 10-year treasury yield on 5/2 was 1.631%…and on 6/25, it hit 2.589%. That represents a 58% rise in interest rates, which is what caused the negative return in the bond markets.

This has already been a great year for stock market returns, no matter what negativity the media tries to sell you. The bond market, on the other hand, has performed poorly relative to recent years. There is NO NEED to make investment decisions based on short term performance. Simply determine your risk tolerance, have a professional create a customized financial plan to attempt to meet those goals, and leave the worrying to us.

Sources: LPL Financial Research, JP Morgan “Guide To The Markets”