Neutrality in the Market (04/02/2015)
The first quarter of 2015 is over. The stock market went up, the stock market went down. It kept doing this all during the quarter. At the end of the quarter, the Dow Jones Industrial Average, an index of 30 blue chip stocks, had dropped 0.3%. The S&P 500, a much broader index of the market, was up 0.4%. In summary, not much change to either of the indexes. What was more apparent was that other asset classes did better than the U.S. stock market during the first quarter. I am always emphasizing diversification and this quarter was an excellent example of why it is so important.
Some examples of positions that did very well during the quarter were international stocks (that lost money last year), real estate investment trusts (that did well last year, too), and a non-diversified portfolio of technology stocks (that did not do well in 2014). Each of these asset classes were up more than 4% during the quarter. Such diversification will produce a result--for better or worse--different from what “the stock market” produces. This deviation from the stock market can help to smooth out our investment results over time. In this case, the results for most of our clients will likely be better than those of the U.S. stock market.
Posted April 2, 2015 by Caroline