Insightful Investing Newsletter July 2007
1st Half 2007 Market Recap
 /The first half of 2007 has been reasonably good to investors, though you might have felt a little sea sick with the roller coaster ride stocks have taken to obtain the 6.3% return for the quarter and 7.0% for the past 6 months. While it looked like both March and June might be the start of significant corrections, so far those have both proven to be good opportunities to buy into this market at better prices. The market has shown considerable resilience, which is somewhat surprising given the recent stumbles in the Chinese stock market, subprime loan problems, higher energy prices and the housing market slowdown. We feel its time to approach the markets with some degree of caution.
The big results news for the last quarter was the 9% hit that Real Estate took. For the first time in a long time, not only was Real Estate not the place to be, being there was actually a little painful. Those experts that have been telling us for the last year or two that Large Cap Growth was the place to be were finally right. A 6.9% return for the big boys in the second quarter easily outdistanced Small Cap Value's 2.3%, though Small Cap Growth's 9.3% return so far in 2007 is even better than Large Cap Growth's 8.1%. It looks like the Growth vs. Value decision was more important than the Small vs. Large so far this year. Don't be surprised if that continues the rest of this year.
The Fed continued to hold short term interest rates steady while longer term rates slowly started to move up. That helped to yield curve to move towards its normal orientation. Unfortunately for bond investors, those higher interest rates pushed down the value of the broader bond market. That resulted in slightly better than break even earnings in the first half of 2007 for the Intermediate Bonds and only 1.5% for shorter maturities.
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