What can you say about a third quarter that witnessed the worst decline in the major domestic averages since 2011?
You call that a downright ugly Q3.
Just about everywhere you looked among domestic and global equities, it was easy to see a whole lot of red.
The table below of the top 10 domestic equity funds by year-to-date performance shows that even the best funds in 2015 saw a lot of bloodletting in Q3.
|PNQI||PowerShares NASDAQ Internet||-5.80||2.97|
|RFG||Rydex S&P Midcap 400 Pure Growth||-6.57||1.49|
|MTUM||ISHARES MSCI USA MOMENTUM||-4.52||0.22|
|PWB||PowerShares Dynamic Large Cap Growth||-4.53||0.14|
|RZG||Rydex S&P Smallcap 600 Pure Growth||-10.27||-0.01|
|MNA||IQ Arb Merger Arbitrage ETF||-3.13||-0.36|
|FV||FIRST TRUST DW FOCUS 5 FUND||-10.31||-0.45|
|PBP||PowerShares S&P 500 BuyWrite||-3.07||-0.80|
|JKE||iShares Morningstar Large Growth Index||-5.65||-1.06|
|IVOG||VANGUARD S&P MID-CAP 400 GRO||-7.09||-1.09|
Things were even worse internationally, as the table below of the top 10 global equity funds by year-to-date performance shows.
|GWX||SPDR S&P International Small Cap||-9.83||0.77|
|RXI||iShares S&P Global Consumer Discretion||-6.51||0.25|
|FNDC||SCHWAB FUNDAMENTAL INTL S/C||-8.46||-0.66|
|KXI||iShares S&P Global Consumer Staples||-1.20||-0.84|
|SCHC||SCHWAB INTL SMALL-CAP EQUITY||-8.82||-1.07|
|IXJ||iShares S&P Global Healthcare Sector||-9.43||-1.09|
|ACWV||ISHARES MSCI ALL COUNTRY WOR||-3.92||-2.73|
|DBEF||DB-X MSCI EAFE CURRENCY-HEDG||-8.87||-3.41|
|GQRE||FLEXSHARES GLOBAL QUALITY REAL ESTATE||-3.32||-4.14|
|PSP||PowerShares Listed Private Equity Portfolio||-9.40||-4.37|
There is not much winning going on, either at home or abroad, in equity land in the third quarter.
We can attribute these declines to a toxic combination of global growth concerns fueled by China’s economic slowdown and the uncertainty of what the Fed is going to do about monetary policy.
Until both of these headwinds begin to tame, I suspect markets are in for a tough slog in Q4.
As for the major market exchange-traded funds (ETFs) we monitor every day, it was a familiar tale of woe.
|DIA||SPDR DJIA TRUST||-7.51||-8.58|
|SPY||SPDR S&P 500 ETF TRUST||-6.91||-6.77|
|QQQ||POWERSHARES QQQ TRUST||-4.96||-1.44|
|VTI||VANGUARD TOTAL STOCK MKT||-7.76||-6.87|
|EFA||ISHARES MSCI EAFE ETF||-9.72||-5.79|
|EEM||ISHARES MSCI EMERGING MKT||-17.26||-16.57|
|FXI||ISHARES CHINA LARGE-CAP ETF||-23.06||-14.78|
|IEV||ISHARES EUROPE ETF||-8.99||-6.42|
|EWJ||ISHARES MSCI JAPAN ETF||-10.77||1.69|
The only market segment that did reasonably well was bonds, as you can see by the table below of three prominent bond ETFs.
|TLT||ISHARES 20+ YEAR TREASURY BO||5.18||-1.89|
|AGG||ISHARES CORE U.S. AGGREGATE||0.74||-0.49|
|TFI||SPDR NUVEEN BARCLAYS MUNI||1.64||-0.21|
Yes, with the exception of bonds, Q3 was downright ugly, and there is just no putting lipstick on this third-quarter pig.
Fortunately, subscribers to my Successful ETF Investing newsletter were out of the market for most of Q3, as our proprietary Fabian Plan gave us the signal to step aside in domestic and international stocks well before the worst of the selling.
If you want to put the power of the Fabian Plan on your side, then please check out my Successful ETF Investing advisory service today!
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Wisdom on Picking Battles
“He who knows when he can fight and when he cannot, will be victorious.”
— Sun Tzu, “The Art of War”
We all know that sometimes, the best thing to do in a difficult situation is just walk away. That’s true of conflict with others, and it’s also true of investing. In fact, knowing when to get in the fight and when to stay away is one of the biggest lessons investors need to learn — but often don’t. If you want to succeed, then learn when to fight and when the fight is not worth it. Doing so will help you be victorious.
Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.
In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about the implications of Janet Yellen’s speech at the University of Massachusetts. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.
All the best,