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November 15th, 2016

The 3rd quarter has come and gone, bringing mostly positive returns for equities and fixed income investments.


In the U.S.: The three major stock indexes (the Dow, the S&P and Nasdaq) set new, simultaneous records for closing at all-time highs in August… twice in the same week.

In the U.K.: Investors kept a cautious calm and carried on in the aftermath of the Brexit vote. While there was the usual reactionary flight from stocks to bonds, during that time, there also were relatively strong August inflows into lower-cost “tracker” (index) funds – an encouraging sign.

Speaking of index funds: The world’s first publicly traded index mutual fund, the Vanguard 500 – turned 40 on August 31. “Happy birthday, index funds,” wrote Wall Street Journal columnist Jason Zweig. “[W]e should all celebrate an innovation that has cut the cost of investing by more than 90% and radically democratized the financial markets.”


If you think back to this time last year, you may remember that it was a very tumultuous time for equity markets, with market declines setting off alarms among the popular press.  You probably have forgotten though, what triggered the turmoil at the time. Similarly, this past January, when various pundits were ringing in dire predictions for the New Year, it may have felt like the year’s unfortunate fate was already sealed. However, markets are still very hard to predict, and the returns of this year have proven many predictors to be incorrect.


As we swing into the fourth quarter, we expect to see continued plays on the emotions, as the U.S. begins the election process of a new president, the Federal Reserve Board makes decisions on interest rates, and the markets respond to the unknown.  Among all the noise of the investment markets, it is important to remain calm, diversified, and focused on the long term.