To follow is a brief look at the month, quarter or the year-to-date ending June 2010… and a little commentary as well.
equity markets
According to Lipper, Inc., in the second quarter of 2010, the average US stock fund dropped 10.3%; the average fund was down 5.3% year-to-date.
The Wall Street Journal (7/1/10), noted that on 6/30/10, the Dow Jones Industrial Average (DJIA) was:
• thirty-one percent (31%) below the October 2007 record close of 14264.53
• up 49.3% from its 12-year low of 6547.05 hit on March 9, 2009.
I like to remind people that the first rule of investing is “Buy Low, Sell High.” Market drops are the time to buy, not run for cover. If you are concerned about your investments, call me and we can talk. That is why I am here.
bond markets
The most common type of investment-grade bond fund, the intermediate-term bond fund, on average returned 2.9% in the second quarter, or 5.4% for the first half of the year. This, according to a story in The Wall Street Journal (7/6/10.)
savings
The Bureau of Economic Analysis reports that the US savings rate (personal savings as a percentage of disposable personal income) for May 2010 (released on June 28th) was 4%. This is a large improvement over the 76-year low US savings rate of -1% for all of 2006, but a far cry from the 11% average household savings rate of 1982 (Associated Press 2/1/07.)
As a general rule, I suggest a minimum of three months cost of living sitting in savings for emergencies and opportunities. If there is the possibility of losing a job in the future, or if you are retired, I recommend a minimum of six months cost of living sitting in savings. If you are unsure of your cost of living, download the (pdf) cost of living sheet found in the general data sheets located here.
economy
According to the Bureau of Labor Statistics (7/2/2010), nonfarm payroll declined approximately 125,000, and the unemployment rate is currently at 9.5%.
According to The Wall Street Journal (7/1/10):
• Oil closed at $75.63 per barrel
• Gold closed at $1,245.50 per ounce, just shy of its record high of $1,257.20
world
According to The Wall Street Journal (7/1/10):
• London FTSE 100 Index was down 13% for the quarter
• Paris CAC-40 Index was down 13% for the quarter
• Frankurt DAX Composite Index was down 3.1% for the quarter
• Japanese stocks fell to a yearly low, down 15% for the quarter.
• The Chinese Shanghai Composite Index was down 27% year-to-date. Its lowest point in nearly 15 months.
The MSCI World Index (an important benchmark of global stock markets) fell 11% the first half of the year.
However, a number of the world’s stock markets were above their highs of 2007, according to a report by The Wall Street Journal (7/6/10). These are: Tunisia, Sri Lanka, Venezuela, Columbia, Chili and Indonesia. What do these markets have in common? They are considered “emerging markets.” Now, before running to invest in emerging market stocks or mutual funds, it is important to realize that these are considered much higher risk investments, and suitable for only a small percentage of a diversified portfolio if the portfolio owner is not risk-adverse.
From a June 15th Bureau of Labor Statistics New Release, US import prices declined 0.6% in May, and the price index for US exports increased by 0.7% in May.
editorial
Now after looking at all that data, one might get a little troubled. The news is depressing, and the short-term outlook is of concern to many. Notice I said “short-term.” One issue facing many – especially in the US – is the difficulty in looking beyond the end of the month or year to the future.
I am a financial professional who looks at investments as a means for achieving long-term goals.
So, if the long-term trend in the stock market is up over the next 10, 20 or 30 years, does it really matter how much it dropped one year and how much it gained the next? What matters is whether you as an investor can achieve your goals.
Contact me and let’s work together to see about achieving your long-term goals.
