Market Update - Last updated on Wednesday, August 21, 2008
Summary: Emerging Market and International Large Caps reached new lows in the past
7 days. US Small Caps are still -14% below their peak in July 2007, but they've
rallied during the past month close to 10%. US Large Caps also rallied the
past month, gaining 5%. The market is not giving any clear indication of macro economic
leadership as the gyrations continue to occur. Although a short term (1 month)
rally has occurred in US markets, we believe a sustained rally must include
all areas of the market. For this reason, we believe the past month has been a
bear market rally and therefore we're keeping our defense posture.
On average, the Kinetic Financial Model Portfolios returned 10.9% in 2007, -17.2%
year-to-date, and 3.1% since inception (Oct 1, 2006). The Model Portfolios fell,
on average, -23% from peak on Oct 31, 2007 to their bottom on August 19, 2008.
They are currently about -22% from the Oct 31, 2007 peak.
The US large capitalization market, as measured by the S&P 500 TR index, returned
5.5% in 2007 and -12% year-to-date. The S&P 500 index fell -21% from its peak
on Oct 9, 2007 to its bottom on July 15th, 2008. It is currently -17% below its
Oct 9th peak.
The US small capitalization market, as measured by Russell 2000*, returned -2% in
2007 and -3.2% year-to-date. The index fell -24.8% from its peak on July 9,
2007 to its bottom on March 10, 2008 and never recovered from the July 2007 downturn.
It is currently -14% below its July 9th, 2007 peak.
The international market, as measured by MSCI EAFE* index, returned 10% in 2007
and -19% year-to-date. The index fell -24.6% from its peak on Oct 31, 2007 to its
bottom on Aug 19th, 2008. It is currently -24.1% below its Oct 31st peak.
The emerging market, as measured by MSCI Emerging Market* index, returned 33.1%
in 2007 and -18.7% year-to-date. The index fell -28.8% from its peak on Oct 31,
2007 to its bottom on Aug 19th, 2008. It is currently -27% below its Oct 31st peak.
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* Performance metrics are derived from Exchange Traded Funds that track the index and assume the reinvestment of dividends and distributions. SPY is used for the S&P 500; IWM is used for the Russell 2000; EFA is used for MSCI EAFE; EEM is used for MSCI Emerging Market.
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