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A Recap of The Bull Quarter

For the week, the Dow Jones Industrial Average (DJIA) gained 1.00% to 13,212, the Standard & Poor’s’ 500 index (S&P 500) gained 0.81% to 1,408, and the Nasdaq Composite Index gained 0.77% to 3,092.  The Russell 2000 Index, which tracks the performance of small capitalization stocks, was basically flat, finishing up 0.03% to 830.

Last Friday brought the 1st quarter of 2012 to an end and as it turns out, it was a great quarter.

The DJIA gained 8.1% for the quarter.  It is now down 7% from its index high of 14,165, which was set on October 9th, 2007.  The S&P 500 gained 12%, which was its 10th best 1st quarter return on record.  Finally, the NASDAQ gained a whopping 18.7%, (most likely on the back of one big stock), which is the largest first quarter gain since 1991 and the 4th best quarter ever.

In fact, both the 4th quarter of 2011 and the 1st quarter of 2012 have been great back-to-back quarters.   They each ended with the S&P 500 gaining in excess of +10%.  This is only the 12th time in history that the S&P 500 has recorded 2 back-to-back +10% quarterly returns.  According to Bespoke Investment Group research, the S&P 500 has had a positive return 9 out of the 12 times that there has been quarterly back-to-back gains of +10%. The average return for the subsequent quarter has been over 4%.

Interestingly, the 2 sectors that were responsible for last decade’s major market busts (information technology and financials), led the markets this past quarter, with both sectors posting excellent returns in excess of 18% and 21% respectively.  But in reality, the strong quarter could be seen across nearly all sectors.  Materials, industrials, energy, consumer discretionary and staples, healthcare and telecom sectors all posted gains; the only losing sector was utilities, down 2.68% for the quarter.

For equity investors, we continue to recommend overweighting growth over value, and small and mid caps over large caps and cyclical sectors of the market.

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Securities and Financial Planning offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. Stock investing involves risk including loss of principal. The Dow Jones Industrial Average is comprised of 30 stocks that are major factors in their industries, and widely held by individuals and institutional investors. The Standard & Poor’s 500 Stock Index (S&P 500) is an unmanaged capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The NASDAQ Composite Index measures all domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. The market value, the last sale price multiplied by total shares outstanding, is calculated throughout the trading day, and is related to the total value of the Index. The Russell 2000 Small Stock Index is an unmanaged index generally representative of the 2000 smallest companies in the Russell 3000 Index. The Russell 2000 is an unmanaged index generally comprised of companies with lower price-to-book ratios and lower forecasted growth values.  The prices of small and mid-cap stocks are generally more volatile than large cap stocks.


David B. photo

David B. Armstrong, CFA

President & Co-Founder

Dave got into the industry when he discovered his passion for finance in his mid-20’s. He’s a combat veteran and served as an officer in the United States Marines Corps on both active duty and in the reserves, retiring at the rank of Lieutenant Colonel. While serving on active duty, Dave was unable to spend money on deployments, so he became a self-taught investor. Along with a few bucks cash as a bouncer, his investing performance grew to be good....

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