2013 stock markets started like 2012 stock markets – with a bang. U.S. stock markets kicked off 2013 with a very good 10.7% return. Also like 2012’s first quarter, foreign markets didn’t fare as well, earning only 3.5%. If we merely hold onto these gains for the remainder of the year we’ll do fine.
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In the following I examine the details of what has been working in global stocks, providing quick insights into market segments that have succeeded and failed.
Smaller value stocks led the way in the quarter, earning more than 13%. By contrast, large core companies earned only 7.5% and large value earned 9.5%. Other than these extremes, style returns clustered around 12%. This has been one of those unusual periods where the “stuff in the middle” (core) has not performed in line with the “stuff on the ends.” I use Surz Style Pure®
classification throughout this commentary.
On the sector front, health care and consumer staple stocks fared best, earning 15% and 14% respectively. By contrast, materials earned only 1%, and infotech gained only 6%.
Looking outside the United States, foreign markets earned 3.5%, lagging both the U.S. stock market’s 10.7% return and EAFE’s 5.3% return. Japan was the big story, earning 12.8% in $U.S. The return in Japanese yen was an even more impressive 23%. The Japanese stock market soared in the quarter as the yen was weakening against the dollar. By contrast, emerging markets suffered a setback, losing 2%.
On the style front, core surprised, as it did in the United States, but core led rather than lagged.
For more details please visit http://www.ppca-inc.com/Commentaries/20130407-1Q13-Commentary.pdf.