The First Quarter is Over

Well, the first quarter of the year is over and the numbers are in. As of March 31 the S&P is up year-to-date .18%, the DOW is down .87% and the NAS is up a paltry .26%. Large cap value outperformed large cap growth--the reverse was true for small caps with growth outpacing value by about 1%. Overall, small caps did better than large caps. The international sector continues to outpace the domestic market. The energy sector did well, while real estate saw some weakness. According to the Stock Trader's Almanac, of which I am a big fan, April marks the end of the "best 6 months". Last year, they were right on cue--what will happen this year?

Growth prospects for the economy remain healthy, which would indicate the Fed will probably not lower rates as the market had previously anticipated. I think the Fed is on hold for the near future. But a healthy economy is good for the stock market as earnings can be expected to remain robust. On the technical side, as an avid chart-watcher for years, the charts appear a little "tired"--the slight correction we experienced in February really did not have a lasting effect and so I think we could see another correction at some point--which would indicate a nice buying opportunity. In terms of specific sectors, I still like Japan specifically and the energy sector. I always like the small and mid caps--I like them more as the "talking heads" continue to insist that their future performance will be less than stellar as compared to the large cap sector. I think the real estate sector will be interesting to watch--lots of money still flowing into that sector supported by a healthy economy and stable interest rates--but WOW those valuations sure are high!

As far as all the talk of home foreclosures and sub prime lending issues--I think the media has overblown the effect of these problems on the overall economy. Just more "noise" through which we must wade.

On the financial planning forefront, an interesting piece of research has come out indicating what a huge difference it makes at what age one starts to save for retirement. The study concluded that by age 35-40, if you haven't already started saving for retirement, that your ability to do so is greatly diminished because of the high percentage you would need to save to get "caught up". The take away here is if you know anyone just starting his/her career--tell them to start saving now! Or if you have teenage children who work summers--have them or you invest some money in a ROTH IRA. The sooner saving begins, the smaller the percentage of income needs to be saved for those Golden Years. If you would like more information on this study, let me know.

If you have anyone you would like to refer to me, please send them to my website http://www.mcdadvisors.com/. As always, thanks for reading.