Goodbye Third Quarter – Phew, Finally
A lot of water has passed under the bridge since the year actually started, but looking back it’s easy to forget that the Standard & Poor’s 500 Index (S&P 500) actually had a pretty good start through the first two quarters…that is until the third quarter rolled around.
The S&P 500 fell 14.33% in the third quarter and most of that came in late July and early August. Since then, according to Bespoke Investment Group, the index has traded in a tight range of just 8% over the past 40 days. Over that same time period, the average daily change of the S&P 500 has been +/-1.9%. So over the past 40 days, the difference between the high and low of the S&P 500 has been 8% and the average daily move of the index is either up or down about 2%.
That’s a lot of volatility–which causes fear, panic, and probably a lot of inappropriate investor behavior.
For the week, the Dow Jones Industrial Average (DJIA) gained 1.32% to finish at 10,913, the Standard & Poor’s 500 Index (S&P 500) lost -0.44% to finish at 1,131 and the Nasdaq Composite Index lost -2.73% to finish at 2,415. The Russell 2000 Index, which tracks the performance of small capitalization stocks, lost -1.27% to finish at 644.
There was actually some good economic news out today. Ok, there was some better economic news out today. We continue to see signs that the economy is STILL not yet moving in reverse. The Manufacturing ISM Report on Business (the PMI index) published by the Institute for Supply Management provides us with insight about the economy. When this index is above 50, it signals economic expansion and when it is below 50, it signals economic contraction. The September 2011 PMI report was released today and the reading was 51.6. This is an increase from the August report’s reading of 50.6. While it is currently close to 50, it is certainly not below 50, has increased in the past month and has been at a reading over 50 for 26 straight months.
We will have a lot more about the third quarter in our Monument Quarterly Newsletter. Check back here for a link to it in a week or so.
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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.
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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