The apparent slowdown of China’s economy reverberated across financial markets in the third quarter, driving stock and commodity prices lower while boosting bond prices.
US stocks declined 7.2%, while international and emerging market stocks fell 10.6% and 17.9%, respectively.
US bonds gained 1.2%, while the foreign bonds hedged to the US dollar rose 2.0%. Fixed income investments reacted positively to the Federal Reserve’s decision to postpone raising short-term interest rates and the general trend toward safety.
Stock markets experience challenging periods occasionally. Certain periods are longer or shorter than others and getting through them requires patience and discipline. Many of us are reluctant to stay with a strategy in difficult circumstances. We are naturally wired to assume that downward trending markets will continue into the future.
However, markets eventually rebound as new information comes to light, sometimes more quickly and forcefully than we expect. As a result, missing even a few days of a stock market rebound can have serious long-range repercussions on an investment strategy.
At Ades Investment Counsel, we recognize that markets are difficult to predict. Our approach is to remain consistent and focused over the long-term so our clients have increased opportunities to reach their goals. Nothing about the events of the past quarter has changed that view.
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References:
Quarterly Market Review Third Quarter 2015
Past performance is not a guarantee of future results.
All figures assume zero expenses and full reinvestment of dividends. Indexes are not available for direct investment.