Stock Market graph analysis investment

Warburton Capital Management

The Markets Do What The Markets Do

So a buddy comes in and asks “What has the Market done lately”?

  • This seems like a very simple question, however, there are a lot of devils in the details of a comprehensive answer.
  • To begin with, which ‘Market’ do we want to talk about and
  • Over what time period?  (For purposes of this discussion, we will analyze Q2 2018.)

Most people think about the S&P 500 as The Market, however, the S&P 500 is merely a subset of Large Cap Stocks trading on the US Stock Exchanges.

  • To truly understand the US Market a thoughtful investor must also examine US Small Cap and the other bifurcations characterized as Value Stocks and Growth Stocks.
  • Then, for some real fun, the same set of analytics can be applied to International Developed Stock Markets and International Not-Developed (Emerging) Stock Markets.
    • From this query we can further drill down to individual countries.

To be comprehensive, the foregoing only applies to Stocks or Equities.  How about Bonds?

  • Bond analysis is even more complicated as there are many distinct buckets of Bonds worthy of consideration and discussion
    • US Bonds vs Foreign Bonds
    • Within both US and Foreign Bond Markets we have Short-Term Bonds, Intermediate-Term Bonds and Long-Term Bonds
    • Finally, within both US and Foreign Bond Markets, we can look at Government Bonds, Highly Rated Investment Grade Corporate Bonds and the many tranches of Bond rated lower than Investment Grade

Thought we were finished?

  • How about the Currency Markets?
  • How about the Commodity Markets?

So, in answer to my buddy who wants to what has The Market been up to lately, I have one response:

  • The Markets moved in many mysterious and unpredictable ways.
    • Who would have expected REIT’s to be a top performer last quarter with a 9.99% return?
    • Who would have expected Israel to be the top performing Developed Market performer?
    • Who would have expected Colombia to be the top performing Emerging Market performer?
    • Who would have expected the US Dollar to strengthen 5.07% against the Euro?
    • Who would have expected Brent Crude Oil to gain 16.18% or Soybeans to decline -18.40%

There just isn’t much that is predictable over the short run

If you would like some numbers in lieu of the narrative, please Click Here for a granular look at each of the above and more.

On behalf of Warburton Capital, I remain

Yours truly,

Tom Warburton

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