Insightful Investing Newsletter April 2004
1st Quarter Market Recap
After a stellar performance in 2003, it was not surprising to see the stock market to take a breather. The S&P 500 managed a gain of less than 2%. Value stocks continued to outperform Growth stocks as they now have since the middle of last year.
The falling dollar continued to help International stocks outpace domestic stocks, as the EAFE Index performed twice as well as the S&P 500, returning just over 4% for the quarter.
The big winner in the 1st Quarter of 2004 is no stranger to the top of the investment leader board. A 12% return for Real Estate stocks helped them to dethrone Bonds as the best investment over the past 3 year and 5 year time horizons. Apparently, the threat of higher interest rates in the near future has inspired many people to buy a new house while they can still afford one. As long as interest rates continue to remain steady, these stocks and mutual funds should continue to do well.
Speaking of Bonds, the steady interest rates helped them slightly outperform the overall stock market for the quarter.
The change in leadership from Technology to Small Cap stocks that began last quarter continued into the new year. Technology stocks were relatively flat, while the Russell 2000 Small Cap Index was up over 6%. That helped the Small Cap Index achieve a 64% 1 year enough to push it ahead of the Technology stocks as the leading performers for the past year.
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