The second quarter saw continued small increases in the stock market almost across the board. The only real loser is the owner of long term fixed income, as rates increased bringing prices down rapidly. The S&P 500 Index (Large Cap Stocks) rose 0.28% in the quarter, extending its streak to ten consecutive quarters of positive gains. However, for this quarter once again, international equities outpaced U.S. stocks, with the MSCI EAFE Index (International Large Stocks) increasing 0.84% and the MSCI EAFE Small Cap Index (International Small Stocks) rose 5.88%. 1.
The Free Market (Matson Money) Funds: Year to Date Returns 1.
US Equity Fund: 2.20%
International Equity Fund: 7.23%
Fixed Income Fund: 0.39%
What can we learn?
The following is education from Matson Money on what we can learn from the recent market trends.
“The market performance over the last several quarters can serve as an educational opportunity for investors. In 2014, the market saw U.S. large cap stocks performing well compared to small cap stocks and international stocks, which could have driven investors to become overly focused on S&P 500 companies. In the most recent quarters however, tides have turned. In 2015, international equities and U.S. small cap stocks have both significantly outperformed U.S. large cap stocks, and investors who became too myopically focused and had forsaken diversification by neglecting these asset classes would have missed out on the returns.” 1.
“Those investors who are not educated and disciplined with the help of an adviser can easily fall prey to the next trend or news story that will seemingly impact the financial markets. The current occurrence of this is the headlines of the impending Greece default and potential exit from the Eurozone. Those listening to news anchors or reading financial news may be tempted to think that this global economic uncertainty will throw the EU into a tailspin and have a ripple effect across the global stock market. In reality, there have been 47 country defaults since 1975, and the global equity markets have continued to thrive and create wealth for investors over the long-term despite these defaults. “This time is different” is often championed by those in the media, but it is commonly an overused sentiment; the situation in Greece is no different. Prudent investors know that current economic conditions should not change the strategies chosen to accomplish one’s long-term goals.” 1.
By Jimmy Hancock
References
1. Matson Money. “Account Statement.” Letter to James Hancock. 1 Apr. 2015. MS. N.p.