Now, however, we are in a global economy so it is instructive to note how the US compares to other countries’ markets (on a YTD basis through 7/3/08 except as noted). I have also noted how the holdings in most of our Wealth Management portfolios have performed.
Dow = -14.4% (large cap)
S&P 500 = -14.0% (large cap)
Nasdaq 100 = -12.9% (large cap)
Russell 2000 = -13.1% (small cap)
S&P 400 - -8.3%
S&P 600 = -10.9% (small cap)
MSCI EAFE = -15.6%
Dow Jones World Index = 13.7%
DJ Euro Stoxx = -25.0%
DJ Asia-Pacific = -11.0%
Popular BRIC ‘Emerging Markets’
Brazil = -7.3%
Russia = -11.2%
India = -33.7%
China = -46.8%
Typical WM Holdings:
Cambridge Index = -14.1% (large cap)
Cambridge Active = -7.9%* (mid cap)
CGGP (Cambridge Global Growth Portfolio) = -8.7%* (small cap + intl)
*(as of 6/30/08)
10 yr. US Treasury = +14.03% (52 wk. average).
Gold = + 9.0%
CGM Focus = +11.2%
CGM Realty = +3.1%
Utopia Growth = -10.1% (small cap and intl)
Royce Value Plus = -6.0% (small cap)
First Eagle Overseas = -4.2% (intl – unhedged).
Virtually all equity classes (i.e. stock market indexes) are down in the double digits YTD. The stock holdings in most of our WM portfolios are down considerably less than their corresponding indexes except for the Cambridge Index. In large cap, the Cambridge Index is mirroring the three large cap indexes as it was designed to do.
We are concerned about Utopia fund, which has fallen over 10% YTD. However, since all of this drop occurred in the last month, we are not recommending any changes at this point.
In summary, your overall portfolio is performing as it should. Overall the losses in values of stocks have largely been offset by increases in the value of Treasury bonds. We do not believe that any changes need to be made due to market conditions.
As your investment managers, the hardest recommendation to make in times like these is to “do nothing.” But, as the data shows, we are weathering the storm. I have found that reacting to short-term moves in the market is seldom worthwhile, and only increases investment expenses and taxes.
However, if you are feeling particularly uncomfortable with your investments right now, we should discuss your situation. I have found that often when clients are upset with their investments, they are experiencing endogenous changes in their life. These need to be addressed and if may well be appropriate to review your overall investment allocation to take into account other changes in your life.
Please let us know if we can talk about this, either at our next phone call or regular appointment. If you want to talk sooner, just let us know.
Bert Whitehead, M.B.A., J.D.