Equity markets lose over 4% in November
By Laura Alspaugh, CFA | December 11, 2007
In October, the S&P 500 hit an all time high which was then followed by a losing November. All equity markets lost ground during the month, with the worst hits taken by small cap stocks. The Russell 2000 Index1 was down 7.2% while the S&P 500 was down 4.2%. Bond markets helped to buffer these losses with the LB Aggregate Index (the broadest measure of the US investment grade bond market) up 1.8% and the LB 1-3 Year Govt/Credit Index up 1.4%.
With one month left in 2007, the S&P 500 Index is poised to post its 5th consecutive year of gains. Small cap stocks have taken the brunt of 2007, with a 1.5% loss through November. Investors have been anticipating a correction in the small cap segment for some time. US large cap stocks had been shunned by investors in favor of small cap, international developed and emerging markets, as well as even high yield bonds, non-dollar bonds. In other words, investors wanted to own riskier assets that could breathe more life (i.e. higher returns) into their portfolios. However, as the year to date numbers suggest, US large cap stocks are not dead and even large cap growth stocks have seen a revival.
While the year to date results should provide comfort with respect to November’s losses, we can offer no short term prediction of what remainder of December will bring. We focus on the long term and do not attempt to time the markets. Long term investing requires patience and often a healthy dose of skepticism to avoid following the crowd in either direction.
1The Russell 2000 is comprised of the 2000 smallest US companies.
Topics: Markets |