The Yin and Yang, Q3 Performance Results

Today we find ourselves in the midst of the first government shut down in 17 years as our elected officials wrangle with the convergence of philosophical positions, escalating debt and debt ceiling deadline later this month.  As we wrote last week, history tells us the equity market has performed relatively well following previous shutdowns.  Since 1976, the S&P 500 Index has risen 11% on average in the 12 months following a shutdown.  We’ll see how this one turns out and much will depend upon the outcome of the debt ceiling debate that is brewing and in the elixir currently intoxicating the markets.

131001 Yin and Yang Q3 PerformanceEK

Speaking of performance, the following table illustrates the performance of various assets, strategies and indices over the past quarter as well as year-to-date data. Third quarter performance ranges from a -35% in the price of corn to +17.4% for silver. There is an old adage in the commodity industry, rain makes grain, and that is shown in spades in the 35% price decline of corn. Global investors were rewarded over the quarter in the foreign developed markets as the MSCI EAFE index returned 17.4% vs. the domestic S&P 500 index return of 5.2% over the same time period. Expectations of the European economy improving after six consecutive quarters of decline have risen and investors are positioning ahead of the turn. Fixed income struggled to deliver a positive return over the quarter with the broadly referenced Barclays Aggregate Bond Index returning a 0.6% quarterly number while the non-investment grade high yield area delivered a 2.3% total return. Next up, third quarter earnings. Stay tuned.


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