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Q4 Market Summary & Commentary
 

Q4 Market Summary & Commentary

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Elevation Wealth Management\'s 4th Quarter 2011 Market Review

Elevation Wealth Management\'s 4th Quarter 2011 Market Review

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    Q4 Market Summary & Commentary Q4 Market Summary & Commentary Presentation Transcript

    • Barry Mendelson, CFPBarry Mendelson CFP®President & Financial Advisor1399 Ygnacio Valley Road, Suite 24 Quarterly Market Review yWalnut Creek, CA 94598 Fourth Quarter 2011925‐348‐5852   barry@elevationwm.comelevationwm.com
    • U.S. & International Market Summary Fourth Q t F th Quarter 2011 U.S. Large  U.S.  U.S.  U.S. REIT  Int’l Value  Int’l Small  Emerging  Global  U.S. Gov/  / Company  Value  Small Cap  Stocks Stocks Stocks Markets 1‐5 Year  Credit 1‐3  Stocks Stocks Stocks Stocks Bonds  Year Bonds  +11.8% +11 8% +13.1% +13 1% +15.5% +15 5% +15.4% +15 4% +3.0% +3 0% +0.7% +0 7% +4.4% +4 4% +0.4% +0 4% +0.2% +0 2% U.S. STOCKS INTERNATIONAL STOCKS BONDSSource: Morningstar Direct 2012. Market segment (Index representation) as follows: U.S. Large Company Stocks (S&P 500 Index); U.S. Small Company Stocks (Russell 2000 Index), U.S. Value Stocks(Russell 1000 Value Index). U.S. Real Estate Market (Dow Jones U.S. Select REIT Index), International Developed (MSCI EAFE Index (net div.)), Emerging Markets (MSCI Emerging Markets Index(gross div)), Global Bonds (Citi WGBI 1-5 Yr Hdg USD), US Bonds (BofA ML Corp & Govt 1-3 Yr TR). Source: Morningstar Direct. Indexes are unmanaged baskets of securities that are not available fordirect investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Allinvestments involve risk, including loss of principal. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting andfinancial reporting.
    • U.S. and International Market IndexesReturns through December 31, 2011, Annualized for 5 and 10 Year Periods Quarter One Year Five Years Ten Years to-Date % % % % S&P 500 Index 11.8 2.1 -0.3 2.9 Russell 3000 Index 12.1 1.0 0.0 3.5 Russell 1000 Value Index 13.1 0.4 -2.6 3.9 Russell 2000 Index 15.5 -4.2 0.2 5.6 Dow Jones U.S. Select REIT Index 15.4 9.4 -2.0 10.1 MSCI World Ex. U.S. Value Index 3.0 -11.7 -5.5 5.5 MSCI World Ex. U.S. Small Cap Index Ex U S 0.7 07 -15.8 15 8 -3.2 32 9.4 94 MSCI Emerging Markets Index 4.4 -18.4 2.4 13.9 WGBI 1-5 Years Hedged 0.4 2.3 3.9 3.6 BofA M ill L h U S C /G t I d 1-3 Years B fA Merrill Lynch U.S. Corp/Govt Index 1 3 Y 0.2 1.6 3.9 3.6 Source: Morningstar Direct 2012. Market segment (Index representation) as follows: U.S. Large Company Stocks (S&P 500 Index); U.S. Small Company Stocks (Russell 2000 Index), U.S. Value Stocks (Russell 1000 Value Index). U.S. Real Estate Market (Dow Jones U.S. Select REIT Index), International Developed (MSCI EAFE Index (net div.)), Emerging Markets (MSCI Emerging Markets Index (gross div)) Global Bonds (Citi WGBI 1-5 Yr Hdg USD) U S Bonds (BofA ML Corp & Govt 1-3 Yr TR) Source: Morningstar Direct Indexes are unmanaged baskets of div)), USD), U.S. TR). Direct. securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. All investments involve risk, including loss of principal. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. 3
    • S&P 500 Daily Performance in 2011 S&P 500 Performance 2011 Aug 9: “If U.S.  Slides Into  Dec 5:  D 5 Recession,  “DeMark:  S&P 500  S&P 500 at  Could Drop to  1,330 by  Oct 31: MF  830” 4 Christmas” 7 Global  Bankruptcy5 Jun 8: Bill  Mar 20:  Jan 9: All 30  Gross:  “Crises in Crises in  Experts  “Treasury  Dec 24: Wall  Japan ripple  Surveyed  Investors  St. Experts  across global  predict positive  will get  think stock  economy”2 year of +10.6%1 cooked” 3 Nov 29:  prices will rise  American  by more than  Airlines  Ai li 10% in 2012. 8 Bankruptcy6Data source: Yahoo Finance. 1: “Stock outlook for 2011: Recovery rally will continue”, CNN Money, 1/9/11, 2: “Crises in Japan Ripple Across the Global Economy”, The New York Times, 3/20/11, 3: “Bill Gross: Treasury investorswill ‘get cooked’”, CNN Money, 6/8/11, 4: “If U.S. Slides Into Recession, S&P 500 Could Drop to 830”, Forbes, 8/9/11, 5: “The Unraveling of MF Global”, The Wall Street Journal, 12/31/11, 6: “American Airlines Parent AMR Files forBankruptcy”, Bloomberg, 11/29/11, 7: “DeMark: S&P 500 at 1,330 by Christmas”, Bloomberg, 12/5/11, 8:, “Pros See Stocks up in 2012, but Big Risks too”, Associated Press, 12/24/11. Indexes are unmanaged baskets of securitiesthat are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. All investmentsinvolve risk, including loss of principal. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting.
    • International Returns International diversification is still key Individual Country Returns 2011 Individual Country Returns 2011Data source: Morningstar Direct. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actualportfolio. Past performance is not a guarantee of future results. All investments involve risk, including loss of principal. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, anddifferent methods of accounting and financial reporting. Diversification neither assures a profit nor guarantees against loss in a declining market.
    • Diversify Effectively Ranking of Markets Around the World Ranking of Markets Around the World Ten‐Year Performance in US Dollars Annualized Returns Year Ending December 31, 2011 1. Colombia  24. New Zealand 2. Indonesia 25. Hungary 3. Peru 26. Poland 4. Czech Republic 27. Sweden 5. Egypt 28. Hong Kong 6. Thailand 29. Switzerland 7. Brazil  30. Spain 8. South Africa 31. Israel 9. Chile  9 Chile 32. Austria 32 Austria 10. India  33. United Kingdom 11. China 34. Germany 12. Mexico 35. Taiwan 13. Morocco 36. Netherlands  14. Russia  37. Japan p 15. Malaysia 38. France 16. Philippines 39. USA 17. Korea 40. Portugal 18. Norway  41. Belgium  19. Australia 42. Italy  20. Turkey 43. Finland  21. Singapore  44. Ireland 22. Canada 45. Greece  23. DenmarkSource: MSCI 2011 Map reflects countries in the MSCI provisional All Country World Index MSCI All Country World Small Cap Index, and MSCI Frontier Markets Index. Indexes are unmanaged baskets of securities that are not 2011. Index, Index Indexavailable for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. All investments involverisk, including loss of principal. Foreign securities involve additional risks, including foreign currency changes, political risks, foreign taxes, and different methods of accounting and financial reporting. Diversification neitherassures a profit nor guarantees against loss in a declining market.
    • Annual Returns Lower than average, but still positive Historical Annual Return, S&P 500 , 1972‐2011 2011:  +2.11%Data source: Yahoo! Finance, returns of S&P 500. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with themanagement of an actual portfolio. Past performance is not a guarantee of future results. All investments involve risk, including loss of principal.
    • Quarterly Volatility One of the worst historic quarterly returns was followed up by one of the best Historical Quarterly Return, S&P 500 1972‐2011 Q4:  +11.82% Q3:  ‐13.87%Data source: Yahoo! Finance, returns of S&P 500. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with themanagement of an actual portfolio. Past performance is not a guarantee of future results. All investments involve risk, including loss of principal.
    • Bull and Bear Markets S&P 500 Inde (USD) Index Monthly Returns: January 1926–June 2011 116 mos. 491%Average Duration Average ReturnBull Market: 32 Months Bull Market: 119%Bear Market: 11 Months Bear Market: ‐27% 92 mos.Months = Duration of Bull/Bear Market 355%%=T t lR t Total Return f the Bull/Bear Market for th B ll/B M k t 61 mos. 282% 44 mos. 2 mos. 49 mos. 193% 92% 210% 6 mos. 6 mos 100% 3 mos. 23 mos. 26% 133% 61 mos. 48 mos. 4 mos. 9 mos. 43 mos. 9 mos. 33 mos. 108% 105% 12% 61% 90% 30 mos. 55% 30 mos. 86% 24 mos. 5 mos. 26 mos. 76% 15 mos. 71% 63% 22% 52% 35% 5 mos. Jun 2011 12% -8% 3 mos. 14 mos. 20 mos. 5 mos. 2 mos. 6 mos. 6 mos. 7 mos. 6 mos. 8 mos. 4 mos. ‐11% ‐14% 3 mos. ‐15% ‐30% 13 mos. ‐16% ‐22% ‐10% ‐22% ‐16% 19 mos. 21 mos. ‐17% ‐15% ‐29% ‐30% 25 mos. 2 mos. ‐50% 5 mos. ‐43% ‐45% 16 mos. 50% 31 mos. 31 mos 34 mos. ‐19% ‐15% 15% ‐51% ‐30% ‐83% 6 mos. Feb 2009 ‐21% 4 mos. ‐10% Indices are not available for direct investment; its performance does not reflect the expenses associated with the management of an actual portfolio.  Past performance is no guarantee  of future results. The S&P data are provided by Standard & Poor’s Index Services Group. Bull and bear markets are defined in hindsight using cumulative monthly returns. A bear  market (1) begins with a negative monthly return, (2) must achieve a cumulative return less than or equal to ‐10%, and (3) ends at the most negative cumulative return prior to  achieving a positive cumulative return. All data points which are not considered part of a bear market are designated as a bull market.
    • Size and Value Effects Are Strong around the World Annual Index Data Annualized  Compound  Returns (%) US US US US Emg. Emg. Emg. Emg. Large S&P Large Small CRSP Small Intl. Intl. MSCI Intl. Markets Markets Markets Markets Value 500 Growth Value 6-10 Growth Value Small EAFE Growth Value Small “Market” Growth US Large US Small Non-US Developed Emerging Capitalization Stocks Capitalization Stocks Markets Stocks Markets Stocks 1927–2010 1927 2010 1927–2010 1927 2010 1975–2010 1975 2010 1989–2010 1989 2010Average Return (%) 14.03 11.88 11.35 19.17 15.98 13.95 18.48 19.17 13.67 11.29 25.01 21.98 19.46 17.05Standard Deviation (%) 27.01 20.51 21.93 35.13 30.94 34.05 24.56 28.13 22.29 22.21 42.01 40.67 36.40 34.89 In US dollars. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is  not a guarantee of future results. US value and growth index data (ex utilities) provided by Fama/French. The S&P data are provided by Standard & Poor’s Index Services Group. CRSP data  provided by the Center for Research in Security Prices, University of Chicago. International Value data provided by Fama/French from Bloomberg and MSCI securities data. International  Small data compiled by Dimensional from Bloomberg, StyleResearch, London Business School, and Nomura Securities data. MSCI EAFE Index is net of foreign withholding taxes on  dividends; copyright MSCI 2011, all rights reserved. Emerging markets index data simulated by Fama/French from countries in the IFC Investable Universe; simulations are free‐float  weighted both within each country and across all countries. Indexes are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. Values change frequently and past performance may not be repeated. There is always the risk that an investor may lose money. Small  company risk: Securities of small firms are often less liquid than those of large companies. As a result, small company stocks may fluctuate relatively more in price. Emerging markets risk: Numerous emerging countries have experienced serious, and potentially continuing, economic and political problems. Stock markets in many emerging countries are relatively small,  expensive, and risky. Foreigners are often limited in their ability to invest in, and withdraw assets from, these markets. Additional restrictions may be imposed under other conditions.  Foreign securities and currencies risk: Foreign securities prices may decline or fluctuate because of: (a) economic or political actions of foreign governments, and/or (b) less regulated or  liquid securities markets. Investors holding these securities are also exposed to foreign currency risk (the possibility that foreign currency will fluctuate in value against the US dollar).
    • Summary
    • ContactBarry Mendelson, CFP®President & Financial Advisor1399 Ygnacio Valley Rd, Suite 1399 Ygnacio Valley Rd SuiteWalnut Creek, CA 94598925‐348‐5852barry@elevationwm.comelevationwm.com
    • DisclosuresOpinions expressed are those of Barry Mendelson, CFP® and Elevation Wealth Management.  This presentation should not be construed as investment advice.  This presentation should not be construed as investment adviceThe information contained in this presentation is compiled from sources believed to be reliable.Investments in securities involve the risk of loss.  Past performance is no guarantee of future results.The markets can remain irrational longer than you can remain solvent.