Financial Markets Update October 2004

Tech was wrecked in the third quarter, dropping over 11%. Real Estate, on the other hand, more than made up for a difficult 2nd quarter with a gain of more than 8%. Stocks lost a little ground in the third quarter, with Large Cap dropping 2% and Small Cap losing 3%. The spurt last quarter by Growth stocks did not last long as these stocks gave up almost 5%, while Value stocks held steady with a 1% gain. The weak dollar helped international stocks finish the quarter just about where they started.

As expected, the Fed raised short term interest rates a couple of times during the quarter. What surprised the markets was the fact that the increases were only 0.25% instead of the anticipated 0.50%. So instead of Bonds having a poor quarter, they actually gained 3%. High Yield Bonds picked up an even better 4%.

With the price of Oil hovering near $50 a barrel, Natural Resource funds performed well this quarter. We will be looking into these funds in our future reports.

Over the last 5 years, Real Estate has provided investors with annualized returns approaching 20%. Coming in a distant second with just over 7% returns has been Bonds and Small Cap Stocks. During this difficult time for the stock market, being invested in a money market fund has actually proven to be better than anywhere else besides these three categories.

Investment Returns ending September 2004

Investment Returns September 2004

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