Lindsey Report – November 2015

After an ugly two-month stretch for equities (as measured by S&P 500), wasn’t sure what to expect in October.  For investors whom have been around a while, they have seen that the month of October has often yielded some poor results: justified or not, the reputation exists.

Pleasingly, that was not the case this October.  Not only did equities rise in October, they experienced their best monthly gain in many years: the S&P 500 was up 8.2% for the month (MSN).  As much as anything, this looks like a bounce rally, especially after the rapid selloff we experienced in both August and September.

Equally pleasing was that many international, equity investments also enjoyed a robust October.  The MSCI EAFI non-US index of international developed markets was also up nicely, rising almost 6% for the month.  One of the driving forces was that the central bank of China lowered interest rates, which was bullish for foreign equities: many believe they will continue this trend.

I’m hard-pressed to find much economic impetus that supported the domestic move, as reports continue to show the U.S. economy plodding along.  Yes, we are still growing and adding jobs at a decent rate, the auto industry is on a pace for a great year and the housing market continues to improve.  Nonetheless, the economy only grew 1.5% in Q3(AP), so it remains a mixed bag.

Conversely, most investors have a diversified basket of investments in order to help lower volatility and risk.  As such, many investors own fixed income (bonds, etc…), as a means to diversify.  Additionally, investors use fixed income for yield or income in the form of dividends.

Well, fixed income did not share in the rally that lifted equities in October nor is it likely to in the coming months, as we continue to expect the Federal Reserve to begin raising rates.  Nonetheless, fixed income investments have historically served a valuable role for investors and they likely will in the future.  Even though fixed income investments may struggle in the coming months, they help with diversification, and for many, they are a source of income.

 

The opinions voiced are for informational purposes only and are not intended to provide specific advice to any individual. To determine which investments are appropriate for you, consult myself prior to investing. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. The economic forecasts set forth in this commentary may not develop as predicted and there can be no guarantees that strategies promoted will be successful.

Share This Post

Related Articles

Leave a Reply

© 2019 Cleat Lindsey. All rights reserved. Site Admin · Entries RSS · Comments RSS
Powered by WordPress · Designed by Theme Junkie