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MARKET COMMENTARY: Second QTR - What We Know

July 7th, 2015

It seems like every year, some sort of financial crisis arises to cause investor anxiety. During the crisis, sometimes investors ask, “How could this have been avoided?” Another question asked to their advisor might be, “What are you going to do about it”?

 

Investors already know that the heightened levels of uncertainty we’re experiencing as a result of the unfolding Greek debt crisis, is the exact kind of market risk that is constantly out there. It’s the kind that drives future expected market returns. It also explains why we urge investors to maintain appropriately diversified portfolios, so their portfolios and subsequent income streams do not take permanent damage whenever various market factors experience their inevitable turns at adversity. To add some perspective, the percentage of Greek equities in our client portfolios is very small; only about .03% of equities and the portfolios do not own any Greek debt.

 

Most of the asset classes were positive for the quarter, and are positive year to date. U.S. small companies are up about 4% YTD, while large companies are up about 1.2%. Interestingly enough, international stocks have outperformed the U.S. so far this year, with large international companies up about 6% and small international companies up about 9%.

 

Don’t underestimate the power of evidence-based investing. It means, as a Petersen Hastings client, you know that the best course for you now is most likely the same, careful course that was set back when we prepared your globally diversified portfolio for these very sorts of conditions.

 

So, let’s celebrate what we already know about prudent investing. Let’s also remember a lesson that Greek philosophers like Socrates taught us: the wisest individuals never stop learning. If you’d like to better understand the historical context and economic implications of the Greek debt crisis, we recommend going to the Insights section of our web site where we posted a recently published article from the University of Chicago’s Booth School of Business.

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