Second quarter
stock markets gave back some first quarter
gains, but we're
still positive year to date. Health and financials performed best, while tech and telecommunication helped
the S&P 500 outperform. Growth
won the quarter and value lost.
U.S. stock markets at mid-year have earned a respectable 9.5% return. A euphoric first quarter 12.6% gain
gave way to a 2.8% minor setback in the second
quarter. Foreign markets
have not fared as well, earning
only 3.4%. Figure 1 provides
the details, and adds a look at gold's performance.
Figure 1: 2Q Performance
Figure 1: 2Q Performance
Source: PPCA
Note the high correlation between U.S. and foreign stocks as measured
by the S&P 500 and EAFE,
respectively. By contrast,
gold prices have moved somewhat
independently of stock prices, reinforcing gold's diversification role. Also note that gold has not fared well thus
far in 2012, barely breaking even. Stocks have been the better investment. Commodities in general, and metals in particular, have not done well. This could of course change, especially if inflation reignites.
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