The Dichotomy
The second quarter of 2015 posed a dichotomy, with the economy growing and the stock and bond markets barely moving. There appear to be a number of reasons for this, some good for the long-term, others less so. Writing this newsletter in the latter part of July has allowed me to reflect on more of the information that is coming to light on the quarter just past.
The Markets
Review of Markets
2015 began with the S&P 500 at 2058.9. To some extent, the first quarter of 2015 reminded me of the first quarter of 2014. The stock market began its slide throughout January. It bottomed on January 29th at 1995, and then proceeded to fluctuate in a fairly narrow range, peaking on March 1 at2117. The quarter closed with the S&P 500 at 2067.9, up 0.4%.
Looking at the Past Quarter
A great deal of market volatility was introduced during the fourth quarter of 2014. A drop in the S&P 500, which began on September 19th, continued a downward spiral that culminated with the average bottoming at 1862 on October 16th. At that point, the average was negative for the year. The S&P then proceeded to rise and fall in swings of 100 points or more until the end of the year. It is interesting to see how the index fell so sharply, then recovered and fell again. By the end of the year, with the average having moved from1972.3 on September 30th to 2058.9 on December 31st, there was a gain of 4.39% for the quarter and a gain of 9.87% for the year.
Ups and Downs
The third quarter of 2014 was nothing like the second quarter. The second quarter saw increases in just about every investment category that we use. This past quarter was one of new volatility in the markets. Bonds and stocks both spent the period going from highs to lows, then reversing course and reversing course again.