Global markets, in the last 12 months, performed strongly with our model portfolios made up of 40%-100% global stock up from 13% to 34% and a slight cooling in Q3.
The last quarter, our models were down slightly, from -0.3% to -1.4%. Clients were in that same range of course, though if money was moving in/out of their accounts, their performance deviated slightly in either direction depending on the market the days they were buying or selling. See our two sets of Model Portfolios here Standard, Catholic-Friendly.
What about the different elements that make up the entire global market? Here are some highlights we noted. Want to dive in deeper? See the Q3 Market Report here.
TIPS - Treasury Inflation Protected Securities - US Govt Bonds that increase with inflation were up 1.75% for the quarter best among among bonds. We increased our clients’ exposure to TIPS in the last year. They are up 5.2% last 12 months, a nice move for bonds. Overall bonds were flat to up a fractional percent for the quarter.
US Real Estate (REITS) - Our clients have exposure to US REITs (vs Global REITs) which were up 1.3% for the quarter (vs -1.7% for Global) and 40.6% up over 12 months far outdistancing Global REITs are 24% last 12 months.
Emerging Markets had lowest return among world stocks at -8.1% for the quarter.`
US Stock Market - down 0.1% for quarter, up 32% for last 12 months. Important since the US represents about 54% of world stock market value.
Growth vs Value had mixed results around the world.
Market/Economy Outlook:
The good news to keep in mind no matter what you hear - we have strong demand in place and a historic number of open jobs. The strong worker demand fuels higher wages and benefits - naturally rather than by government mandates.
In 2020 our government "engineered" a recession by shutting down parts of the economy, while simultaneously adding billions of stimulus. Normally recessions are caused because demand reduces on its own - a "natural" process.
In 2021 we've had strong demand fueled in part from stimulus, and in part by a supply side restriction keeping us from producing enough. With significant government assistance to workers, they have only partially returned to work. Strong demand also strained the supply chain as materials could not be produced fast enough. Inflation, expected to be transient, increased. (Inflation like other economic measures is never constant - it is always going up and down.)
Politics (as always) - "elected drama queens" coupled with amped up press coverage sway the markets up/down - always has, always will. It's NORMAL! Market is down one day because of concerns about the debt ceiling. Today the market soars because the debt ceiling drama reduces.
This 2020-2021 time frame is unusual in the extensive government intervention. That will wane and the economy will gradually settle to its NORMAL pattern of natural recessions and expansions.
No crystal ball here, but there could actually be a benefit in "metering" the economy and having it increase gradually as we slowly produce enough to satisfy current demand and catch up on pent up demand. That strong demand, if it survives, will fuel the economy for a couple years as we gradually catch up.
Most states have ended unemployment benefits a while ago - but California - a huge economy on its own, actually just recently extended unemployment benefits slowing our state's recovery and further metering the economic growth. This delays our return to normal, natural economic environment.
"Earnings Season", where publicly traded companies report their results ending 9/30/2021 starts now and results should be good although it could be that the industry analysts have finally caught up with growth and there will be fewer "earnings surprises to the upside". This is also "drama" because in reality it's a game of managing investors expectations and always being able to "positively surprise".
After all those explanations - bottom line:
The market elements still move up and down, in an unpredictable pattern, on their way up long term.